Operations Manager at 23 hours) + (Senior Business Analyst at 23
hours)) = 210 hours x 17 respondent clearing agencies = 3,570 hours.
See supra note 195.
---------------------------------------------------------------------------

    Clearing agencies would be required to administer their default
standards required by proposed Rule 17AAd-22d)(11) on an ongoing basis.
The Commission expects that the exact burden of administering the
procedures

for monitoring default standards would vary depending on how frequently
each clearing agency may need to update its procedures. Based on the
analogous policies and procedures requirements and the corresponding
burden estimates in Regulation NMS and for security-based swap data
repositories, the Commission estimates that the ongoing requirements of
this rule would impose an aggregate annual burden of 60 hours on each
respondent clearing agency, corresponding to an aggregate annual burden
for all respondent clearing agencies of 1,020 hours.\233\ The
Commission solicits comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \233\ This figure was calculated as follows: Compliance Attorney
at 60 hours x 17 respondent clearing agencies = 1,020 hours. See
supra note 196.
---------------------------------------------------------------------------

    Based on information from respondents that are already subject to a
similar requirement in the CDS Clearing Exemption Orders to make
publicly available certain pricing and valuation information with
respect to security-based swaps,\234\ the Commission estimates that the
one-time burden for a clearing agency to make key aspects of its
default procedures publicly available would involve slight adjustments
to data systems that would already be in place as part of the clearing
agency's operations under Section 17A of the Exchange Act. Therefore,
the Commission does not anticipate that new hardware, such as
additional computer equipment, would be required. Instead, the
Commission broadly estimates that for a clearing agency to adjust its
systems to meet the requirements of proposed Rule 17AAd-22d)(11) would
impose a one-time burden of 100 hours on each respondent clearing
agency, corresponding to an aggregate one-time burden imposed on all
respondent clearing agencies of 1,700 hours.\235\ The Commission
solicits comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \234\ See infra notes 251-254 and accompanying text.
    \235\ This figure was calculated as follows: ((Chief Compliance
Officer at 40 hours) + (Computer Operations Department Manager at 40
hours) + (Senior Programmer at 20 hours)) x 17 respondent clearing
agencies = 1,700 hours. See infra note 253 and accompanying text.
---------------------------------------------------------------------------

u. Timing of Settlement Finality
    Proposed Rule 17Ad-22(d)(12) would require clearing agencies to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to ensure that final settlement occurs
no later than the end of the settlement day and require that intraday
or real-time finality be provided where necessary to reduce risks. The
exact nature of the procedures a clearing agency would establish is
likely to vary between clearing agencies. However, there are estimates
of the burden imposed by similar policies and procedures requirements
in Regulation NMS and in proposed requirements for security-based swap
data repositories. While the requirements underlying those estimates
are not identical to this requirement for clearing agencies, the
Commission preliminarily believes that for PRA purposes there is
similarity in the burden to create policies and procedures.
    Based on the analogous policies and procedures requirements and the
corresponding burden estimates in Regulation NMS and in the proposed
requirements for security-based swap data repositories, the Commission
preliminarily estimates that proposed Rule 17Ad-22(d)(12) would impose
a one-time burden on each respondent clearing agency of 210 hours,
corresponding to an aggregate one-time burden on all respondent
clearing agencies of 3,570 hours.\236\
---------------------------------------------------------------------------

    \236\ This figure was calculated as follows: ((Assistant General
Counsel at 87 hours) + (Compliance Attorney at 77 hours) + (Computer
Operations Manager at 23 hours) + (Senior Business Analyst at 23
hours)) = 210 hours x 17 respondent clearing agencies = 3,570 hours.
See supra note 195.
---------------------------------------------------------------------------

    Clearing agencies would be required to administer their settlement
finality standards required by proposed Rule 17Ad-22(d)(12) on an
ongoing basis. The Commission expects that the exact burden of
administering the procedures for ensuring the timing of settlement
finality would vary depending on how frequently each clearing agency
may need to update its procedures. Based on the analogous policies and
procedures requirements and the corresponding burden estimates in
Regulation NMS and for security-based swap data repositories, the
Commission estimates that the ongoing requirements of this rule would
impose an aggregate annual burden of 60 hours on each respondent
clearing agency, corresponding to an aggregate annual burden for all
respondent clearing agencies of 1,020 hours.\237\ The Commission
solicits comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \237\ This figure was calculated as follows: Compliance Attorney
at 60 hours x 17 respondent clearing agencies = 1,020 hours. See
supra note 196.
---------------------------------------------------------------------------

v. Delivery Versus Payment
    Proposed Rule 17Ad-22(d)(13) would require clearing agencies to
establish, implement, maintain and enforce written policies and
procedures reasonably designed to eliminate principal risk by linking
securities transfers to funds transfers in a way that achieves delivery
versus payment. The exact nature of the procedures a clearing agency
would establish is likely to vary between clearing agencies. However,
there are estimates of the burden imposed by similar policies and
procedures requirements in Regulation NMS and in proposed requirements
for security-based swap data repositories.\238\ While the requirements
underlying those estimates are not identical to this requirement for
clearing agencies, the Commission preliminarily believes that for PRA
purposes there is similarity in the burden to create policies and
procedures.
---------------------------------------------------------------------------

    \238\ See supra note 157.
---------------------------------------------------------------------------

    Based on the analogous policies and procedures requirements and the
corresponding burden estimates in Regulation NMS and in the proposed
requirements for security-based swap data repositories, the Commission
preliminarily estimates that proposed Rule 17Ad-22(d)(13) would impose
a one-time burden on each respondent clearing agency of 210 hours,
corresponding to an aggregate one-time burden on all respondent
clearing agencies of 3,570 hours.\239\
---------------------------------------------------------------------------

    \239\ This figure was calculated as follows: ((Assistant General
Counsel at 87 hours) + (Compliance Attorney at 77 hours) + (Computer
Operations Manager at 23 hours) + (Senior Business Analyst at 23
hours)) = 210 hours x 17 respondent clearing agencies = 3,570 hours.
See supra note 195.
---------------------------------------------------------------------------

    Clearing agencies would be required to administer their delivery
versus payment standards required by proposed Rule 17Ad-22(d)(13) on an
ongoing basis. The Commission expects that the exact burden of
administering the procedures for delivery versus payment would vary
depending on how frequently each clearing agency may need to update its
procedures. Based on the analogous policies and procedures requirements
and the corresponding burden estimates in Regulation NMS and for
security-based swap data repositories, the Commission estimates that
the ongoing requirements of this rule would impose an aggregate annual
burden of 60 hours on each respondent clearing agency, corresponding to
an aggregate annual burden for all respondent clearing agencies of
1,020 hours.\240\ The Commission solicits comment regarding the
accuracy of this estimate.
---------------------------------------------------------------------------

    \240\ This figure was calculated as follows: Compliance Attorney
at 60 hours x 17 respondent clearing agencies = 1,020 hours. See
supra note 196.
---------------------------------------------------------------------------

w. Risk Controls To Address Participants' Failure To Settle
    Proposed Rule 17Ad-22(d)(14) would require clearing agencies to
establish, implement, maintain and enforce

written policies and procedures reasonably designed to institute risk
controls, including collateral requirements and limits to cover the
clearing agency's credit exposure to each participant exposure fully,
and that ensure timely settlement in the event that the participant
with the largest payment obligation is unable to settle when the
clearing agency provides central securities depository services and
extends intraday credit to participants. The exact nature of any rules
and procedures a clearing agency would likely establish to support this
requirement is likely to vary between clearing agencies. However, there
are estimates of the burden imposed by similar policies and procedures
requirements in Regulation NMS and in proposed requirements for
security-based swap data repositories.\241\ While the requirements
underlying those estimates are not identical to this requirement for
clearing agencies, the Commission preliminarily believes that for PRA
purposes there is similarity in the burden to create policies and
procedures.
---------------------------------------------------------------------------

    \241\ See supra note 157.
---------------------------------------------------------------------------

    Based on the analogous policies and procedures requirements and the
corresponding burden estimates in Regulation NMS and in the proposed
requirements for security-based swap data repositories, the Commission
preliminarily estimates that proposed Rule 17Ad-22(d)(14) would impose
a one-time burden on each respondent clearing agency of 210 hours,
corresponding to an aggregate one-time burden on all respondent
clearing agencies of 3,570 hours.\242\ The Commission solicits comment
regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \242\ This figure was calculated as follows: ((Assistant General
Counsel at 87 hours) + (Compliance Attorney at 77 hours) + (Computer
Operations Manager at 23 hours) + (Senior Business Analyst at 23
hours)) = 210 hours x 17 respondent clearing agencies = 3,570 hours.
See supra note 195.
---------------------------------------------------------------------------

    Clearing agencies that provide central securities depository
services would be required to administer their risk control standards
required by proposed Rule 17Ad-22(d)(14) on an ongoing basis. The
Commission expects that the exact burden of administering the
procedures for risk controls, including collateral requirements and
limits to cover the clearing agency's credit exposure to each
participant exposure fully and that ensure timely settlement in the
event that the participant with the largest payment obligation is
unable to settle would vary depending on how frequently each clearing
agency may need to update its procedures. Based on the analogous
policies and procedures requirements and the corresponding burden
estimates in Regulation NMS and for security-based swap data
repositories, the Commission estimates that the ongoing requirements of
this rule would impose an aggregate annual burden of 60 hours on each
respondent clearing agency, corresponding to an aggregate annual burden
for all respondent clearing agencies of 1,020 hours.\243\ The
Commission solicits comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \243\ This figure was calculated as follows: Compliance Attorney
at 60 hours x 17 respondent clearing agencies = 1,020 hours for all
respondent clearing agencies. See supra note 196.
---------------------------------------------------------------------------

x. Identification and Management of Physical Delivery Risks
    Proposed Rule 17Ad-22(d)(15) would require a clearing agency to
state to its participants the clearing agency's obligations with
respect to physical deliveries and to identify and manage the risks
that arise in connection with these obligations. The exact form in
which a clearing agency would state to its participants the clearing
agency's obligations with respect to physical deliveries and to
identify and manage the risks in connection with those obligations is
likely to vary between clearing agencies. However, there are estimates
of the burden imposed by similar policies and procedures requirements
in Regulation NMS and in proposed requirements for security-based swap
data repositories.\244\ While the requirements underlying those
estimates are not identical to this requirement for clearing agencies,
the Commission preliminarily believes that for PRA purposes there is
similarity in the burden to create policies and procedures.
---------------------------------------------------------------------------

    \244\ See supra note 157.
---------------------------------------------------------------------------

    Based on the analogous policies and procedures requirements and the
corresponding burden estimates in Regulation NMS and in the proposed
requirements for security-based swap data repositories, the Commission
preliminarily estimates that proposed Rule 17Ad-22(d)(15) would impose
a one-time burden on each respondent clearing agency of 210 hours,
corresponding to an aggregate one-time burden on all respondent
clearing agencies of 3,570 hours.\245\ The Commission solicits comment
regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \245\ This figure was calculated as follows: ((Assistant General
Counsel at 87 hours) + (Compliance Attorney at 77 hours) + (Computer
Operations Manager at 23 hours) + (Senior Business Analyst at 23
hours)) = 210 hours x 17 respondent clearing agencies = 3,570 hours.
See supra note 195.
---------------------------------------------------------------------------

    Clearing agencies would be required to administer their physical
delivery standards required by proposed Rule 17Ad-22(d)(15) on an
ongoing basis. The Commission expects that the exact burden of
administering the procedures for monitoring physical delivery standards
would vary depending on how frequently each clearing agency may need to
update its procedures. Based on the analogous policies and procedures
requirements and the corresponding burden estimates in Regulation NMS
and for security-based swap data repositories, the Commission estimates
that the ongoing requirements of this rule would impose an aggregate
annual burden of 60 hours on each respondent clearing agency,
corresponding to an aggregate annual burden for all respondent clearing
agencies of 1,020 hours.\246\ The Commission solicits comment regarding
the accuracy of this estimate.
---------------------------------------------------------------------------

    \246\ This figure was calculated as follows: Compliance Attorney
at 60 hours x 17 respondent clearing agencies = 1,020 hours. See
supra note 196.
---------------------------------------------------------------------------

    Based on information from respondents that are already subject to a
similar requirement in the CDS Clearing Exemption Orders to make
publicly available certain pricing and valuation information with
respect to security-based swaps,\247\ the Commission estimates that the
one-time burden for a clearing agency to state to its participants its
obligations with respect to physical deliveries would involve slight
adjustments to data systems that would already be in place as part of
the clearing agency's operations under Section 17A of the Exchange Act.
Therefore, the Commission does not anticipate that new hardware, such
as additional computer equipment, would be required. Instead, the
Commission broadly estimates that for a clearing agency to adjust its
systems to meet the requirements of proposed Rule 17Ad-22(d)(15) would
impose a one-time burden of 100 hours on each respondent clearing
agency, corresponding to an aggregate one-time burden imposed on all
respondent clearing agencies of 1,700 hours.\248\ The Commission
solicits comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \247\ See infra notes 251-254 and accompanying text.
    \248\ This figure was calculated as follows: ((Chief Compliance
Officer at 40 hours) + (Computer Operations Department Manager at 40
hours) + (Senior Programmer at 20 hours)) x 17 respondent clearing
agencies = 1,700 hours. See infra note 253 and accompanying text.
---------------------------------------------------------------------------

Total Burden
    The Commission preliminarily believes that for all respondent
clearing agencies the aggregate paperwork burdens contained in proposed
Rules

17Ad-22(d)(1), (2), (3), (4), (5), (6), (7), (8), (9), (10), (11),
(12), (13), (14), (15), (b)(1), (2), (3), (4), (5), (6), (7), (c)(1)
and (2) would impose a one-time burden of 83,343 hours \249\ and an
ongoing annual burden of 39,658 hours.\250\ The Commission solicits
comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \249\ This figure combines the one-time burdens for proposed
Rules 17Ad-22(d)(1), (2), (3), (4), (5), (6), (7), (8), (9), (10),
(11), (12), (13), (14), (15), (b)(1), (2), (3), (4), (5), (6), (7),
(c)(1) and (2) and was calculated as follows: (((3,570 hours x 16
standards pursuant to proposed Rules 17Ad-22(d)(1), (2), (3), (4),
(5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15) and
(d)(2) = 57,123 hours) + (1,890 hours x 8 standards pursuant to
proposed Rules 17Ad-22(b)(1), (2), (3), (4), (5), (6), (7) and
(d)(1) = 15,120 hours) + (1,700 hours x 6 systems adjustments
pursuant to Rules 17Ad-22(d)(2), (8), (9), (11), (15), (d)(2) =
10,200 hours) + (900 hours x 1 systems adjustment pursuant to Rule
17Ad-22(c)(1)) = 83,343 hours.
    \250\ This figure combines the annual burdens for proposed Rules
17Ad-22(d)(1), (2), (3), (4), (5), (6), (7), (8), (9), (10), (11),
(12), (13), (14), (15), (b)(1), (2), (3), (4), (5), (6), (7), (c)(1)
and (2) and was calculated as follows: ((1,020 hours x 16 standards
to be administered pursuant to Rules 17Ad-22(d)(1), (2), (3), (4),
(5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15) and
(d)(2) = 16,320 hours) + (540 hours x 8 standards to be administered
pursuant to proposed Rules 17Ad-22(b)(1), (2), (3), (4), (5), (6),
(7) and (d)(1) = 4,320 hours) + (1,020 hours x 2 ongoing efforts to
maintain and troubleshoot computer systems used to facilitate
dissemination of information responsive to Rules 17Ad-22(d)(2) and
(9) = 2,040 hours) + (6,480 hours to prepare the annual model
validation required pursuant to Rule 17Ad-22(b)(4)) + (1,890 hours
to prepare revised policies and procedures providing for a higher
net capital requirement pursuant to Rule 17Ad-22(b)(7) + (108 hours
to generate the financial information required pursuant to Rule
17Ad-22(c)(1)) + (8,500 hours to coordinate the posting of financial
information to the clearing agency's Web site as required pursuant
to Rule 17Ad-22(c)(2)) = 39,658 hours.
---------------------------------------------------------------------------

2. Dissemination of Pricing and Valuation Information by Security-
Based Swap Clearing Agencies That Perform Central Counterparty Services
    The requirement for dissemination of pricing and valuation
information in proposed Rule 17Aj-1 would effectively require each of
the entities authorized to provide CCP services for security-based
swaps pursuant to the CDS Clearing Exemption Orders \251\ to continue
the information dissemination practices they already perform. These
entities generate end of day settlement prices and other model prices
for security-based swaps, which can be used to establish margin
requirements for participant positions and could provide prices in the
event of a default scenario. As outlined above, the Commission
estimates a total of six respondents would be subject to this
requirement.\252\
---------------------------------------------------------------------------

    \251\ See supra note 6.
    \252\ See supra notes 139-140 and accompanying text. The
Commission notes that clearing agencies operating under the existing
CDS Clearing Exemption Orders may not need to make additional
changes to meet the requirements of the proposed rule because they
are already subject to similar conditions as part of the orders.
However, for purposes of this PRA analysis the Commission assumes
that these would be new requirements.
---------------------------------------------------------------------------

    Based on information from respondents that are already subject to a
similar requirement in the CDS Clearing Exemption Orders to disseminate
pricing and valuation information, the Commission preliminarily
believes that the requirements of proposed Rule 17Aj-1 would impose
one-time and ongoing burdens on respondent clearing agencies. For
instance, compliance professionals may need to work with information
technology and operations professionals to accurately memorialize in
writing the specific policy and procedure requirements regarding the
dissemination of pricing and valuation information. Information
technology personnel may be relied on to develop or modify computer
programs that facilitate the requirements of the policies and
procedures.
    The Commission estimates that the one-time burden for a security-
based swap clearing agency to comply with the requirements of proposed
Rule 17Aj-1 would involve slight adjustments to data systems that would
already be in place as part of the operation of the respondent as a
registered clearing agency that provides CCP services for security-
based swaps. Therefore, the Commission does not anticipate that new
hardware, such as additional computer equipment, would be required.
Instead, the Commission broadly estimates that for a clearing agency to
adjust its systems to meet the requirements of proposed Rule 17Aj-1
would impose a one-time burden of 100 hours on each respondent clearing
agency, corresponding to an aggregate one-time burden imposed on all
respondent clearing agencies of 600 hours.\253\ The Commission solicits
comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \253\ This figure was calculated as follows: ((Chief Compliance
Officer at 40 hours) + (Computer Operations Department Manager at 40
hours) + (Senior Programmer at 20 hours)) = 100 hours x 6 respondent
clearing agencies = 600 hours.
---------------------------------------------------------------------------

    Respondent clearing agencies would also have an ongoing
responsibility to make their relevant pricing and valuation information
available. Based on informal comments from respondents that are already
subject to a similar requirement in the CDS Clearing Exemption Orders,
the Commission preliminarily believes that the ongoing burden would be
limited and would likely involve maintenance and troubleshooting of
computer systems used to facilitate dissemination of covered pricing
and valuation information. Therefore, the Commission preliminarily
estimates this would impose an annual aggregate burden of 60 hours for
each respondent clearing agency, which corresponds to an ongoing
aggregate annual burden of 360 hours for all respondent clearing
agencies.\254\ The Commission solicits comment regarding the accuracy
of this estimate.
---------------------------------------------------------------------------

    \254\ This figure was calculated as follows: Computer Operations
Department Manager at 60 hours annually x 6 respondent clearing
agencies = 360 hours.
---------------------------------------------------------------------------

3. Clearing Agency Policies and Procedures To Protect the
Confidentiality of Trading Information of Clearing Agency Participants
    Proposed Rule 17Ad-23 would require each clearing agency to
establish, maintain and enforce written policies and procedures
designed to protect the confidentiality of clearing members' trading
information. As outlined above, the Commission estimates a total of 17
respondents to this requirement.\255\
---------------------------------------------------------------------------

    \255\ See supra notes 141-144 and accompanying text.
---------------------------------------------------------------------------

    Based on the staff's conversations with respondents that are
already subject to a similar policies and procedures requirement as
part of the CDS Clearing Exemption Orders, the Commission preliminarily
believes that establishing, maintaining and enforcing written policies
and procedures to protect confidential information of clearing members
would require collaboration and coordination across business units
within the clearing agency. For instance, legal or compliance
professionals may need to work with information technology and
operations professionals to accurately memorialize in writing the
specific policy and procedure requirements that the clearing agency
decides to establish. Information technology personnel may be heavily
relied on to develop or modify computer programs that facilitate the
requirements of the policies and procedures. Developing business
practices that are synchronized with the policies and procedures may
also entail coordination with the clearing agency's human resources or
risk management personnel to ensure effective adoption of any employee
training created to inform employees about trading restrictions or
other areas of the policies and procedures that impact them.
    The exact nature of the written policies and procedures a clearing
agency would establish is likely to vary. However, based on preliminary

information from respondents that are affected by similar requirements
under the CDS Clearing Exemption Orders and also based on the
Commission's experience in administering those orders, the Commission
preliminarily believes that the proposed rule would impose a one-time
burden on each respondent clearing agency of 610 hours, corresponding
to an aggregate one-time burden on all respondent clearing agencies of
10,370 hours.\256\ The Commission solicits comment regarding the
accuracy of this estimate.
---------------------------------------------------------------------------

    \256\ This figure was calculated as follows: ((Chief Compliance
Officer at 210 hours) + (Computer Operations Department Manager at
180 hours) + (Senior Programmer at 180 hours) + (Senior Risk
Management Specialist at 40 hours)) = 610 hours x 17 respondent
clearing agencies = 10,370 hours.
---------------------------------------------------------------------------

    Also based on information from respondents that have been subject
to the CDS Clearing Exemption Orders, the Commission preliminarily
believes that a clearing agency would likely purchase computer software
from a third party vendor that the clearing agency would then use to
implement the aspects of its policies and procedures designed to
restrict, as appropriate, the trading of clearing agency employees for
their own account and to prevent misuse and misappropriation of
participant information protected by the rule. The cost of such
computer software is likely to vary according to the specific policies
and procedures of the clearing agency (i.e., based on the number of
licenses it may need to cover its employees, the types of services it
needs the software to provide, etc.). However the Commission
preliminarily estimates that the rule would impose a one-time cost of
approximately $10,000 dollars on each clearing agency, corresponding to
an aggregate one-time burden on all clearing agencies of $170,000.\257\
The Commission solicits comment regarding the accuracy of this
estimate.
---------------------------------------------------------------------------

    \257\ This figure was calculated as follows: $10,000 dollars in
software costs per respondent clearing agency x 17 respondent
clearing agencies = $170,000.
---------------------------------------------------------------------------

    The Commission also preliminarily understands from respondents
subject to the similar requirement in the CDS Clearing Exemption Orders
that monitoring and enforcing the written policies and procedures
required by proposed Rule 17Ad-23 would likely require resource
commitments from many of the same business units needed to develop such
policies and procedures. For instance, as part of the effort to
restrict, as appropriate, trading by clearing agency employees for
their own accounts and to prevent misuse and misappropriation of
information protected by the rule, the Commission preliminarily
believes a clearing agency would need to devote fifty percent of the
work hours of a full-time, compliance attorney. The Commission
preliminarily expects this resource commitment may, among other things,
take the form of obtaining and reviewing brokerage statements of
clearing agency employees and reviewing their e-mails. Time for
employee training related to the requirements of the policies and
procedures, troubleshooting any computer systems designed to protect
information in connection with the policies and procedures, and
amendments to the policies and procedures are also factors that may
contribute to the ongoing burden on clearing agencies. Accordingly, the
Commission preliminarily estimates the rule would impose an annual
aggregate burden on each respondent of 1,128 hours, corresponding to an
aggregate annual burden on all clearing agencies of 19,176 hours.\258\
The Commission solicits comment regarding the accuracy of this
estimate.
---------------------------------------------------------------------------

    \258\ This figure was calculated as follows ((Compliance
Attorney at 4 hours per business day x 260 business days per year) =
1040 hours per year + (Computer Operations Department Manager at 40
hours per year) + (Senior Programmer at 40 hours per year) + (Senior
Risk Management Specialist at 8 hours per year)) = 1,128 hours per
year x 17 respondent clearing agencies = 19,176 hours per year.
---------------------------------------------------------------------------

4. Clearing Agency Procedures To Identify and Address Conflicts of
Interest
    Proposed Rule 17Ad-25 would require each clearing agency to
establish, implement, maintain and enforce written policies and
procedures that are reasonably designed to identify and address
existing or potential conflicts of interest and minimize conflicts of
interest in the decision-making process of the clearing agency. As
outlined above, the Commission estimates a total of 17 respondents to
this requirement.\259\
---------------------------------------------------------------------------

    \259\ See supra notes 145-148 and accompanying text.
---------------------------------------------------------------------------

    The exact nature of the policies and procedures a clearing agency
would establish is likely to vary between clearing agencies. For
instance, legal or compliance professionals may need to work to
accurately memorialize in writing the specific policy and procedure
requirements regarding conflicts of interest. Information technology
personnel may be relied on to develop, modify or implement computer
programs that facilitate the requirements of the policies and
procedures.
    There are estimates of the burden imposed by similar policies and
procedures requirements in Regulation NMS and in proposed requirements
for security-based swap data repositories.\260\ While the requirements
underlying those estimates are not identical to this requirement for
clearing agencies, the Commission preliminarily believes that for PRA
purposes there is similarity in the burden to create policies and
procedures.
---------------------------------------------------------------------------

    \260\ See supra note 157.
---------------------------------------------------------------------------

    Based on the analogous policies and procedures requirements and the
corresponding burden estimates in Regulation NMS and in the proposed
requirements for security-based swap data repositories, the Commission
preliminarily estimates that proposed Rule 17Ad-25 would impose a one-
time burden on each respondent clearing agency of 420 hours,
corresponding to an aggregate one-time burden on all respondent
clearing agencies of 7,140 hours.\261\ Also based on the estimates in
Regulation NMS and for security-based swap data repositories, the
Commission estimates that a burden of $40,000 in initial outside legal
costs would be incurred per respondent clearing agency for an aggregate
outside cost burden of $680,000 for all clearing agencies.\262\ The
Commission solicits comment regarding the accuracy of these estimates.
---------------------------------------------------------------------------

    \261\ This figure was calculated as follows: ((Assistant General
Counsel at 87 hours) + (Compliance Attorney at 77 hours) + (Computer
Operations Manager at 23 hours) + (Senior Business Analyst at 23
hours)) = 210 hours to create one policy and procedure x 2 policies
and procedures x 17 respondent clearing agencies = 7,140 hours. See
supra note 195.
    \262\ This estimated $680,000 figure has been calculated as
follows: $400 per hour cost for outside legal services x 50 hours x
2 policies and procedures x 17 clearing agencies. This is the same
estimate used by the Commission for these services in the proposed
consolidated audit trail rule. See Exchange Act Release No. 62174
(May 26, 2010), 75 FR 32556 (June 8, 2010).
---------------------------------------------------------------------------

    For a clearing agency to monitor, enforce, and potentially adjust
its policies and procedures in connection with proposed Rule 17Ad-25,
the Commission preliminarily believes these activities would impose an
ongoing aggregate annual burden on each respondent clearing agency of
120 hours, corresponding to an aggregate annual ongoing burden for all
respondents of 2,040 hours.\263\ The Commission solicits comment
regarding the accuracy of these estimates.
---------------------------------------------------------------------------

    \263\ This figure was calculated as follows: Compliance Attorney
at 60 hours x 17 respondent clearing agencies = 1,020 hours to
administer one policy and procedure x 2 policies and procedures =
2,040 hours. See supra note 196.

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

5. Standards for Board or Board Committee Directors
    Proposed Rule 17Ad-26 outlines the proposed governance standards
that clearing agencies would be required to establish for board or
board committee directors. As outlined above, the Commission estimates
a total of 17 respondents to this requirement.\264\
---------------------------------------------------------------------------

    \264\ See supra notes 149-152 and accompanying text.
---------------------------------------------------------------------------

    The exact nature of the policies and procedures a clearing agency
would establish is likely to vary between clearing agencies. For
instance, legal or compliance professionals may need to work with a law
firm to accurately memorialize in writing the specific policy and
procedure requirements regarding the selection of directors. However,
as noted above in the discussion of the burdens associated with
proposed Rule 17Ad-25, there are estimates of similar burdens imposed
by policies and procedures requirements in Regulation NMS and in the
proposed requirements for security-based swap data repositories.\265\
While the requirements underlying those estimates are not identical to
this requirement for clearing agencies, the Commission preliminarily
believes that there is sufficient similarity between them for PRA
purposes that the burden would be roughly equivalent.
---------------------------------------------------------------------------

    \265\ See supra note 157.
---------------------------------------------------------------------------

    Based on the analogous policies and procedures requirements and the
corresponding burden estimates in Regulation NMS and in the proposed
requirements for security-based swap data repositories, the Commission
preliminarily believes that this rule would impose an aggregate one-
time burden on each respondent clearing agency of 210 hours to create
the minimum standards required by the rule, corresponding to a one-time
aggregate burden for all clearing agencies of 3,570 hours.\266\ The
Commission solicits comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \266\ This figure was calculated as follows: ((Assistant General
Counsel at 87 hours) + (Compliance Attorney at 77 hours) + (Computer
Operations Manager at 23 hours) + (Senior Business Analyst at 23
hours)) = 210 hours x 17 respondent clearing agencies = 3,570 hours.
See supra note 195.
---------------------------------------------------------------------------

    The Commission also estimates, based on similar requirements and
the corresponding burdens in Regulation NMS and for security-based swap
data repositories that a total burden of $20,000 in outside legal costs
would be incurred by each respondent clearing agency, corresponding to
an aggregate cost burden of $340,000 for all respondent clearing
agencies.\267\ The Commission solicits comment regarding the accuracy
of this information.
---------------------------------------------------------------------------

    \267\ This estimated figure was calculated as follows: ($400 per
hour cost for outside legal services x 50 hours) x 17 respondent
clearing agencies = $170,000. See supra note 262.
---------------------------------------------------------------------------

    Clearing agencies would be required to administer their governance
standards required by proposed Rule 17Ad-26 on an ongoing basis. The
Commission expects that the exact burden of administering the
governance standards would vary depending on factors that include, but
are not limited to, how frequently a clearing agency elects new board
members and how many board and board committee members are involved
with the governance of each clearing agency. These factors would
influence the time spent evaluating potential new board members as well
as the time needed to assess existing board members at least annually
for compliance with the standards.
    Based on the analogous policies and procedures requirements and the
corresponding burden estimates in Regulation NMS and for security-based
swap data repositories, the Commission estimates that the ongoing
requirements of this rule would impose an aggregate annual burden of 60
hours on each respondent clearing agency, corresponding to an aggregate
annual burden for all respondent clearing agencies of 1,020 hours.\268\
The Commission solicits comment regarding the accuracy of this
information. The proposed rule also encourages clearing agencies to use
a third party to facilitate completion of the board's annual assessment
of its members against its governance standards. The Commission
estimates that using a third party would impose an average annual
burden of 20 hours on each respondent clearing agency, corresponding to
aggregate of 340 hours all clearing agencies.\269\ The Commission
solicits comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \268\ This figure was calculated as follows: Compliance Attorney
at 60 hours x 17 respondent clearing agencies = 1,020 hours. See
supra note 196.
    \269\ This figure was calculated as follows: Consultant at 20
hours x 17 respondent clearing agencies = 340 hours.
---------------------------------------------------------------------------

6. Designation of Chief Compliance Officer
    Under proposed Rule 3Cj-1(b), a registered clearing agency's CCO
would be responsible for, among other matters, (1) establishing
policies and procedures for the remediation of non-compliance issues
identified by the CCO and (2) establishing and following appropriate
procedures for the handling of management response, remediation,
retesting and closing of non-compliance issues. As outlined above, the
Commission estimates a total of 17 respondents to this
requirement.\270\
---------------------------------------------------------------------------

    \270\ See supra note 153-156 and accompanying text.
---------------------------------------------------------------------------

    The exact nature of the policies and procedures a clearing agency
would establish is likely to vary between clearing agencies. However,
as noted in the discussion of the estimated burdens for proposed Rules
17Ad-25 and 17Ad-26, there are similarly positioned requirements and
corresponding burden estimates in Regulation NMS and in the proposed
requirements for security-based swap data repositories.\271\ The
proposed rule requirements that create the estimated PRA burden for the
CCO of a security-based swap data repository \272\ are highly-similar
to the proposed requirements for the CCO of a clearing agency in Rule
3Cj-1(b).\273\ This is because both rules are predicated on statutory
provisions of the Exchange Act that contain statutory requirements that
mirror one another to a large degree.\274\ Therefore, the Commission
preliminarily believes that for PRA purposes the burdens would be
roughly equivalent.
---------------------------------------------------------------------------

    \271\ See supra note 157.
    \272\ See Exchange Act Release No. 63347 (November 19, 2010), 75
FR 77306 (December 10, 2010) (proposed Rules 13n-11(c)(6),(7) and
13n-11(d), (h). See generally Public Law 111-203 Sec.  763(a)
(adding Section 3C(n)(6) to the Exchange Act).
    \273\ Compare Public Law 111-203 Sec.  763(a) adding Section
3C(j) to the Exchange Act concerning requirements for the CCO of a
clearing agency with Public Law 111-203 Sec.  763(a) adding Section
3C(n)(6) concerning requirements for the CCO of an SDR.
    \274\ Compare Public Law 111-203 Sec.  763(a) adding Section
3C(j) to the Exchange Act concerning requirements for the CCO of a
clearing agency with Public Law 111-203 Sec.  763(a) adding Section
3C(n)(6) concerning requirements for the CCO of an SDR.
---------------------------------------------------------------------------

    Consequently, the Commission preliminarily estimates that the two
requirements for the CCO of a clearing agency under proposed Rule 3Cj-1
would require 420 hours to create policies and procedures,
corresponding to a total burden of 7,140 hours initially.\275\ The
Commission also preliminarily estimates 120 hours to administer each
policy and procedure per year per respondent, corresponding to 1,200
hours on average annually.\276\

The Commission preliminarily believes that this work will be conducted
internally and solicits comments regarding the accuracy of this
information. The Commission solicits comment regarding the accuracy of
these estimates.
---------------------------------------------------------------------------

    \275\ This figure was calculated as follows: ((Assistant General
Counsel at 87 hours) + (Compliance Attorney at 77 hours) + (Computer
Operations Manager at 23 hours) + (Senior Business Analyst at 23
hours)) = 210 hours to create one policy and procedure x 2 policies
and procedures x 17 respondent clearing agencies = 7,140 hours. See
supra note 195.
    \276\ This figure was calculated as follows: (Compliance
Attorney at 60 hours x 17 respondent clearing agencies) = 1,020
hours to administer one policy and procedure x 2 policies and
procedures = 2,040 hours. See supra note 196.
---------------------------------------------------------------------------

    Also, based on the similarly positioned burdens in Regulation NMS
and in the proposed requirements for the CCO of a security-based swaps
data repository, the Commission preliminarily estimates that a total of
$40,000 in initial outside legal costs would be incurred by each
respondent clearing agency. This corresponds to an aggregate, one-time
outside cost burden of $680,000 for all clearing agencies.\277\ The
Commission solicits comment regarding the accuracy of this estimate.
---------------------------------------------------------------------------

    \277\ This figure was calculated as follows: (($400 per hour
cost for outside legal services x 50 hours) x (2 policies and
procedures)) x 17 clearing agencies = $680,000. See supra note 262.
---------------------------------------------------------------------------

    The CCO would also be required under proposed Rule 3Cj-1(c) to
prepare, sign and submit (to the clearing agency's board of directors
and audit committee (or equivalent bodies) and to the Commission) an
annual compliance report that contains a description of (i) the
compliance of the clearing agency with respect to the Federal
securities laws and the rules and regulations thereunder, and (ii) each
policy and procedure of the clearing agency of the compliance officer
(including the code of ethics and conflict of interest policies of the
registered clearing agency). Based upon the Commission's experience
with similar reports, the Commission preliminarily estimates that this
would require an average of 54 hours per respondent per year. Thus, the
Commission preliminarily estimates an aggregate annual burden of 918
hours on all respondent clearing agencies.\278\ Because the report will
be submitted by the internal CCO, the Commission preliminarily does not
expect any external costs. The Commission solicits comments regarding
the accuracy of this estimate.
---------------------------------------------------------------------------

    \278\ This figure is based on the following: ((Compliance
Attorney at 50 hours) + (Senior Systems Analyst at 4 hours)) x 17
clearing agencies = 918 hours.
---------------------------------------------------------------------------

E. Collection of Information Is Mandatory

1. Standards for Clearing Agencies
a. Measurement and Management of Credit Exposures
    The collection of information relating to measuring credit
exposures to its participants at least once a day and limiting its
exposures to potential losses from defaults by its participants in
normal market conditions so that the operations of the clearing agency
would not be disrupted and non-defaulting participants would not be
exposed to losses that they cannot anticipate or control under proposed
Rule 17Ad-22(b)(1) would be mandatory for all clearing agencies that
provide CCP services.
b. Margin Requirements
    The collection of information relating to using margin requirements
to limit credit exposures to participants in normal market conditions
and using risk-based models and parameters to set margin requirements
and review them at least monthly under proposed Rule 17Ad-22(b)(2)
would be mandatory for all clearing agencies that provide CCP services.
c. Financial Resources
    The collection of information relating to maintaining sufficient
financial resources to withstand, at a minimum, a default by the
participant to which it has the largest exposure in extreme but
plausible market conditions, and if the clearing agency provides CCP
services for security-based swaps then a default by the two
participants to which it has the largest exposures in extreme but
plausible market conditions; provided that if a participant controls
another participant or is under common control with another
participant, then the affiliated participants shall be collectively
deemed to be a single participant under proposed Rule 17Ad-22(b)(3)
would be mandatory for all clearing agencies that provide CCP services.
d. Model Validation
    The collection of information relating to providing for an annual
model validation consisting of evaluating the performance of the
clearing agency's margin models and the related parameters and
assumptions associated with such models by a qualified person who does
not perform functions associated with the clearing agency's margin
models (except as part of the annual model validation) and does not
report to a person who performs these functions under proposed Rule
17Ad-22(b)(4) would be mandatory for all clearing agencies that provide
CCP services.
e. Non-Dealer Access
    The collection of information relating to providing the opportunity
for a person that does not perform any dealer or security-based swap
dealer services to obtain membership at the clearing agency to clear
securities for itself or on behalf of other persons under proposed Rule
17Ad-22(b)(5) would be mandatory for all clearing agencies that provide
CCP services.
f. Net Capital Requirements
    The collection of information relating to providing the opportunity
for a person that maintains net capital equal to or greater than $50
million with the ability to obtain membership at the clearing agency,
with any net capital requirements being scalable so that they are
proportional to the risks posed by the participant's activities to the
clearing agency; provided, however, that the clearing agency may
provide for a higher net capital requirement as a condition for
membership at the clearing agency if the clearing agency demonstrates
to the Commission that such a requirement is necessary to mitigate
risks that could not otherwise be effectively managed by other measures
and the Commission approves the higher net capital requirement as part
of a rule filing or clearing agency registration application under
proposed Rule 17Ad-22(b)(7) would be mandatory for all clearing
agencies that provide CCP services.
g. Record of Financial Resources
    The collection of information each fiscal quarter, or at any time
upon request by the Commission, relating to the calculation and
maintenance of a record of the financial resources necessary to meet
the requirements of proposed Rule 17Ad-22(b)(3) under proposed Rule
17Ad-22(c)(1) would be mandatory for all clearing agencies that perform
CCP services.
h. Annual Audited Financial Report
    The collection of information relating to the annual audited
financial report that shall (i) be a complete set of financial
statements of the clearing agency for the most recent two fiscal years
and be prepared in accordance with U.S. GAAP, except that for a
clearing agency that is a corporation or other organization
incorporated or organized under the laws of any foreign country the
financial statements may be prepared according to U.S. GAAP or IFRS;
(ii) be audited in accordance with standards of the Public Company
Accounting Oversight Board by a registered public accounting firm that
is qualified and independent in accordance with Rule 2-01 of Regulation
S-X (17 CFR 210.2-01); and (iii) include a report of the registered
public accounting firm that complies with paragraphs (a) through (d) of
Rule

2-02 of Regulation S-X (17 CFR 210.2-02) under proposed Rule 17Ad-
22(c)(2) would be mandatory for all clearing agencies.
i. Transparent and Enforceable Rules and Procedures
    The collection of information relating to policies and procedures
providing for a well founded, transparent, and enforceable legal
framework for each aspect of its activities in all relevant
jurisdictions under proposed Rule 17Ad-22(d)(1) would be mandatory for
all clearing agencies.
j. Participation Requirements
    The collection of information relating to requiring participants to
have sufficient financial resources and robust operational capacity to
meet obligations arising from participation in the clearing agency;
have procedures in place to monitor that participation requirements are
met on an ongoing basis; and have participation requirements that are
objective, publicly disclosed, and permit fair and open access under
proposed Rule 17Ad-22(d)(2) would be mandatory for all clearing
agencies.
k. Identification and Mitigation of Custody of Assets and Investment
Risk
    The collection of information relating to holding assets in a
manner whereby risk of loss or of delay in its access to them is
minimized; and investing assets in instruments with minimal credit,
market and liquidity risks under proposed Rule 17Ad-22(d)(3) would be
mandatory for all clearing agencies.
l. Identification and Mitigation of Operational Risk
    The collection of information relating to identifying sources of
operational risk and minimizing them through the development of
appropriate systems, controls, and procedures; implementing systems
that are reliable, resilient and secure, and have adequate, scalable
capacity; and having business continuity plans that allow for timely
recovery of operations and fulfillment of a clearing agency's
obligations under proposed Rule 17Ad-22(d)(4) would be mandatory for
all clearing agencies.
m. Money Settlement Risks
    The collection of information relating to employing money
settlement arrangements that eliminate or strictly limit the clearing
agency's settlement bank risks, that is, its credit and liquidity risks
from the use of banks to effect money settlements with its
participants; and requiring funds transfers to the clearing agency to
be final when effected under proposed Rule 17Ad-22(d)(5) would be
mandatory for all clearing agencies.
n. Cost-Effectiveness
    The collection of information relating to being cost-effective in
meeting the requirements of participants while maintaining safe and
secure operations under proposed Rule 17Ad-22(d)(6) would be mandatory
for all clearing agencies.
o. Links
    The collection of information relating to evaluating the potential
sources of risk for any link arrangements the clearing agency
establishes and prudently managing those risks under proposed Rule
17Ad-22(d)(7) would be mandatory for all clearing agencies.
p. Governance
    The collection of information relating to having governance
arrangements that are clear and transparent to fulfill the public
interest requirements in Section 17A of the Exchange Act applicable to
clearing agencies, to support the objectives of owners and
participants, and to promote the effectiveness of the clearing agency's
risk management procedures under proposed Rule 17Ad-22(d)(8) would be
mandatory for all clearing agencies.
q. Information on Services
    The collection of information relating to providing market
participants with sufficient information for them to identify and
evaluate the risks and costs associated with using its services under
proposed Rule 17Ad-22(d)(9) would be mandatory for all clearing
agencies.
r. Immobilization and Dematerialization of Stock Certificates
    The collection of information relating to immobilization and
dematerialization of securities certificates and transferring them by
book entry to the greatest extent possible under proposed Rule 17Ad-
22(d)(10) would be mandatory for all clearing agencies that perform
central securities depository services.
s. Default Procedures
    The collection of information relating to making key aspects of the
clearing agency's default procedures publicly available and
establishing default procedures that ensure that the clearing agency
can take timely action to contain losses and liquidity pressures and to
continue meeting its obligations in the event of a participant default
under proposed Rule 17Ad-22(d)(11) would be mandatory for all clearing
agencies.
t. Risk Controls To Address Participants' Failure To Settle
    The collection of information relating to instituting risk controls
including collateral requirements and limits to cover the clearing
agency's credit exposure to each participant exposure fully, and that
ensure timely settlement in the event that the participant with the
largest payment obligation is unable to settle when the clearing agency
provides central securities depository services and extends intraday
credit to participants, provided that if a participant controls another
participant or is under common control with another participant then
the affiliated participants shall be collectively deemed to be a single
participant, under proposed Rule 17Ad-22(d)(14) would be mandatory for
all clearing agencies.
u. Identification and Management of Physical Delivery Risks
    The collection of information relating to stating to participants
the clearing agency's obligations with respect to physical deliveries
and identifying and managing the risks from those obligations under
proposed Rule 17Ad-22(d)(15) would be mandatory for all clearing
agencies.
2. Dissemination of Pricing and Valuation Information by Security-
Based Swap Clearing Agencies That Perform Central Counterparty Services
    The collection of information relating to the dissemination of
pricing and valuation information of security-based swaps under
proposed Rule 17Aj-1 would be mandatory for all security-based swap
clearing agencies that perform CCP services.
3. Clearing Agency Policies and Procedures To Protect the
Confidentiality of Trading Information of Clearing Agency Participants
    The collection of information relating to the establishment,
maintenance and enforcement of written policies and procedures under
proposed Rule 17Ad-23 pertaining to the confidentiality of trading
information would be mandatory for all clearing agencies.
4. Clearing Agency Procedures To Identify and Address Conflicts of
Interest
    The collection of information relating to the establishment,
implementation, maintenance and enforcement of written policies and
procedures reasonably designed to identify and address conflicts of
interest under proposed Rule 17Ad-25 would be mandatory for all
clearing agencies.

5. Standards for Board or Board Committee Directors
    The collection of information relating to board or board committee
directors governance standards under proposed Rule 17Ad-26 would be
mandatory for all clearing agencies.
6. Designation of Chief Compliance Officer
    The collection of information relating to the CCO under proposed
Rule 3Cj-1 requirements would be mandatory for all clearing agencies.

F. Confidentiality

1. Standards for Clearing Agencies
a. Measurement and Management of Credit Exposures
    The collection of information relating to the measurement and
management of credit exposures under proposed Rule 17Ad-22(b)(1) would
be provided to the Commission staff but not subject to public
availability.
b. Margin Requirements
    The collection of information relating to margin requirements under
proposed Rule 17Ad-22(b)(2) would be provided to the Commission staff
but not subject to public availability.
c. Financial Resources
    The collection of information relating to financial resources under
proposed Rule 17Ad-22(b)(3) would be provided to the Commission staff
but not subject to public availability.
d. Model Validation
    The collection of information relating to conducting an annual
model validation under proposed Rule 17Ad-22(b)(4) would be provided to
the Commission staff but not subject to public availability.
e. Non-Dealer Access
    The collection of information relating to non-dealer access under
proposed Rule 17Ad-22(b)(5) would be provided to the Commission staff
but not subject to public availability.
f. Net Capital Requirements
    The collection of information relating to the procedures for net
capital requirements under proposed Rule 17Ad-22(b)(7) would be
provided to the Commission staff but not subject to public
availability.
g. Record of Financial Resources
    The collection of information relating to the calculation and
maintenance by a clearing agency that provides CCP services of a
quarterly report describing the financial resources necessary to meet
the requirements of proposed Rule 17Ad-22(b)(3) would be provided to
the Commission staff under proposed Rule 17Ad-22(c)(1) but would not be
subject to public availability.
h. Annual Audited Financial Report
    The collection of information relating to the annual audited
financial report published to the clearing agency's Web site under
proposed Rule 17Ad-22(c)(2) would be subject to public availability.
i. Transparent and Enforceable Rules and Procedures
    The collection of information relating to a clearing agency's well
founded, transparent and enforceable legal framework under proposed
Rule 17Ad-22(d)(1) would be provided to the Commission staff but not
subject to public availability.
j. Participation Requirements
    The collection of information relating to the procedures for
monitoring and publicly disseminating the participation requirements
under proposed Rule 17Ad-22(d)(2) would be provided to the Commission
staff and would be subject to public availability.
k. Custody of Assets and Investment Risk
    The collection of information relating minimizing custody and
investment risk under proposed Rule 17Ad-22(d)(3) would be provided to
the Commission staff but not subject to public availability.
l. Identification and Mitigation of Operational Risk
    The collection of information relating to identifying and
minimizing operational risk under proposed Rule 17Ad-22(d)(4) would be
provided to the Commission staff but not subject to public
availability.
m. Money Settlement Risks
    The collection of information relating to the procedures for money
settlement arrangements under proposed Rule 17Ad-22(d)(5) would be
provided to the Commission staff but not subject to public
availability.
n. Cost-Effectiveness
    The collection of information relating to being cost-effective
under proposed Rule 17Ad-22(d)(6) would be provided to the Commission
staff but not subject to public availability.
o. Links
    The collection of information relating to evaluating potential
sources of risk in links arrangements under proposed Rule 17Ad-22(d)(7)
would be provided to the Commission staff but not subject to public
availability.
p. Governance
    The collection of information relating to a clearing agency's
governance arrangements under proposed Rule 17Ad-22(d)(8) would be
provided to the Commission staff but not subject to public
availability.
q. Information on Services
    The collection of information relating to the provision of
sufficient information to market participants under proposed Rule 17Ad-
22(d)(9) would be provided to the Commission staff and market
participants but not subject to public availability.
r. Immobilization and Dematerialization of Stock Certificates
    The collection of information relating to the procedures for
immobilizing and dematerializing stock certificates under proposed Rule
17Ad-22(d)(10) would be provided to the Commission staff but not
subject to public availability.
s. Default Procedures
    The collection of information relating to the establishment and
maintenance of default procedures under proposed Rule 17Ad-22(d)(11)
would be subject to public availability.
t. Risk Controls To Address Participants' Failure To Settle
    The collection of information relating to risk controls to address
participants' failure to settle under proposed Rule 17Ad-22(d)(14)
would be provided to the Commission staff, but not subject to public
availability.
u. Identification and Management of Physical Delivery Risks
    The collection of information relating to the statement and
management of physical delivery risk under proposed Rule 17Ad-22(d)(15)
would be provided to the Commission staff, but not subject to public
availability.
2. Dissemination of Pricing and Valuation Information by Security-
Based Swap Clearing Agencies That Perform Central Counterparty Services
    The collection of information relating to the dissemination of
pricing and valuation information under proposed Rule 17Aj-1 would be
subject to public availability.

3. Clearing Agency Policies and Procedures To Protect the
Confidentiality of Trading Information of Clearing Agency Participants
    The collection of information pertaining to the establishment,
maintenance and enforcement of written policies and procedures
pertaining to the confidentiality of trading information under proposed
Rule 17Ad-23 would be provided to the Commission staff and would be
subject to public availability.
4. Clearing Agency Procedures To Identify and Address Conflicts of
Interest
    The collection of information relating to the establishment,
implementation, maintenance and enforcement of written policies and
procedures reasonably designed to identify and address conflicts of
interest under proposed Rule 17Ad-25 would be provided to the
Commission staff and would be subject to public availability.
5. Standards for Board or Board Committee Directors
    The collection of information relating to board or board committee
directors governance standards under proposed Rue 17Ad-26 would be
provided to the Commission staff and would be subject to public
availability.
6. Designation of Chief Compliance Officer
    The collection of information relating to the CCO under proposed
Rule 3Cj-1 would be provided to the Commission staff and would be
subject to public availability.

G. Retention Period of Recordkeeping Requirements

    Registered clearing agencies will be required to retain all
correspondence and other communications reduced to writing (including
comment letters) to and from such clearing agency for a period of not
less than five years, the first two years of which are to be in a place
immediately available to the Commission staff for inspection and
examination, pursuant to the recordkeeping requirements set forth in
Rule 17a-1 of the Exchange Act.

H. Request for Comment

    The Commission invites comments on all of the above 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. S7-8-11. 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. S7-8-11, and be submitted to the Securities and Exchange
Commission, Office of Investor Education and Advocacy, 100 F Street,
NE., Washington, DC 20549-0213. 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 \279\
---------------------------------------------------------------------------

    \279\ The hourly rates use for professionals used throughout
this Section VI. Consideration of Costs and Benefits are taken from
the Securities Industry and Financial Markets Association's
Management & Professional Earnings in the Securities Industry 2010,
modified by the Commission's staff to account for an 1800-hour work-
year and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead.
---------------------------------------------------------------------------

    The Commission is proposing several new rules that would set
standards for the operation and governance of clearing agencies. In
part, the Dodd-Frank Act is intended to promote financial stability in
the financial system of the United States by improving accountability
and transparency.\280\ Key aspects of the framework of the Dodd-Frank
Act specifically give the Commission authority to regulate security-
based swaps \281\ and to prescribe regulations containing risk
management standards for designated clearing entities that the
Commission regulates. In addition to considering these specific
concerns in formulating the proposed rules, the Commission believes
that designing several of the proposed rules to be applicable to all
clearing agencies promotes financial stability by facilitating prompt
and accurate clearance and settlement of securities transactions
consistent with Section 17A of the Exchange Act while concurrently
promoting the Dodd-Frank Act's stated aims of accountability and
transparency.
---------------------------------------------------------------------------

    \280\ See supra note 2.
    \281\ See supra note 3.
---------------------------------------------------------------------------

    Proposed Rules 17Ad-22 through 17Ad-26 and 3Cj-1 would establish
operational standards for registered clearing agencies and require
those clearing agencies to adopt written policies and procedures
pertaining to, among other matters, the confidential treatment of
trading information received by the clearing agency, identifying and
addressing conflicts of interest, establishing board governance
standards and designating a CCO for the clearing agency. Proposed Rule
17Aj-1 would require the public dissemination of certain pricing and
valuation information by clearing agencies that perform CCP services
with respect to security-based swaps. Finally, the proposed amendments
to existing Rule 17Ab2-1 would modify the temporary registration
process for clearing agencies.
    The Commission is sensitive to the costs and benefits imposed by
its rules and has identified the following costs and benefits. In
particular, the discussion below is focused on the costs and benefits
flowing from the decisions proposed by the Commission to fulfill the
mandates of the Dodd-Frank Act rather than the mandates of the Dodd-
Frank Act itself. 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 on which they relied on to reach any
conclusions.

A. Standards for Clearing Agencies

    The standards set forth under proposed Rule 17Ad-22 build off of
the recommendations of the CPSS-IOSCO RSSS and RCCP, adjusted to
conform to the U.S. system for clearing agency regulation and to adopt
those tailored standards as rule requirements. Included in this
proposed rule is the requirement that each fiscal quarter (based on
calculations made as of the last business day of the clearing agency's
fiscal quarter), or at any time upon Commission request, a clearing

agency that performs central counterparty services shall calculate and
maintain a record of the financial resources necessary to comply with
proposed Rule 17Ad-22(b)(3), as well as sufficient documentation to
explain the methodology it uses to compute such financial resource
requirement.
1. Benefits
    The proposed standards are intended to provide benefits to clearing
agencies and the markets they serve by promoting implementation of
measures that would enhance the safety and efficiency of clearing
agencies and reduce systemic risk. Safe and reliable clearing agencies
are essential not only for the stability of the securities markets they
serve but often also to payment systems, which may be used by a
clearing agency or may themselves use a clearing agency to transfer
collateral. The safety of securities settlement arrangements and post-
trade custody arrangements is also critical to the goal of protecting
the assets of investors from claims by creditors of intermediaries and
other entities that perform various functions in the operation of the
clearing agency.
    Permitting persons who do not provide dealer or security-based swap
dealer services to become members of a clearing agency, as required
under proposed Rule 17Ad-22(b)(5), should foster the development of
correspondent clearing arrangements that would allow dealers and
security-based swap dealers, who may otherwise not be able to meet
reasonable participation standards of a clearing agency, to obtain
access to the clearing agency through correspondent clearing
arrangements, thereby increasing competition among clearing agencies.
The net capital requirements contained in proposed Rule 17Ad-22(b)(7)
would help remove an overly burdensome barrier to clearing agency
access for market participants with a net capital level of at least $50
million, and promote greater direct access to clearing agencies.
Entities that become participants will also benefit from an elimination
of fee costs that the entities might otherwise have incurred to gain
indirect access to the clearing agency through existing participants
with higher levels of net capital. Proposed Rule 17Ad-22(b)(7) also may
facilitate greater competition among market participants of varying
sizes because smaller market participants may not incur additional cost
to clear and settle transactions.
    Finally, the standards in proposed Rule 17Ad-22(d) have the
potential to mitigate various risks associated with providing clearing
agency services by establishing standards to address (1) transparent
and enforceable rules and procedures; (2) participation requirements;
(3) custody of assets and investment risk; (4) operational risk; (5)
money settlement risk; (6) cost-effectiveness; (7) links; (8)
governance; (9) information on services; (10) immobilization and
dematerialization of stock certificates; (11) default procedures; (12)
timing of settlement finality; (13) delivery versus payment; (14) risk
controls to address participants' failures to settle; and (15) physical
delivery risks. This should help to create a framework for the
operation of clearing agencies that would promote sound and efficient
practices by the clearing agency. Moreover, standards relating to
measurement and management of credit exposures, margin requirements,
and financial resources should act as a helpful tool to manage systemic
risk as increasing amounts of clearance and settlement activity is
centralized within clearing agencies. At the same time, requiring
annual evaluations of the performance of the clearing agency's margin
models should help to ensure that clearing agencies' margin models
perform in a manner that facilitates prompt and accurate clearance and
settlement of transactions.
2. Costs
    As noted above, the standards contained in proposed Rules 17Ad-
22(b)(1), (2), (3), (4), (5), (6), (7), (c)(1), (2), (d)(1), (2), (3),
(4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14) and (15)
would impose certain burdens and related costs on respondent clearing
agencies. As discussed in section V.D.1., based on policies and
procedures requirements for Regulation NMS and security-based swap data
repositories and based on staff conversations with industry
representatives, the Commission has estimated the burdens and related
costs of these requirements for clearing agencies.
    The proposed clearing agency standards in proposed Rules 17Ad-
22(b)(1), (2), (3), (4), (5), (6), (7), (c)(1), (2), (d)(1), (2), (3),
(4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14) and (15)
would require respondent clearing agencies to create policies and
procedures. The requirements would impose one-time costs of
approximately $26,084,488 in the aggregate for all respondent clearing
agencies.\282\ The standards contained in proposed Rules 17Ad-22(b)(4),
(c)(2), (d)(2), (8), (9), (11) and (15) would also impose one-time
costs on clearing agencies that are related to the adjustment of
systems. With respect to proposed Rules 17Ad-22(b)(2), (d)(2), (8),
(9), (11) and (15), this adjustment would be related to facilitating
compliance with requirements to provide information or make information
available. Proposed Rule 17Ad-22(b)(4) would require one-time systems
adjustments related to the capability to perform an annual model
validation. These adjustments would amount to a one-time cost of
approximately $4,182,480 in the aggregate for all respondent clearing
agencies.\283\ Consequently, this results in a total one-time burden
imposed by proposed Rule 17Ad-22 of approximately $30,266,968 in the
aggregate for all respondent clearing agencies.\284\
---------------------------------------------------------------------------

    \282\ This figure was calculated as follows: ((Assistant General
Counsel for 87 hours at $430 per hour) + (Compliance Attorney for 77
hours at $320 per hour) + (Computer Operations Department Manager
for 23 hours at $367 per hour) + (Senior Business Analyst for 23
hours at $232 per hour)) = $75,827 x 16 standards pursuant to
proposed Rules 17Ad-22(d)(1), (2), (3), (4), (5), (6), (7), (8),
(9), (10), (11), (14), (15) and (c)(2) = $1,213,232 x 17 respondent
clearing agencies = $20,624,944) + (($75,827 x 8 standards pursuant
to proposed Rules 17Ad-22(b)(1), (2), (3), (4), (5), (6), (7) and
(c)(1) = $606,616 x 9 clearing agencies = $5,459,544) = $26,084,488.
See supra note 195.
    \283\ This figure was calculated as follows: ((Chief Compliance
Officer for 40 hours at $423 per hour) + (Computer Department
Operations Manager for 40 hours at $367 per hour) + (Senior
Programmer for 20 hours at $304 per hour) = $37,680 x proposed Rules
17Ad-22(d)(2), (8), (9), (11), (15) and (d)(2)) = $226,080 x 17
respondent clearing agencies = $3,843,360 + ($37,680 x 9 clearing
agencies for proposed Rules 17Ad-22(b)(4) = $339,120) = $4,182,480.
See supra note 253.
    \284\ This $30,266,968 figure is the sum of the one-time costs
calculated in note 282, $26,084,488, plus the one-time costs
calculated in note 283, $4,182,480.
---------------------------------------------------------------------------

    The standards contained in Rule 17Ad-22 would also impose ongoing
costs on clearing agencies. For example, the proposed clearing agency
standards in proposed Rules 17Ad-22(b)(1), (2), (3), (4), (5), (6),
(7), (c)(1), (2), (d)(1), (2), (3), (4), (5), (6), (7), (8), (9), (10),
(11), (14) and (15) would collectively require respondent clearing
agencies to perform certain ongoing monitoring and enforcement
activities with respect to the policies and procedures the clearing
agency creates in response to the proposed standard. Accordingly, the
Commission preliminarily believes that those ongoing activities would
impose total annual costs of approximately $6,660,800 in the aggregate
for all respondent clearing agencies.\285\
---------------------------------------------------------------------------

    \285\ This figure was calculated as follows: ((Compliance
Attorney for 60 hours at $320 per hour = $19,200 x 16 standards
pursuant to proposed Rules 17Ad-22(d)(1), (2), (3), (4), (5), (6),
(7), (8), (9), (10), (11), (12), (13), (14), (15) and (c)(2) =
$307,200 x 17 respondent clearing agencies = $5,222,400) + ($19,200
x 8 standards pursuant to proposed Rules 17Ad-22(b)(1), (2), (3),
(4), (5), (6), (7) and (c)(1) = $153,600 x 9 clearing agencies =
$1,382,400)) = $6,660,800. See supra note 196.

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

    Proposed Rule 17Ad-22(b)(4) would entail ongoing costs. To meet the
requirements of the proposed Rule 17Ad-22(b)(4) to provide for an
annual model validation, the Commission preliminarily believes clearing
agencies would hire a consulting firm that dedicates two consultants to
the project. The Commission estimates that this requirement would
impose an ongoing annual cost of approximately $432,000 for each
respondent, which corresponds to a total annual cost of approximately
$7,776,000 in the aggregate for all respondent clearing agencies.\286\
---------------------------------------------------------------------------

    \286\ This figure was calculated as follows: 2 Consultants for
30 hours per week at $600 per hour = $36,000 per week x 12 weeks =
$432,000 per clearing agency x 9 clearing agencies = $7,776,000.
---------------------------------------------------------------------------

    Proposed Rule 17Ad-22(b)(6) would impose ongoing costs on the nine
estimated clearing agencies that provide CCP services. The rule would
impose these ongoing costs to the extent that staff from the legal,
compliance, risk or other departments at the clearing agency providing
CCP services would be responsible for ensuring that the clearing
agency's membership standards do not require participants to maintain a
portfolio of a minimum size or to maintain a minimum transaction volume
threshold. This gate-keeping responsibility required in Rule 17Ad-
22(b)(6) is unlikely to require the complete work hours of a full-time
employee. Instead, as an ongoing cost related to preventing these
specific types of participation standards, the cost would likely
represent a fraction of total staff time and related costs. Based on
the Commission's experience regulating clearing agencies that provide
CCP services, it is unlikely that such a clearing agency would
frequently seek to change its membership requirements in a way that
would be inconsistent with proposed Rule 17Ad-22(b)(6). Therefore, the
fractional cost imposed on the clearing agency by the proposed rule
would likely be small compared to the clearing agency's overall cost of
paying the same staff to perform their other job responsibilities.
    In addition, proposed Rule 17Ad-22(b)(7) may require a clearing
agency that provides CCP services to update its policies and procedures
relating to its net capital requirements if it determines that the
clearing agency should provide for a higher net capital requirement
(i.e., higher than $50 million) as a condition for membership. This
work would entail the preparation of potentially one new policy
annually reflecting the clearing agency's updated net capital
requirements. To meet these ongoing requirements of proposed Rule 17Ad-
22(b)(7), the Commission preliminarily estimates a total annual cost of
$682,443 in the aggregate for all respondent clearing agencies.\287\
The proposed rule's requirement that a clearing agency that provides
CCP services must provide a person with net capital equal to or greater
than $50 million with the ability to obtain membership at the clearing
agency (with any net capital requirements being scalable so that they
are proportional to the risks posed to the clearing agency by the
participant's activities) would also impose costs on the operations of
the clearing agency. Specifically, certain clearing agencies that
provide CCP services would likely need to revise their admission
criteria so that they are scalable and still provides for effective
measures to limit the risks that smaller members present to the
clearing agency. This would involve implementation and oversight of any
measures such as heightened margin requirements, limited access to
clearing services, portfolio and transaction requirements, or other
risk management measures used as part of the scalable membership
classes that would be designed by the clearing agency under the
proposed rule.
---------------------------------------------------------------------------

    \287\ This figure was calculated as follows: ((Assistant General
Counsel for 87 hours at $430 per hour) + (Compliance Attorney for 77
hours at $320 per hour) + (Computer Operations Department Manager
for 23 hours at $367 per hour) + (Senior Business Analyst for 23
hours at $232 per hour)) = $75,827 x 1 new policy annually in
response to Rule 17Ad-22(b)(7) = $75,827 x 9 respondent clearing
agencies = $682,443. See supra note 195.
---------------------------------------------------------------------------

    The requirements in proposed Rules 17Ad-22(c)(1) and (2) would also
impose ongoing costs on clearing agencies. Under proposed Rule 17Ad-
22(c)(1), the requirement for a clearing agency that provides CCP
services to calculate and maintain a record of the financial resources
necessary to meet the requirements of proposed Rule 17Ad-22(b)(3), as
well as sufficient documentation to explain the methodology it uses to
compute such financial resource requirement, would require the efforts
of clearing agency compliance and operational personnel to create the
reports, properly document them and ensure the reports and supporting
documentation are properly record kept. To meet these ongoing
requirements of proposed Rule 17Ad-22(c)(1), the Commission
preliminarily estimates a total annual cost of $37,944.\288\
---------------------------------------------------------------------------

    \288\ This figure was calculated as follows (Compliance Attorney
for 1 hour at $320 per hour) + (Computer Operations Department
Manager for 2 hours at $367)) = $1,054 per quarter x 4 quarters per
year = $4216 per year x 9 clearing agencies = $37,944.
---------------------------------------------------------------------------

    Proposed Rule 17Ad-22(c)(2) would require each clearing agency to
post on its Web site an annual audited financial report. Each financial
report would have to: (i) be a complete set of financial statements of
the clearing agency for the most recent two fiscal years and be
prepared in accordance with U.S. GAAP, except that for a clearing
agency that is a corporation or other organization incorporated or
organized under the laws of any foreign country the financial
statements may be prepared according to U.S. GAAP or IFRS as issued by
the International Accounting Standards Board; (ii) be audited in
accordance with standards of the Public Company Accounting Oversight
Board by a registered public accounting firm that is qualified and
independent in accordance with Rule 2-01 of Regulation S-X (17 CFR
210.2-01); and (iii) include a report of the registered public
accounting firm that complies with paragraphs (a) through (d) of Rule
2-02 of Regulation S-X (17 CFR 210.2-02). This requirement would
necessitate work hours of compliance personnel and finance personnel at
the clearing agency to compile relevant data, organize and analyze that
data, and then post it to the clearing agency's Web site consistent
with the rule. The requirement would also require the services of a
registered public accounting firm. The Commission estimates those
services would cost approximately $500,000 annually. Therefore, to meet
the ongoing requirements of proposed Rule 17Ad-22(c)(2) the Commission
estimates a total annual cost of approximately $10,239,984 in the
aggregate for all respondent clearing agencies.\289\
---------------------------------------------------------------------------

    \289\ This figure was calculated as follows: ((Senior Accountant
for 500 hours at $198 per hour) + (Senior Systems Analyst for 8
hours at $259 per hour) + (Compliance Attorney for 4 hours at $320)
= $102,352 + $500,000 for independent public accounting services =
$602,352 x 17 respondent clearing agencies = $10,239,984. See supra
notes 192 and 193.
---------------------------------------------------------------------------

    Consequently, this results in a total, annual burden imposed by
proposed Rule 17Ad-22 of approximately $25,397,171.\290\
---------------------------------------------------------------------------

    \290\ This $25,397,171 figure is the sum of the aggregate annual
costs estimated in note 285, $6,660,800, plus the aggregate annual
cost estimated in note 286, $7,776,000, plus the aggregate cost
estimated in note 287, $682,443, plus the aggregate annual cost
estimated in note 288, $37,944, plus the aggregate annual cost
estimated in note 289, $10,239,984.
---------------------------------------------------------------------------

    Recent assessments of the registered U.S. clearing agencies support
the conclusion that these entities generally meet or exceed analogous
standards of operation and governance to those that are contained
within Rule 17Ad-22. Those findings support a view that the

requirements of proposed Rule 17Ad-22 would not be likely to require
the clearing agencies to build new infrastructure or modify operations
to continue to meet the standards.\291\ The Commission's oversight of
the entities clearing CDS pursuant to the CDS Clearing Exemption Orders
forms the basis for a similar belief that no associated start-up costs
would be imposed because those entities already represent through the
CDS Clearing Exemption Orders that they meet the CPSS-IOSCO standards
for central counterparties, which impose similar requirements to those
contained in proposed Rule 17Ad-22.
---------------------------------------------------------------------------

    \291\ See generally International Monetary Fund, Publication of
Financial Sector Assessment Program Documentation--Detailed
Assessment of Observance of the National Securities Clearing
Corporation's Observance of the CPSS-IOSCO Recommendations for
Central Counterparties 4-29 (2010), available at http://www.imf.org/external/pubs/ft/scr/2010/cr10129.pdf; International Monetary Fund,
Publication of Financial Sector Assessment Program Documentation--
Detailed Assessment of Observance of the Depository Trust Company's
Observance of the CPSS-IOSCO Recommendations for Securities
Settlement Systems 4-40 (2010), available at http://www.imf.org/external/pubs/ft/scr/2010/cr10128.pdf.
---------------------------------------------------------------------------

B. Dissemination of Pricing and Valuation Information by Security-Based
Swap Clearing Agencies That Perform Central Counterparty Services

    The Commission is proposing new Rule 17Aj-1 which would require
every security-based swap clearing agency that performs CCP services to
make available to the public all end-of-day settlement prices and any
other prices with respect to security-based swaps that it may establish
to calculate mark-to-market \292\ margin requirements for its
participants. Proposed Rule 17Aj-1 would also require security-based
swap clearing agencies that perform CCP services to make available to
the public any other pricing or valuation information with respect to
security-based swaps that it otherwise publishes or makes available to
its participants. Under the proposed rule, this information is not
required to be made available to the public free of charge. Instead, it
must be provided to the public on terms that are fair, reasonable and
not unreasonably discriminatory.
---------------------------------------------------------------------------

    \292\ See supra note 91 (explaining the specific meaning of
``mark-to-market'' in the context of the margin practices of
security-based swap clearing agency margin practices).
---------------------------------------------------------------------------

1. Benefits
    Proposed Rule 17Aj-1 would provide a publicly available source of
pricing and valuation information for pricing and valuation in the
security-based swap markets. The Commission recognizes that other
market mechanism created under the Dodd-Frank Act, such as security-
based swap data repositories and security-based swap execution
facilities, will also generate security-based swap pricing data. Under
the Dodd-Frank Act, all security-based swap transactions are required
to be reported to a security-based swap data repository, or, if such
data repository does not exist, to the Commission.\293\ Consequently,
security-based swap data repositories would consolidate post-trade
information about security-based swaps that the Commission
preliminarily believes would be helpful for analyzing the security-
based swap market as a whole and identifying its risks.\294\ Similarly,
security-based swap execution facilities will provide important pre-
trade information about security-based swaps.
---------------------------------------------------------------------------

    \293\ See Public Law 111-203, Sec. Sec.  763(i) and 766(a)
(adding Exchange Act Sections 13(m)(1)(G) and 13A(A)(1),
respectively). The Dodd-Frank Act amends the CEA to provide for a
similar regulatory framework with respect to transactions in swaps
regulated by the CFTC.
    \294\ See Exchange Act Release No. 63347 (November 19, 2010), 75
FR 77306 (December 10, 2010) (discussing in Section II, Role,
Regulation, and Business Models of SDRs, that the enhanced
transparency provided by an SDR is important to help regulators and
others monitor the build-up and concentration of risk exposures in
the security-based swaps market).
---------------------------------------------------------------------------

    However, the Commission preliminarily believes that pricing and
valuation information generated by clearing agencies would add value
beyond pre- and post-trade pricing information. Rather than basing risk
management of clearance and settlement on pre- or post- trade pricing
that may be stale, or may be inappropriate to facilitate a clearing
agency's risk management practices for other reasons, clearing agencies
frequently generate their own prices for security-based swaps, either
through consensus pricing or pricing models. Those prices are then used
to inform the clearing agency's margin requirements for its
participants and the risk management of the clearing facility.
    End-of-day pricing information is pricing during the life of a
security-based swap that is not otherwise available from pre- and post-
trade market sources--for instance from a security-based swap execution
facility or security-based swap data repository. Therefore, the
Commission preliminarily believes public availability of the end-of-day
pricing information, as well as any other pricing information the
security-based swap clearing agency publishes or distributes with
respect to security-based swaps can provide helpful transparency to
market participants about the value of similar security-based swap
positions they may hold. Accordingly, the Commission preliminarily
believes that requiring the information to be made publicly available
on terms that are fair, reasonable and not unreasonably discriminatory
improves fairness, efficiency, and market competition by providing
availability to data that may otherwise be difficult for some market
participants to obtain.
2. Costs
    The proposed rule requiring dissemination of pricing and valuation
information would impose initial and ongoing costs on security-based
swap clearing agencies. To establish the necessary pricing and
valuation infrastructure to satisfy Rule 17Aj-1, security-based swap
clearing agencies that perform CCP services would bear the cost of
establishing the applicable infrastructure capabilities. The Commission
notes that entities providing CCP services for security-based swaps are
currently required by the CDS Clearing Exemption Orders to disseminate
pricing and valuation information.
    As noted above in section V.D.2., based on staff conversations with
industry representatives already subject to similar requirements under
the CDS Clearing Exemption Orders, the Commission preliminarily
estimates that the one-time burden for a security-based swap clearing
agency that performs CCP services to comply with the requirements of
proposed Rule 17Aj-1 would only involve adjustments to computing
systems required as part of registration. The Commission estimates that
for a clearing agency to adjust its systems beyond the specifications
associated with registration would impose a one-time cost of
approximately $37,680 on each respondent clearing agency, corresponding
to a total one-time aggregate cost imposed on all respondent clearing
agencies of approximately $226,080.\295\
---------------------------------------------------------------------------

    \295\ This figure was calculated as follows: ((Chief Compliance
Officer for 40 hours at $423) + (Computer Operations Department
Manager for 40 hours at $367) + (Senior Programmer for 20 hours at
$304)) = $37,680 dollars x 6 respondent clearing agencies =
$226,080. See supra note 253.
---------------------------------------------------------------------------

    To meet the requirements of the proposed rule, security-based swap
clearing agencies that perform CCP services would have a continuous
responsibility to make the relevant pricing and valuation information
available. The Commission estimates this imposes an ongoing annual
aggregate burden of $22,020 for each respondent, which corresponds to
an

ongoing aggregate annual cost of $132,120 for all respondent clearing
agencies.\296\
---------------------------------------------------------------------------

    \296\ This figure was calculated as follows: Computer Operations
Department Manager for 60 hours at $367 dollars per hour = $22,020 x
6 security-based swap clearing agencies = $132,120. See supra note
254.
---------------------------------------------------------------------------

C. Clearing Agency Policies and Procedures To Protect the
Confidentiality of Trading Information of Clearing Agency Participants

    Proposed Rule 17Ad-23 would require each registered clearing agency
to establish, maintain and enforce written policies and procedures
designed to protect the confidentiality of any and all transaction
information that the clearing agency receives. Such transaction
information may include, but is not limited to, trade data, position
data, and any non-public personal information about a clearing agency
member or participant or any of its members or participant's customers.
The proposed rule also provides that the required policies and
procedures shall include, but are not limited to, (a) limiting access
to confidential trading information of clearing members to those
employees of the clearing agency who are operating the system or
responsible for its compliance with any other applicable laws or rules
and (b) standards controlling employees and agents of the clearing
agency trading for their personal benefit or the benefit of others.
1. Benefits
    The proposed standards are intended to promote implementation of
adequate measures taken by a clearing agency to safeguard data, which
can increase market participants' confidence in the safety and
reliability of a clearing agency. Trade data stored by a clearing
agency should be protected from loss, leakage, unauthorized access and
other processing risks. It is necessary for a clearing agency to apply
information security and system integrity objectives to its own
operations to protect trade data during transmission and dissemination.
These protections for trade data benefit participants by helping to
ensure, for instance, that participant trade data is not leaked to
other market participants who may attempt to use that information to
front run participant trades or misappropriate it in other ways.
Protections for trade data by a clearing agency also generate the
benefit to participants of promoting the confidence among participants
and their customers that use of a clearing agency to clear and settle
trades will not result in economic or reputational harm to the clearing
agency's users. This, in turn, promotes overall marketplace confidence
in the clearance and settlement system for securities transactions.
2. Costs
    Proposed Rule 17Ad-23 would impose costs on a clearing agency to
establish procedures to protect the confidentiality of trading
information of participants. However, the entities providing CCP
services for security-based swaps pursuant to the CDS Clearing
Exemption Orders already maintain and enforce safeguards to protect the
confidentiality of trading information of participants as part of those
orders. While the Commission notes that those respondents may not need
to make additional, one-time changes to meet the requirements of
proposed Rule 17Ad-23, the Commission is assuming for the purpose of
this cost-benefit analysis that proposed Rule 17Ad-23 would impose one-
time costs on them. As discussed above in section V.D.3., based on
staff discussions with industry representatives already subject to
similar requirements under the CDS Clearing Exemption Orders, the
Commission has estimated the burdens and related costs of these
requirements for clearing agencies.
    The Commission does anticipate the rule would impose one-time costs
at the remaining six clearing agencies related to the coordinated
research and development costs between compliance, legal, operational,
and information technology staff. Protecting confidential information
in compliance with the requirements of the proposed rule would likely
necessitate drawing on expertise and knowledge from each of these
areas. The number of employees and number of employee hours required to
deliver the necessary information could vary slightly between clearing
agencies given that clearing agencies may divide the skill sets of
their employees differently. However, for a clearing agency to create
policies and procedures protecting the confidentiality of trading
information of participants, the Commission believes the rule would
impose a one-time cost on each clearing agency of approximately
$227,290, corresponding to an aggregate one-time cost to all respondent
clearing agencies of approximately $3,863,930.\297\
---------------------------------------------------------------------------

    \297\ This figure was calculated as follows ((Chief Compliance
Officer for 210 hours at $423 per hour) + (Computer Operations
Department Manager for 180 hours at $367 per hour) + (Senior
Programmer for 180 hours at $304 per hour) + (Risk Management
Specialist for 40 hours at $192 per hour) + ($10,000 software
costs)) = $227,290 x 17 respondent clearing agencies = $3,863,930.
See supra note 256.
---------------------------------------------------------------------------

    The rule would also impose ongoing costs associated with storing
confidential data in the form and manner prescribed by the clearing
agency's policies and procedures, which would be designed to control
access to that information. Such costs are likely to include monitoring
and testing of the integrity of the access controls on the data and
potentially updating those controls as new technology becomes available
or as the clearing agency modifies the safeguarding requirements within
the policies and procedures. The Commission believes these
responsibilities would impose an ongoing annual cost per clearing
agency of approximately $56,942, corresponding to an annual aggregate
cost to all clearing agencies of approximately $7,990,544.\298\
---------------------------------------------------------------------------

    \298\ This figure was calculated as follows: Compliance Attorney
at 4 hours per business day x 260 business days per year = 1,040
hours per year at $423 per hour + ((Computer Operations Department
Manager for 40 hours per year at $367 per hour) + (Senior Programmer
for 40 hours per year at $304 per hour) + (Senior Risk Management
Specialist at 8 hours per year at $409 per hour)) = $470,032 x 17
respondent clearing agencies = $7,990,544. See supra note 258.
---------------------------------------------------------------------------

D. Exemption From Clearing Agency Definition

    The Commission is proposing new Rule 17Ad-24 which would exempt
from the definition of clearing agency, as defined in Section
3(a)(23)(A) of the Exchange Act, certain registered security-based swap
dealers and security-based swap execution facilities.
1. Benefits
    The proposed rule described in this section would provide for the
exclusion of certain registered security-based swap dealers and
registered security-based swap execution facilities from the definition
of a clearing agency. The proposed rule is intended to avoid subjecting
these entities, where appropriate, to multiple registrations when doing
so would impose overlapping or duplicative requirements with marginal
benefits or no benefits to safeguarding securities and funds and
protecting investors.
2. Costs
    The Commission anticipates any costs associated with the proposed
rule are likely to be minimal. Registered security-based swap dealers
and registered security-based swap execution facilities that perform
certain limited clearing agency functions could rely on the proposed
exemption upon determining that their clearing agency

functions are within the scope of the rule.

E. Amendment of 17Ab2-1 Registration of Clearing Agencies

    Proposed Rule 17Ab2-1 would provide for amendments to Section
17Ab2-1 of the Exchange Act and extends certain timeframes associated
with the registration of clearing agencies.
1. Benefits
    A modernized temporary registration process can serve as a useful
tool by giving the Commission the option to examine a clearing agency
after it becomes operational, but in advance of its registration being
final. For example, a newly formed security-based swap clearing agency
may only be able to provide materials regarding its anticipated
activities when completing its CA-1 registration form. However, there
may be value in examining the security-based swap clearing agency once
it becomes operational. This has the benefit of informing the
Commission by observations made through examinations and/or monitoring
of active operations.
2. Costs
    The amendments to the Rule 17Ab2-1 relate specifically to the
operations of the Commission and the timing of its ability to grant
temporary registrations for clearing agencies. As a result, the
Commission preliminarily believes that the proposed amendments to Rule
17Ab2-1 are unlikely to impose costs to clearing agencies other than
those that currently exist.

F. Procedures To Identify and Address Conflicts of Interest

    Proposed Rule 17Ad-25 would require registered clearing agencies to
establish, implement, maintain and enforce written policies reasonably
designed to identify and address existing or potential conflicts of
interest and minimize conflicts of interest in decision-making at the
clearing agency.
1. Benefits
    Requiring a clearing agency to create written policies and
procedures designed to identify conflicts of interest would help a
clearing agency evaluate its particular organization and activities and
determine areas that might undermine the clearing agency's core
business of clearing and settling securities transactions. A documented
plan provides a clear set of guidelines that can focus the clearing
agency's evaluation and ensure consistency in the way those evaluations
are performed. Similarly, if conflicts are identified, the policies and
procedures offer a standard method of approaching those conflicts to
make sure they are addressed. The procedures would also provide a
documented plan against which the Commission could evaluate a clearing
agency's efforts to mitigate conflicts and provide the Commission with
a better understanding of those areas of operation and organization
about which a clearing agency may be particularly concerned.
2. Costs
    Creating written policies and procedures under proposed Rule 17Ad-
25 that are reasonably designed to identify and address conflicts of
interest would necessitate an evaluation by each clearing agency of the
areas in its operation that are likely to be susceptible to conflicts
of interest. This review is an exercise likely to require collaboration
between the board of directors of the clearing agency and senior
management given that many of the potential conflicts are likely to
revolve around the participant admissions and voting rights practices
of the clearing agency. After the review, the Commission anticipates
that the compliance or legal staff of the clearing agency would be
assigned to draft policies and procedures.
    As discussed in section V.D.4., the Commission preliminarily
believes that there are analogous policies and procedures requirements
for Regulation NMS and in the proposed requirements for security-based
swap data repositories that are informative of the burdens and related
costs to clearing agencies under proposed Rule 17Ad-25. The Commission
believes that the one-time cost to research and create the policies and
procedures would be approximately $191,654 for each clearing agency,
corresponding to a one-time aggregate cost to all clearing agencies of
approximately $3,258,118.\299\ Costs would also be incurred by the
clearing agency to monitor and enforce the policies and procedures. The
Commission preliminarily believes this would impose an annual cost of
approximately $38,400 per clearing agency, corresponding to an annual
aggregate burden to all clearing agencies of approximately
$652,800.\300\
---------------------------------------------------------------------------

    \299\ This figure was calculated as follows: ((Assistant General
Counsel for 87 hours at $430 per hour) + (Compliance Attorney for 77
hours at $320 per hour) + (Computer Operations Department Manager
for 23 hours at $367 per hour) + (Senior Business Analyst for 23
hours at $232 per hour)) = $75,827 x 2 policies and procedures +
$40,000 in one-time outside legal costs = $191,654 x 17 respondent
clearing agencies = $3,258,118. See supra notes 261 and 262.
    \300\ This figure was calculated as follows: Compliance Attorney
for 60 hours at $320 per hour = $19,200 x 2 policies and procedures
= $38,400 x 17 respondent clearing agencies = $652,800. See supra
note 263.
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G. Standards for Board or Board Committee Directors

    Proposed Rule 17Ad-26 would set forth governance standards that
clearing agencies would be required to establish with respect to their
board members and board committee directors. These standards would
include at least the following areas: (i) A clear articulation of the
roles and responsibilities of directors serving the clearing agency's
board and any board committees; (ii) director qualifications providing
criteria for expertise in the securities industry, clearance and
settlement of securities transactions, and financial risk management;
(iii) disqualifying factors concerning serious legal misconduct,
including violations of the Federal securities laws; and (iv) policies
and procedures for the periodic review by the board or a board
committee of the performance of its individual members.
1. Benefits
    Clearing agencies are at the heart of the settlement process.
Moreover, because their activities are subject to significant economies
of scale, many are sole providers of clearing and settlement services
to the market they serve. Therefore, their performance is a critical
determinant of the safety and efficiency of those markets. No single
set of governance arrangements is appropriate for all clearing agencies
within the various securities markets and regulatory schemes. However,
an effectively governed clearing agency should meet certain key minimum
requirements. Among these are delivering sound risk management;
ensuring a clear separation between reporting lines for risk management
and other clearing agency operations, meeting public interest
requirements, identifying those principally responsible for achieving
the clearing agencies governance objectives, and disclosing the extent
to which these objectives have been met.
    Requiring registered clearing agencies to establish standards for
their board and board committee members helps to ensure that well-
qualified individuals contribute to effective governance of a clearing
agency. Board members who can provide guidance by drawing on expertise
in the securities industry, clearance and settlement, and risk
management are well positioned to

make decisions that account for the positions of the various
participants in the market the clearing agency serves as well as to
balance those perspectives with the goals of stability and efficiency
of the clearing agency. In the interest of promoting informed and
balanced decision making in governance, requiring each clearing agency
to establish governance standards that include disqualifying factors
concerning serious legal misconduct, including violations of the
Federal securities laws, would help clearing agencies evaluate whether
persons who have been found to have violated the securities laws, or
other similar laws or statutes, may not be fit to serve on the clearing
agency's board or board committees.
    Proposed Rule 17Ad-26 would also benefit the clearing agency and
its participants by creating a degree of certainty in the role and
responsibility of each director and in defining instances appropriate
for removal of a director. The requirement for a clear articulation of
the role and responsibility of each director focuses the governance
resources of the clearing agency and provides commonly understood
boundaries with respect to what is expected of each director. Clearly
articulating those expectations can help the directors understand how
to make individual contributions to the governance of the clearing
agency as well as the ways in which they are expected to work with one
another to govern the clearing agency effectively.
    Finally, requiring clearing agencies to establish policies and
procedures for the periodic review by the board or a board committee of
the performance of its individual members would support prompt and
accurate clearance and settlement because directors play a vital role
in the decision-making processes of the clearing agency. These reviews
would promote focused analysis on the contributions that directors make
to the clearing agency and how those contributions are particularly
valuable or could be adjusted or improved to better support the
clearing agency's ability to operate in effectively.
2. Costs
    Proposed Rule 17Ad-26 would set forth governance standards
applicable to a clearing agency's board members and board committee
directors. The rule would require clearing agencies to adopt procedural
frameworks that inform the governance of the clearing agency.
    Proposed Rule 17Ad-26 would require a clearing agency to incur
research and development costs associated with creating standards for
its board members and board committee members. The Commission
anticipates that there would likely need to be a coordinated effort
between different business units within a clearing agency to develop
these standards. As discussed in section V.D.5., the Commission
preliminarily believes that there are analogous policies and procedures
requirements for Regulation NMS and in the proposed requirements for
security-based swap data repositories that are informative of the
burdens and related costs for clearing agencies under proposed Rule
17Ad-26. The Commission believes that the one-time cost to a clearing
agency imposed by the rule would be approximately $95,827,
corresponding to a one-time aggregate cost to all clearing agencies of
approximately $1,629,059.\301\
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    \301\ This figure was calculated as follows: ((Assistant General
Counsel for 87 hours at $430 per hour) + (Compliance Attorney for 77
hours at $320 per hour) + (Computer Operations Department Manager
for 23 hours at $367 per hour) + (Senior Business Analyst for 23
hours at $232 per hour)) = $75,827 + $20,000 in one-time outside
legal costs = $95,827 x 17 respondent clearing agencies =
$1,629,059. See supra notes 266 and 267.
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    Also involved would be the time of the clearing agency's employees
that would be devoted to maintaining application of the standards to
the incumbent directors, evaluating new directors and evaluating the
incumbent directors on an annual basis. For example, the Commission
preliminarily believes that a compliance attorney at a clearing agency
may be asked to update the clearing agency's standards to clearly
reflect the roles and responsibilities of the clearing agency's
directors. Similarly, time of a compliance attorney may be needed to
amend the standards with respect to director qualifications and
disqualifying factors for service if the clearing agency decides to
make changes to those aspects of its governance standards. The
Commission preliminarily believes that the annual cost to each clearing
agency would be approximately $19,200, corresponding to an annual
aggregate cost to all clearing agencies of approximately $326,000.\302\
In addition, the Commission preliminarily believes that third party
facilitation of the annual review of the incumbent board members would
also impose an ongoing annual cost of $6,000 for each respondent, which
corresponds to a total annual cost of $102,000 in the aggregate for all
respondent clearing agencies.\303\ An employee at the clearing agency
may be expected to help arrange and coordinate such a third-party
review of the clearing agency's board members, which would also factor
into the ongoing, annual cost to a clearing agency.
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    \302\ This figure was calculated as follows: Compliance Attorney
for 60 hours at $320 per hour = $19,200 x 17 respondent clearing
agencies = $326,400. See supra note 268.
    \303\ This figure was calculated as follows: One Consultant for
20 hours at $600 per hour = $12,000 x 17 respondent clearing
agencies = $204,000. See supra note 269.
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H. Proposed Rule 3Cj-1 Designation of Chief Compliance Officer

    Proposed Rule 3Cj-1 would incorporate the requirements of Section
3Cj of the Exchange Act and impose additional requirements. Proposed
Rule 3Cj-1 would require each registered clearing agency to designate a
CCO. Under proposed Rule 3Cj-1(b), the CCO would be responsible for,
among other matters, establishing policies and procedures for the
remediation of non-compliance issues identified by the CCO and
establishing and following appropriate procedures for the prompt
handling of management response, remediation, retesting, and closing of
non-compliance issues.
    Under Proposed Rule 3Cj-1(c), the CCO would also be responsible for
preparing and signing an annual compliance report that contains a
description of (i) the compliance of the clearing agency with respect
to the Federal securities laws and the rules and regulations
thereunder, and (ii) each policy and procedure of the clearing agency
of the compliance officer (including the code of ethics and conflict of
interest policies of the registered clearing agency). This compliance
report must accompany each appropriate financial report of the clearing
agency that is required to be furnished to the Commission pursuant to
the Exchange Act and the rules thereunder and include a certification
that, under penalty of law, the compliance report is accurate and
complete.
    Additionally, the compliance report would be required to: (i) Be
submitted to the board of directors and audit committee (or equivalent
bodies) of the clearing agency promptly after the date of execution of
the required certification and prior to filing of the report with the
Commission; (ii) be filed with the Commission in a tagged data format
in accordance with the instructions contained in the EDGAR Filer
Manual, as described in Rule 301 of Regulation S-T; and (iii) be filed
with the Commission within 60 days after the end of the fiscal year
covered by such report.
1. Benefits
    Proposed Rule 3Cj-1 is designed to ensure that clearing agencies
comply with Federal securities laws, including the Exchange Act and the
rules and

regulations promulgated thereunder. Although entities currently
operating as clearing agencies already may have CCOs in place, Section
3C(j) of the Exchange Act and proposed Rule 3Cj-1 would make it a
required practice.
    The designation of a CCO would help ensure that each clearing
agency complies with the written policies and procedures it adopts. The
Commission expects requiring this safeguard would in turn facilitate
accurate data reporting by clearing agencies to the Commission and
improve the Commission's understanding of operations across all the
clearing agencies it oversees.
    Proposed Rule 3Cj-1 would focus on creating a compliance structure
that is transparent and minimizes conflicts. Section 3C(j) of the
Exchange Act provides flexibility in permitting the CCO to report
either to the clearing agency's board or to a senior officer. Because
the Commission is concerned that a clearing agency's commercial
interests might discourage a clearing agency's CCO from making
forthright disclosure about compliance failures of the clearing agency,
the proposed rule would insulate the CCO from management pressures by
preventing a senior officer of a clearing agency from removing the CCO
or determining the CCO's compensation without the approval of a
majority of the clearing agency's board. This would provide the benefit
of aligning the CCO's position within the clearing agency with having
the CCO serve as a mechanism that freely encourages compliance.
    The reliability of clearance and settlement services depends on the
integrity of a clearing agency's operations. As a result of the
proposed rule, the accuracy, reliability, and integrity of the clearing
agency 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 clearing agency's compliance with the Exchange Act
(including Section 17A) and the rules and regulations thereunder and
with the relevant clearing agency policies and procedures, will help
ensure that each clearing agency complies with the written policies and
procedures it adopts.
2. Costs
    As discussed in section V.D.6., the Commission preliminarily
believes that there are analogous policies and procedures requirements
for Regulation NMS and in the proposed requirements for security-based
swap data repositories that are informative of the burdens and related
costs for clearing agencies under proposed Rule 3Cj-1.
    The establishment of a designated CCO and compliance with the
accompanying responsibilities of a CCO would impose certain costs on
each clearing agency. The Commission estimates that the average initial
costs associated with establishing policies and procedures for the
remediation of non-compliance issues identified by the CCO and
establishing and following appropriate procedures for the handling,
management response, remediation, retesting, and closing of non-
compliance issues would require approximately 420 hours of employee
time and approximately $40,000 for each clearing agency, and the
average ongoing paperwork cost would be 120 hours for each clearing
agency. In addition, each clearing agency would be required to hire a
CCO to comply with the proposed rules, at an annual cost of
approximately $761,400 for each clearing agency.\304\ Therefore, the
aggregate initial estimated dollar cost per year to each clearing
agency would be approximately $191,654 for each respondent clearing
agency, corresponding to an aggregate initial estimated cost to all
respondent clearing agencies of approximately $3,258,118 \305\ and the
aggregate ongoing estimated dollar cost per year would be approximately
$13,596,600 \306\ to comply with the proposed rule.
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    \304\ This figure was calculated as follows: Chief Compliance
Officer for 1,800 hours at $423 per hour = $761,400. See supra note
279 regarding hourly rates for professionals taken from SIFMA's
Management & Professional Earnings in the Securities Industry 2010,
and modified by the Commission's staff.
    \305\ This figure was calculated as follows: ((Assistant General
Counsel for 87 hours at $430 per hour) + (Compliance Attorney for 77
hours at $320 per hour) + (Computer Operations Department Manager
for 23 hours at $367 per hour) + (Senior Business Analyst for 23
hours at $232 per hour)) = $75,827 x 2 policies and procedures +
$40,000 in one-time outside legal costs = $191,654 x 17 respondent
clearing agencies = $3,258,118. See supra notes 275 and 277.
    \306\ This figure was calculated as follows: Compliance Attorney
for 60 hours at $320 per hour = $19,200 x 2 policies and procedures
= $38,400 + $761,400 for the annual salary of a Chief Compliance