determined to clear a SBS through a clearing agency having its
principal place of business in the United States, this suggests that
the clearing agency has made the SBS eligible for clearing because at
least some U.S. counterparties might wish to trade the SBS as well.
Requiring the SBS to be reported to a registered SDR also would cause a
transaction report of the SBS to be publicly disseminated, thus
promoting price discovery for market participants in the United States
and elsewhere.
---------------------------------------------------------------------------

    \134\ While U.S. regulators also would have access to
information about the SBS through the U.S. clearing agency,
requiring the SBS to be reported to a registered SDR would reduce
the fragmentation of the regulatory data.
---------------------------------------------------------------------------

    It is possible that there could be a clearing agency registered
with the Commission under Section 17A of the Exchange Act \135\ but
having its principal place of business outside the United States.
Although that clearing agency might service U.S. persons, it also would
likely provide clearing services to many non-U.S. persons. The
Commission does not intend for proposed Regulation SBSR to apply to
such non-U.S. persons solely because they clear a SBS through a
clearing agency registered with the Commission but not having its
principal place of business in the United States.\136\ However,
proposed Regulation SBSR would apply with respect to that SBS if either
counterparty were a U.S. person, or if the SBS had been executed in the
United States or through any means of interstate commerce (including by
clearing through a clearing agency having its principal place of
business in the United States).
---------------------------------------------------------------------------

    \135\ 15 U.S.C. 78q-1.
    \136\ For example, assume that Clearing Agency A has its
principal place of business in an E.U. member state, but is also
registered as a clearing agency in the United States under Section
17A of the Exchange Act because it has sufficient contacts with U.S.
participants to require registration under Section 17A. Assume
further that Counterparty X executes a SBS with Counterparty Y, both
X and Y are each domiciled in an E.U. member state, the SBS is
executed in an E.U. member state and does not involve any means of
interstate commerce in the United States. Under proposed Rule 908,
this SBS would not be required to be reported to a registered SDR
solely because it was cleared by a clearing agency registered under
Section 17A.
---------------------------------------------------------------------------

    It should be noted that a registered SDR could receive reports of
foreign SBS transactions that are not required to be reported pursuant
to proposed Rule 908(a). The registered SDR may determine to publicly
disseminate reports of such foreign SBS transactions, but would not be
required to do so by proposed Regulation SBSR.

B. When is a counterparty to a SBS subject to Regulation SBSR?

    Proposed Rule 908(b) would provide that, notwithstanding any other
provision of Regulation SBSR, no counterparty to a SBS would incur any
obligation under Regulation SBSR unless it is: (1) A U.S. person; (2) a
counterparty to a SBS executed in the United States or through any
means of interstate commerce; or (3) a counterparty to a SBS cleared
through a clearing agency having its principal place of business in the
United States. For the reasons discussed above, the Commission
preliminarily believes that, if a U.S. person executes a SBS anywhere
in the world, that U.S. person should become subject to Regulation
SBSR.
    Non-U.S. persons who are counterparties to U.S. persons could,
therefore, have SBSs to which they are counterparties reported to and
held by a registered SDR. If none of these SBSs were executed in the
United States or through any means of interstate commerce, however, the
non-U.S. person would not become a ``participant'' of the registered
SDR and would not become subject to proposed Regulation SBSR.\137\
Thus, the non-U.S. person would not have to provide any UICs pursuant
to proposed Rule 906(a) or parent and affiliate information to a
registered SDR pursuant to proposed Rule 906(b).
---------------------------------------------------------------------------

    \137\ See proposed Rule 900 (defining ``participant'' as (1) A
U.S. person that is a counterparty to an SBS that is required to be
reported to a registered SDR; or (2) A non-U.S. person that is a
counterparty to an SBS that is (i) required to be reported to a
registered SDR; and (ii) that is executed in the United States or
through any means of interstate commerce, or cleared through a
clearing agency having its principal place of business in the United
States).
---------------------------------------------------------------------------

C. An Example

    Assume that X (a U.S. bank) enters into an SBS with Y (a Japanese
bank). The SBS is effected in Japan, involves no means of interstate
commerce, and is not cleared by a clearing agency having its principal
place of business in the United States. Because the SBS has at least
one counterparty that is a U.S. person, proposed Rule 908(a)--which
describes when an SBS is not required to be reported because it is
outside the jurisdiction of the Exchange Act--would not apply.
Therefore, the SBS must be reported to a registered SDR. X would be the
reporting party, as proposed Rule 901(a)(1) provides that, where only
one counterparty to an SBS is a U.S. person, the U.S. person shall be
the reporting party. X also would be a participant because it is a U.S.
person that is a counterparty to an SBS that is required to be reported
to a registered SDR. However, Y would not be a participant under
proposed Rule 900, and would incur no obligations under proposed
Regulation SBSR. Although the SBS is required to be reported to a
registered SDR, the SBS was not executed in the United States or
through any means of interstate commerce, or cleared through a clearing
agency having its principal place of business in the United States.
Thus, the Commission anticipates that there would be some SBSs reported
to and captured by a registered SDR where only one counterparty of the
SBS is a participant.

IX. Fair and Non-Discriminatory Access to SBS Market Data

A. SBS Market Data Disseminated by Registered SDRs

    As noted above, the Commission preliminarily believes that post-
trade transparency could spur significant improvements in the SBS
market. Some of the benefits could include greater price competition,
lower transaction

costs, enhanced liquidity, and improved ability of market participants
to value their positions. Therefore, fair access to last-sale data
appears critical--particularly since registered SDRs would collectively
have data on all SBSs executed in the market. The Commission
preliminarily believes that market observers should not be forced to
pay excessive fees or be subject to unfair usage restrictions imposed
by registered SDRs. The Commission therefore seeks to ensure that these
data feeds would be available to all market observers on terms that are
fair and reasonable and not unreasonably discriminatory.
    In a separate rulemaking proposal regarding the registration and
regulation of SDRs being issued today, the Commission is proposing
rules that would require SDRs to comply with certain core principles.
To comply with these core principles, an SDR would be required, among
other things, to establish and enforce clearly stated and objective
criteria that would permit fair, open, and not unreasonably
discriminatory access to services offered and data that would be
disseminated by the SDR, as well as fair, open, and not unreasonably
discriminatory participation by market participants, market
infrastructures, venues from which data could be submitted to the SDR,
and third-party service providers that seek to connect or link with the
SDR.\138\ In addition, an SDR would be required to establish policies
and procedures for reviewing any prohibition or limitation of any
person's access to services offered, directly or indirectly, or data
maintained and disseminated by the SDR, and--if it finds that the
person has been discriminated against unfairly--granting to such person
access to its services or data.\139\
---------------------------------------------------------------------------

    \138\ See proposed Rule 13n-4(c)(1)(iv) under the Exchange Act.
    \139\ See proposed Rule 13n-4(c)(1)(v) under the Exchange Act.
---------------------------------------------------------------------------

    A registered SDR also would become subject to certain provisions of
Section 11A of the Exchange Act\140\ because it would be a SIP, as
defined by Section 3(a)(22)(A) of the Exchange Act.\141\ Section
11A(c)(1) of the Exchange Act \142\ provides that the Commission may
prescribe rules applying to SIPs (among other entities) that would
require them (among other things) to assure ``the fairness and
usefulness of the form and content'' of the information that they
disseminate,\143\ and to assure ``all other persons may obtain on terms
which are not unreasonably discriminatory'' the transaction information
published or distributed by SIPs.\144\ Section 11A(c)(1) applies
regardless of whether a SIP is registered with the Commission as such.
---------------------------------------------------------------------------

    \140\ 15 U.S.C. 78k-1.
    \141\ 15 U.S.C. 78c(a)(22)(A) (defining SIP as ``any person
engaged in the business of (i) collecting, processing, or preparing
for distribution or publication, or assisting, participating in, or
coordinating the distribution or publication of, information with
respect to transactions in or quotations for any security (other
than an exempted security) or (ii) distributing or publishing
(whether by means of a ticker tape, a communications network, a
terminal display device, or otherwise) on a current and continuing
basis, information with respect to such transactions or
quotations''). SBSs are securities under the Exchange Act. See 15
U.S.C. 78c(a)(10). Further, pursuant to proposed Regulation SBSR, a
registered SDR would collect SBS transaction reports from
participants and participate in the distribution of such reports
and, thus, would be a SIP for purposes of the Exchange Act.
    \142\ 15 U.S.C. 78k-1(c)(1).
    \143\ 15 U.S.C. 78k-1(c)(1)(B).
    \144\ 15 U.S.C. 78k-1(c)(1)(D).
---------------------------------------------------------------------------

    Section 11A(b)(1) of the Exchange Act \145\ provides that a SIP not
acting as the ``exclusive processor'' \146\ of any information with
respect to quotations for or transactions in securities is exempt from
the requirement to register with the Commission as a SIP unless the
Commission, by rule or order, determines that the registration of such
SIP ``is necessary or appropriate in the public interest, for the
protection of investors, or for the achievement of the purposes of
[Section 11A].'' Requiring a registered SDR to register with the
Commission as a SIP would subject that entity to Section 11A(b)(5) of
the Exchange Act,\147\ which provides that a registered SIP must notify
the Commission whenever it prohibits or limits any person's access to
its services. Upon its own motion or upon application by any aggrieved
person, the Commission could review the registered SIP's action.\148\
If the Commission finds that the person has been discriminated against
unfairly, it could require the SIP to provide access to that
person.\149\ Section 11A(b)(6) of the Exchange Act also provides the
Commission authority to take certain regulatory action as may be
necessary or appropriate against a registered SIP.\150\
---------------------------------------------------------------------------

    \145\ 15 U.S.C. 78k-1(b)(1).
    \146\ 15 U.S.C. 78c(a)(22)(B) (defining ``exclusive processor''
as any securities information processor or self-regulatory
organization which, directly or indirectly, engages on an exclusive
basis on behalf of any national securities exchange or registered
securities association, or any national securities exchange or
registered securities association which engages on an exclusive
basis on its own behalf, in collecting, processing, or preparing for
distribution or publication any information with respect to (1)
transactions or quotations on or effected or made by means of any
facility of such exchange or (2) quotations distributed or published
by means of any electronic system operated or controlled by such
association).
    \147\ 15 U.S.C. 78k-1(b)(5).
    \148\ See 15 U.S.C. 78k-1(b)(5)(A).
    \149\ See 15 U.S.C. 78k-1(b)(5)(B).
    \150\ See 15 U.S.C. 78k-1(b)(6) (providing that the Commission,
by order, may censure or place limitations upon the activities,
functions, or operations of any registered SIP or suspend for a
period not exceeding 12 months or revoke the registration of any
such processor, if the Commission finds, on the record after notice
and opportunity for hearing, that such censure, placing of
limitations, suspension, or revocation is in the public interest,
necessary or appropriate for the protection of investors or to
assure the prompt, accurate, or reliable performance of the
functions of such SIP, and that such SIP has violated or is unable
to comply with any provision of this title or the rules or
regulations thereunder).
---------------------------------------------------------------------------

    The Commission preliminarily believes that the additional authority
over a registered SDR/SIP provided by Sections 11A(b)(5) and 11A(b)(6)
of the Exchange Act would help ensure that these entities offer their
SBS market data on terms that the Commission believes would be fair and
reasonable and not unreasonably discriminatory. Therefore, the
Commission preliminarily believes that the registration of SDRs as SIPs
would be necessary or appropriate in the public interest, for the
protection of investors, or for the achievement of the purposes of
Section 11A of the Exchange Act. Section 11A of the Exchange Act
establishes broad goals for the development of the securities markets
and charges the Commission with establishing rules and policies that
are designed to further these objectives. Section 11A(a) states, among
other things, that it is in the public interest and appropriate for the
protection of investors and the maintenance of fair and orderly markets
to assure economically efficient execution of securities transactions;
the availability to brokers, dealers, and investors of information with
respect to quotations for and transactions in securities; and an
opportunity for investors' orders to be executed without the
participation of a dealer. SIP registration could assist in achieving
these objectives in the still-developing SBS market. Therefore, the
Commission preliminarily believes that the registration of SDRs as SIPs
would be necessary or appropriate in the public interest, for the
protection of investors, or for the achievement of the purposes of
Section 11A. Accordingly, the Commission is proposing Rule 909, which
would require a registered SDR to register with the Commission as a
SIP.\151\
---------------------------------------------------------------------------

    \151\ A registered SDR would register as a SIP by filing
(existing) Form SIP with the Commission.
---------------------------------------------------------------------------

B. SBS Market Data Disseminated by Other Market Participants

    The measures described above are designed to ensure that SBS market
data

disseminated by registered SDRs is available to the public on terms
that are fair and reasonable and not unreasonably discriminatory. This
is particularly important since all SBS must be reported to a
registered SDR,\152\ and registered SDRs exclusively would have the
responsibility under proposed Regulation SBSR to publicly disseminate
SBS transaction data to the public.
---------------------------------------------------------------------------

    \152\ See 15 U.S.C. 78m(m)(1)(G).
---------------------------------------------------------------------------

    Nevertheless, other private sources of market data reflecting
subsets of the SBS market could arise.\153\ Differences in access to
that market data--for example, if some market participants could obtain
the data sooner than others--could create an unfair competitive
landscape. Therefore, the Commission is proposing Rule 902(d), which
would impose a partial and temporary restriction on sources of SBS
market data other than registered SDRs. Proposed Rule 902(d) would
provide that no person (other than a registered SDR) shall make
available to one or more persons (other than a counterparty) a
transaction report of a SBS before the earlier of: (1) 15 minutes after
execution of the SBS; or (2) the time that a registered SDR publicly
disseminates a report of that SBS.
---------------------------------------------------------------------------

    \153\ For example, a SB SEF would have information about SBSs
executed on its systems and could find that commercial opportunities
exist to sell such information.
---------------------------------------------------------------------------

    Under proposed Rule 902(d), the temporary restriction on other
market participants that may wish to disseminate information relating
to a SBS transaction would last no longer than 15 minutes. Under
proposed Regulation SBSR, a transaction report of a SBS would be
expected to be publicly disseminated within 15 minutes of execution.
The Commission preliminarily believes that it is not necessary or
appropriate to require other sources of market data to withhold
dissemination of a transaction report beyond 15 minutes if a registered
SDR is not able to do so in a timely fashion. Proposed Rule 902(d)
would, however, permit the transfer of information of a SBS before
dissemination by a registered SDR to a counterparty to that SBS.
Therefore, one counterparty would be permitted to pass details of the
SBS to the other counterparty, or a SB SEF on which the SBS was
executed could pass details of the SBS to either or both of the
counterparties.
    By proposing Rule 902(d), the Commission seeks to balance the goal
of promoting robust and fair competition among all market
participants--by allowing them to view the same comprehensive source of
SBS market data at the same time--with that of allowing market
participants to devise new value-added market data products.

Request for Comment

    The Commission requests comment on all aspects of its proposal
relating to fair and non-discriminatory access to SBS market data. In
particular:
    160. Do commenters have any potential concerns with market
participants' access to data disseminated by registered SDRs? If so,
what steps should the Commission do to address them?
    161. Do commenters agree with the proposal to require registered
SDRs to register with the Commission as SIPs? Why or why not?
    162. Would SIP registration entail costs and burdens that are
unreasonable or unnecessary in light of the requirements associated
with SDR registration? What additional burdens, if any, would be
associated with SIP registration?
    163. In the SDR Registration Proposing Release, the Commission is
proposing a Form SDR that is similar to but separate from existing Form
SIP. Should the Commission combine Forms SIP and Form SDR such that an
SDR would register as a SIP and SDR using only one form? Or should the
elements necessary for registration as an SDR be a supplement to Form
SIP? Are there any specific items on Form SIP that should be added to
Form SDR that would help to facilitate the registration process?
    164. Would it be beneficial for aggrieved persons to have the
ability to request that the Commission review a registered SDR's
prohibition or limitation on access its services, as contemplated by
Section 11A(b)(5) of the Exchange Act? Are there any concerns with
applying Section 11A(b)(5) to registered SDRs?
    165. Are there additional means by which the Commission can or
should attempt to ensure that the market data fees and usage
restrictions imposed by registered SDRs are fair and reasonable and not
unreasonably discriminatory? If so, please describe.
    166. Should market participants other than a registered SDR be
prohibited from distributing their SBS market data before transactions
are disseminated by a registered SDR? Why or why not?
    167. Do commenters anticipate that market participants other than
registered SDRs will seek to sell SBS market data? Do commenters have a
view as to whether those additional market data products would compete
with or complement the required market data feed from registered SDRs?
    168. Would proposed Rule 902(d) unnecessarily inhibit competition
and innovation in the provision of value-added market data services or
products? Please be specific in your response.
    169. Are there alternative means to better ensure that all market
participants have full and fair access to SBS market data other than
placing a restriction on sources other than the registered SDRs? If so,
what are they and why would they be preferable to the proposal?
    170. Would competitive forces act to ensure that all market
participants have full and fair access to SBS market data?
    171. If commenters agree with proposed Rule 902(d), is 15 minutes
an appropriate length to restrict market participants other than
registered SDRs from disseminating SBS transaction data? Do commenters
think that period is too long or too short? Please be specific in your
response.
    172. Should market participants other than registered SDRs that
publicly disseminate SBS transaction information be subject to the same
requirements regarding dissemination of block trades as registered
SDRs?

X. Implementation Timeframes

    Proposed Rule 910 is designed to provide clarity as to SBS
reporting and dissemination timelines and to establish a phased-in
compliance schedule for those subject to proposed Regulation SBSR. The
Commission acknowledges that the system for reporting and dissemination
described in proposed Regulation SBSR would take a significant amount
of time and resources to implement effectively. While the Commission is
committed to fully implementing Congress's directive to require real-
time public reporting of all SBSs, market participants will need a
reasonable period in which to acquire or configure the necessary
systems, engage and train the necessary staff, and develop and
implement the necessary policies and procedures to implement the
proposed rules. The Commission preliminarily believes that the proposed
compliance timeframes described below should provide sufficient time
for reporting parties and SDRs to make the necessary technological and
other preparations needed to begin reporting and disseminating SBS
information, respectively, as required under proposed Regulation SBSR.

A. Compliance Schedule

    The Commission is proposing a phased-in compliance schedule, with
respect to a SDR that registers with the Commission, as follows:

     Reporting of pre-enactment SBSs, no later than January 12,
2012.
    Proposed Rule 910(a) would require reporting parties to report to a
registered SDR any pre-enactment SBSs subject to reporting under
proposed Rule 901(i) no later than January 12, 2012 (180 days after the
effective date of the Dodd-Frank Act).\154\ Proposed Rule 900 would
define pre-enactment SBS to mean any SBS executed before July 21, 2010
(the date of enactment of the Dodd-Frank Act), the terms of which had
not expired as of that date. The Commission notes that Section 3C(e)(1)
of the Exchange Act \155\ requires SBSs entered into before the date of
enactment of Section 3C to be reported to a registered SDR or the
Commission no later than 180 days after the effective date of Section
3C (i.e., no later than January 12, 2012). The proposed timeframe would
help the Commission obtain relevant information about SBS transactions
necessary to prepare reports required by the Dodd-Frank Act. Further,
proposed Rule 910 would help promote timely implementation of
Regulation SBSR, and thereby facilitate achievement of the goals
articulated in the Dodd-Frank Act.
---------------------------------------------------------------------------

    \154\ See supra Section IV.F (discussing reporting requirements
for pre-enactment SBSs).
    \155\ 15 U.S.C. 78c-3(e)(1).
---------------------------------------------------------------------------

     Phase 1, six months after the registration date (i.e., the
effective reporting date): \156\ Reporting parties shall begin
reporting, pursuant to proposed Rule 901, all SBS transactions executed
on or after the effective reporting date; reporting parties also shall
report to the registered SDR any transitional SBSs; \157\ SBS dealers
and major SBS participants shall comply with proposed Rule 906(c);
\158\ participants and the registered SDR must comply with proposed
Rule 905 \159\ (except with respect to dissemination) and proposed
Rules 906(a) and (b).\160\
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    \156\ See proposed Rule 900 (defining ``registration date,''
with respect to a SDR, as the date on which the Commission registers
the SDR, or, if the Commission registers the SDR before the
effective date of proposed Regulation SBSR, the effective date of
proposed Regulation SBSR; and ``effective reporting date,'' with
respect to a SDR, as the date six months after the registration
date).
    \157\ See supra Section IV.F (discussing reporting requirements
for transitional SBSs).
    \158\ Proposed Rule 906(c) would require each SBS dealer and
major SBS participant to establish, maintain, and enforce written
policies and procedures that are reasonably designed to ensure that
it complies with any reporting obligations under proposed Regulation
SBSR.
    \159\ Proposed Rule 905, among other things, would require a
registered SDR to correct erroneous information with respect to
SBSs.
    \160\ Proposed Rule 906(a) would require a registered SDR to
notify participants at least once a day of SBSs for which the
registered SDR lacks a participant ID, broker ID, desk ID, or trader
ID. Proposed Rule 906(b) would require participants to provide to
the registered SDR information sufficient to identify its ultimate
parent(s) and any affiliate(s) of the participant that also are
participants of the registered SDR.
---------------------------------------------------------------------------

    The Commission preliminarily believes that, before reporting
parties and other participants could be expected to comply with
proposed Regulation SBSR, they must first know the policies and
procedures of the registered SDR that would receive and hold
transaction information regarding their SBSs.\161\ Phase 1 would
provide time for SBS dealers and major SBS participants to establish
their own policies and procedures, and implement necessary systems
changes, for complying with proposed Regulation SBSR and the policies
and procedures of the registered SDR. On the effective reporting date,
participants would be required to begin reporting SBSs to the
registered SDR in a manner consistent with proposed Rule 901, including
providing the real-time reports required by proposed Rule 901(c) and
the additional, regulatory SBS information required by proposed Rule
901(d). At that time, however, the registered SDR would not yet
publicly disseminate any transaction reports.
---------------------------------------------------------------------------

    \161\ As discussed in the SDR Registration Proposing Release, a
data repository seeking to register with the Commission would have
to provide the policies and procedures required by proposed Rule 907
as part of its application for registration. See SDR Registration
Proposing Release, supra note 6.
---------------------------------------------------------------------------

    Also on the effective reporting date, the registered SDR would be
required to begin preparing reports to each participant of any missing
UICs, and any participant receiving such a report would have to begin
providing the missing UICs to the registered SDR. The registered SDR
and its participants also would become subject to the error correction
requirements of proposed Rule 905 at this time, except that the
registered SDR would not yet be required to publicly disseminate any
corrected transaction reports (since it would not have disseminated a
report of the initial transaction).
    Finally, the Commission notes that proposed Rules 901(i)
(establishing reporting requirements for pre-enactment and transitional
SBSs), 910(a) (requiring the reporting of pre-enactment SBSs by January
12, 2012), and 910(b)(2)(i) (requiring the reporting of transitional
SBSs by the effective reporting date) are together designed to assure
that a registered SDR would obtain a complete view of each
participant's open SBS positions by the time that the registered SDR is
about to both receive and publicly disseminate transaction reports of
SBSs.
     Phase 2, nine months after the registration date: Wave 1
of public dissemination; the registered SDR would be required to comply
with proposed Rules 902 and 905 (with respect to dissemination of
corrected transaction reports) for 50 SBS instruments.
    Nine months after the registration date and three months after the
effective reporting date, the registered SDR would be required to begin
disseminating transaction reports as follows: The registered SDR, in
consultation with the Commission's staff, would select 50 SBS
instruments for which it receives and holds transaction data. Beginning
on the date nine months after the registration date and continuing
every day thereafter, the registered SDR would be required to publicly
disseminate transaction reports in real time for those 50 SBS
instruments, including with respect to block trades. The three-month
period between the beginning of Phase 2 and the beginning of Phase 3
would allow the registered SDR a sufficient number of days to calculate
and publish the block trade levels for those 50 SBS instruments. Also
in Phase 2, the registered SDR would be required to begin disseminating
any corrected reports required by proposed Rule 905 for those 50 SBS
instruments. The Commission preliminarily believes, based on its
experience implementing aspects of Regulation NMS, that the public
dissemination of transaction reports for 50 SBS instruments is
appropriate in Phase 2.
     Phase 3, 12 months after the registration date: Wave 2 of
public dissemination; the registered SDR must comply with proposed
Rules 902 and 905 (with respect to dissemination of corrected
transaction reports) for an additional 200 SBS instruments.
    Twelve months after the registration date and six months after the
effective reporting date, the registered SDR would be required, in
consultation with the Commission's staff, to select an additional 200
SBS instruments for which to publicly disseminate transaction reports
in real time, apply the block trade exception with respect to those 250
SBS instruments, and disseminate any corrected transaction reports
required by proposed Rule 905 for those 250 SBS instruments. The
Commission preliminarily believes, based on its experience implementing
aspects of Regulation NMS, that the public dissemination of transaction
reports for 250 SBS instruments is appropriate in Phase 3.

     Phase 4, 18 months after the registration date: Wave 3 of
public dissemination; All SBSs reported to the registered SDR shall be
subject to real-time public dissemination as specified in Rule 902.
    Eighteen months after the registration date, proposed Regulation
SBSR would become operative with respect to every SBS transaction
reported to and held by the registered SDR. The Commission
preliminarily believes, based on its experience implementing aspects of
Regulation NMS, that requiring public dissemination of all SBSs
reported to the registered SDR is appropriate in Phase 4.

B. Prohibition During Phase-In Period

    Proposed Rule 911 is designed to prevent evasion of the post-trade
transparency rules. The rule would provide that a reporting party shall
not report a SBS to a registered SDR in a phase-in period described in
proposed Rule 910 during which the registered SDR is not yet required
to publicly disseminate transaction reports for that SBS instrument
unless: (1) The SBS also is reported to a registered SDR that is
disseminating transaction reports for that SBS instrument, consistent
with proposed Rule 902; or (2) no other registered SDR is able to
receive, hold, and publicly disseminate transaction reports regarding
that SBS instrument.
    The Commission is concerned that the development of new SDRs not be
used to undermine the goal of post-trade transparency for SBSs. This
could occur, for example, if a SDR were registered with the Commission,
and--pursuant to proposed Rule 910--the SDR were in a phase-in period
when it was not yet required to publicly disseminate transactions.
Participants in an existing registered SDR could seek to report their
SBSs to the second instead of the first registered SDR during the
former's phase-in period, to avoid having their SBS transactions
publicly disseminated in real time.
    Under proposed Rule 911, counterparties would be permitted to
report any SBS to the first registered SDR, even though the first
registered SDR was in a phase-in period and not yet publicly
disseminating transaction reports, because no other registered SDR
could do so, either. However, if a later SDR registers and enters a
phase-in period, participants would not be permitted to report SBSs
exclusively to the subsequent registered SDR before it is required or
able under proposed Rule 910 to disseminate transaction reports, if an
earlier registered SDR could receive, hold, and publicly disseminate
transaction reports for that SBS. Thus, a participant could report the
SBS to both registered SDRs: To the newer one, to assist with
operational testing; and to the operating one, to ensure that a trade
report for that SBS was publicly disseminated in real time.

Request for Comment

    The Commission requests comment on all aspects of the proposed
rules relating to the proposed implementation of proposed Regulation
SBSR, as provided in proposed Rules 910 and 911.
    173. Are the proposed timeframes for reporting with respect to pre-
enactment SBSs sufficiently clear?
    174. Are the obligations applicable to registered SDRs,
counterparties, and participants in each phase of the proposed phase-in
schedule sufficiently clear? If not, what obligations are unclear?
Please be specific in your response.
    175. Do commenters generally agree with the proposed phase-in
approach to implementation of the reporting timeframes contained in
proposed Rule 910? Is the proposed phase-in schedule generally
appropriate to allow reporting parties and registered SDRs sufficient
time to implement the requirements of proposed Regulation SBSR? If not,
why not? What period of time would be sufficient?
    176. Do commenters believe that registered SDRs would be able to
meet the requirements of proposed Phase 1? Why or why not? If three
months after the SDR's registration date is not a sufficient amount of
time to comply with proposed Rule 907, what amount of time would be
sufficient? Do commenters believe that registered SDRs would need
additional time to develop and implement certain policies and
procedures that would be required under proposed Rule 907? If so, why,
and which policies and procedures would require additional time to
develop and implement?
    177. Do commenters believe that registered SDRs, reporting parties,
and participants would be able to satisfy their respective obligations
under proposed Phase 2 within the proposed time frame? Why or why not?
Would SBS counterparties and participants be able to comply,
respectively, with proposed Rules 901 and 906(b) and (c) within the
time frame specified in Phase 2? Why or why not? If not, what amount of
time would be sufficient? Would counterparties or participants require
additional time to comply with certain requirements in proposed Phase
2? If so, which requirement(s), and what additional amount of time
would be necessary? Would counterparties and participants have adequate
time to make any necessary systems changes to comply with the
requirements in proposed Phase 2?
    178. Would registered SDRs be able to correct erroneous information
and notify counterparties of missing UICs within the time frame
specified in Phase 2? Why or why not? If not, what amount of time would
be adequate?
    179. Do commenters believe that registered SDRs would be able to
begin publicly disseminating SBS information, including corrected
reports, and publicizing block trade levels, as would be required in
proposed Phase 3? Why or why not? Would any specific requirement in
proposed Phase 3 require additional time to implement? If so, which
requirement(s), and what amount of time would be sufficient?
    180. Do commenters believe that real-time public dissemination of
SBS transaction reports should be required to commence for 50 SBS
instruments nine months after the registration date? Should that period
be longer or shorter? For example, should it be 12 months after the
registration date? If so, why? Should the first wave of public
dissemination be for more SBS instruments--perhaps 100? 200? Why or why
not?
    181. Do commenters generally agree with the proposed implementation
schedule that would require public dissemination of SBSs in three
Waves, as provided in proposed Phases 3, 4, and 5? Why or why not? If
not, what approach would be more appropriate?
    182. Should there be longer periods between Waves? If so, how long?
    183. Is 50 SBSs an appropriate number of SBSs to include in
proposed Phase 3? Why or why not? If not, what number would be
appropriate?
    184. Is it appropriate to require public dissemination of an
additional 200 SBSs in proposed Phase 4? Why or why not?
    185. What criteria should be used to choose the first 50 and second
200 SBSs be publically disseminated?
    186. Do commenters believe that registered SDRs would be able to
begin publicly disseminating all SBSs reported to the SDR 18 months
after registration, as would be required under proposed Phase 5? Why or
why not? If 18 months is not a sufficient amount of time, what amount
of time would be sufficient?
    187. Do commenters agree with the objective of proposed Rule 911?
Why or why not?
    188. Do commenters agree with the requirements of proposed Rule
911? Why or why not? Please be specific in your response. Do commenters
believe that the Commission should take a

different approach to preventing potential evasions of the post-trade
transparency rules? If so, what approach would be more appropriate?
Please be specific in your response.
    189. Under proposed Rule 910, the Commission would require a newly
registered SDR to begin publicly disseminating trade reports for 50 SBS
instruments beginning nine months after its registration date, and for
an additional 200 SBS instruments beginning 12 months after its
registration date. The registered SDR would be required at those times
to calculate block trade thresholds in accordance with proposed Rule
907(b) and to disseminate reports of block trades in accordance with
proposed Rule 902(b) with respect to those initial 50 and subsequent
200 instruments. Under proposed Rule 902(b), the registered SDR would
be required to publicly disseminate a transaction report of the block
trade with all transaction details other than notional size, and to
disseminate the full trade report (including the notional size) at a
later time. Should the Commission instead, during the phase-in period,
provide for different approaches to publicly disseminating block trades
in order to measure their associated cost to market participants? The
Commission could require--at least for the phase-in period, but perhaps
beyond--that different SBS instruments or transactions be subject to
different block trade dissemination rules, to provide the Commission
and market participants the opportunity to assess the relative costs
and benefits of different approaches. For example, one group of SBS
instruments or transactions could be subject to block trade
dissemination mechanism described in proposed Rule 902(b). A second
group could be subject to a regime where the full details of the
transaction (including notional size) were disseminated, but with a
one-hour delay, a third group could be subject to a regime where the
full details were disseminated with a three-hour delay, and so on.
Would commentators support or oppose such an approach? Why? Are there
other approaches that should be considered in order to evaluate the
impact of different post-trade transparency regimes for block trades on
market quality? How long should each portion of the phase-in continue
and what variation in the number and type of SBS instruments or
transactions would be needed in each group to support a statistical
analysis to distinguish between the potentially different effects on
the markets resulting from distinct post-trade dissemination
requirements?

XI. Section 31 Fees

    Section 31(c) of the Exchange Act \162\ provides that a national
securities association must pay fees based on the ``aggregate dollar
amount of sales transacted by or through any member of such association
otherwise than on a national securities exchange of securities * * *
registered on a national securities exchange or subject to prompt last
sale reporting pursuant to the rules of the Commission or a registered
national securities association.'' Pursuant to Section 761(a) of the
Dodd-Frank Act,\163\ SBSs are securities.\164\ When proposed Regulation
SBSR becomes effective, SBSs will be subject to prompt last-sale
reporting pursuant to the rules of the Commission because they will be
subject to real-time public dissemination. Therefore, a national
securities association the members of which effect SBS sales other than
on an exchange (including on a SB SEF) would be liable for Section 31
fees for any such sales.\165\ A national securities association
typically obtains funds to pay its Section 31 fees by imposing on its
members an offsetting fee on covered sales, and would likely take the
same approach with respect to SBSs.
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    \162\ 15 U.S.C. 78ee(c).
    \163\ 15 U.S.C. 78c(a).
    \164\ See 15 U.S.C. 78c(a)(10).
    \165\ National securities exchanges also would be liable for
fees in connection with transactions in SBSs that they execute. See
15 U.S.C. 78ee(b).
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    Under the Exchange Act, brokers and dealers are required to join a
national securities association.\166\ The Dodd-Frank Act also provides
for the registration of SBS dealers \167\ and correspondingly amends
the definition of ``dealer'' under the Exchange Act to exempt from the
definition of dealer any person engaged in the business of buying and
selling SBSs, other than SBSs with or for persons that are not eligible
contract participants.\168\ Under the new definition of ``dealer,'' a
SBS dealer that buys and sells SBSs--other than with or for persons
that are not eligible contract participants--would not be required to
register as a dealer under the Exchange Act and thus would not be
required to join a national securities association.
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    \166\ See 15 U.S.C. 78o(b)(8) (``It shall be unlawful for any
registered broker or dealer to effect any transaction in, or induce
or attempt to induce the purchase or sale of, any security (other
than or [sic] commercial paper, bankers' acceptances, or commercial
bills), unless such broker or dealer is a member of a securities
association registered pursuant to section 78o-3 of this title or
effects transactions in securities solely on a national securities
exchange of which it is a member.''). In addition, Rule 15b9-1(a)
under the Exchange Act, 17 CFR 240.15b9-1(a), provides that any
broker or dealer required by Section 15(b)(8) of the Exchange Act to
become a member of a registered national securities association
shall be exempt from such requirement if it (1) is a member of a
national securities exchange, (2) carries no customer accounts, and
(3) has annual gross income derived from purchases and sales of
securities otherwise than on a national exchange of which it is a
member in an amount no greater than $1,000. The gross income
limitation does not apply to income derived from transactions (1)
for the dealer's own account with or through another registered
broker or dealer, or (2) through the Intermarket Trading System. See
17 CFR 240.15b9-1(b).
    \167\ See 15 U.S.C. 78o-8 (``The term `dealer' means any person
engaged in the business of buying and selling securities (not
including security-based swaps, other than security-based swaps with
or for persons that are not eligible contract participants) for such
person's own account through a broker or otherwise''); 15 U.S.C.
78c(71) (defining a security-based swap dealer ``any person who--(i)
holds themself out as a dealer in security-based swaps; (ii) makes a
market in security-based swaps; (iii) regularly enters into
security-based swaps with counterparties as an ordinary course of
business for its own account; or (iv) engages in any activity
causing it to be commonly known in the trade as a dealer or market
maker in security-based swaps'').
    \168\ See 15 U.S.C. 78c(a)(5).
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    Because the Dodd-Frank Act did not make corresponding changes for
SBS brokers, a SBS broker would be considered a broker for purposes of
the Exchange Act.\169\ Thus, brokers that buy or sell SBSs, SBS dealers
that buy and sell SBSs with or for persons that are not eligible
contract participants, and SBS dealers that buy and sell securities
other than SBSs would be required to join a national securities
association. However, SBS dealers that buy and sell only securities
that are SBSs would not be required to register as dealers under the
Exchange Act and thus would not be required to join a national
securities association.
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    \169\ See 15 U.S.C. 78c(a)(4).
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    The Commission is proposing to exempt SBSs from the calculation of
Section 31 fees.\170\ This exemption is designed to provide a more
level playing field among SBS market participants. A national
securities association would be able to collect funds to pay its
Section 31 fees only from SBS market participants that are required to
register with it. It would be unable to collect such member fees from
SBS dealers that are not required to register with it. Thus, absent an
exemption for all SBSs, the burden of indirectly paying the Section 31
fees would fall on some SBS market participants but not others.
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    \170\ 15 U.S.C. 78ee(f) (``The Commission, by rule, may exempt
any sale of securities or any class of sales of securities from any
fee or assessment imposed by this section, if the Commission finds
that such exemption is consistent with the public interest, the
equal regulation of markets and brokers and dealers, and the
development of a national market system.'').

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    In addition, the Commission proposes to revise Rule 31(a)(10)(ii)
under the Exchange Act \171\ to conform the definition of ``due date''
in that rule to Section 31(e)(2) of the Exchange Act, as amended by
Section 991 of the Dodd-Frank Act. This amendment provides that certain
fees and assessments required under Section 31 will be required to be
paid by September 25, rather than September 30.\172\ The Commission
proposes to make a corresponding amendment to the definition of ``due
date'' in Rule 31(a)(10)(ii) under the Exchange Act by replacing the
reference to ``September 30'' in that rule with a reference to
``September 25.''
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    \171\ 17 CFR 240.31(a)(10)(ii).
    \172\ Section 991 of the Dodd-Frank Act provides, in relevant
part: ``(1) AMENDMENTS.--Section 31 of the Securities Exchange Act
of 1934 (15 U.S.C. 78ee) is amended * * * in subsection (e)(2), by
striking `September 30' and inserting `September 25'.''
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Request for Comment

    190. Do commenters agree with the proposal to exempt SBSs from
Section 31 fees? Why or why not?
    191. How much transaction volume in SBSs would the Commission be
exempting from Section 31 fees on an annual basis?
    192. If the Commission did not exempt SBSs from Section 31 fees,
how would a national securities association obtain funds to pay the
fees? Would the offsetting fees imposed on members of the national
securities association be fairly distributed?
    193. Do commenters agree that the proposed exemption would create a
more level playing field among SBS market participants? Why or why not?
    194. Absent the proposed exemption from Section 31 fees for SBSs,
would there be difficulties in collecting Section 31 fees for mixed
swaps (which are included with the definition of ``security-based
swap'' and are thus securities)?

XII. General Request for Comment

    Title VII of the Dodd-Frank Act requires the SEC to consult and
coordinate to the extent possible with the CFTC for the purposes of
assuring regulatory consistency and comparability, to the extent
possible,\173\ and states that in adopting rules, the CFTC and SEC
shall treat functionally or economically similar products or entities
in a similar manner.\174\
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    \173\ See Section 712(a)(2) of the Dodd-Frank Act.
    \174\ See Section 712(a)(7) of the Dodd-Frank Act.
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    The CFTC is adopting rules related to the reporting of swaps and
the public dissemination of swap transaction, pricing, and volume data,
as required under Sections 723, 727, and 729 of the Dodd-Frank Act.
Understanding that the Commission and the CFTC regulate different
products and markets and, as such, appropriately may be proposing
alternative regulatory requirements, the Commission requests comment on
the impact of any differences between the Commission and CFTC
approaches to the regulation of the reporting of swaps and SBSs and the
public dissemination of swap and SBS transaction, pricing, and volume
information.
    In addition, legislatures and regulators in other jurisdictions are
undertaking efforts to improve regulation in the market for OTC
derivatives, including security-based swaps. The Commission requests
comment generally on the impact of any differences between the
Commission's proposed approach to the reporting and public
dissemination of SBSs and that of any relevant foreign jurisdictions.
    195. Would the regulatory approaches under the Commission's
proposed rulemaking pursuant to Sections 763 and 766 of the Dodd-Frank
Act and the CFTC's proposed rulemaking pursuant to Sections 723, 727,
and 729 of the Dodd-Frank Act result in duplicative or inconsistent
efforts on the part of market participants subject to both regulatory
regimes or result in gaps between those regimes? If so, in what ways do
commenters believe that such duplication, inconsistencies, or gaps
should be minimized?
    196. Do commenters believe the approaches proposed by the
Commission and the CFTC to regulate the reporting of swaps and SBSs,
and the public dissemination of swap and SBS transaction, volume, and
pricing information, are comparable? If not, why not?
    197. Do commenters believe there are approaches that would make the
regulation of swap and SBS reporting and the public dissemination of
swap and SBS transaction, volume, and pricing information more
comparable? If so, what?
    198. Do commenters believe that it would be appropriate for the
Commission to adopt an approach proposed by the CFTC that differs from
our proposal? Is so, which one(s)? We request commenters to provide
data, to the extent possible, supporting any such suggested approaches.
    199. If registered SDRs would also be assuming real-time reporting
obligations under the CEA, should the phase-in schedules for reporting
obligations for swaps and SBSs be coordinated?
    200. How will proposed Regulation SBSR interact with reporting and
public dissemination regimes in other jurisdictions? Will there be
significant differences? If so, would those differences result in
regulatory arbitrage? If so, what steps, if any, should the Commission
take to minimize opportunities for regulatory arbitrage?

XIII. Paperwork Reduction Act

    Certain provisions of the proposed reporting rules proposed in this
release contain ``collection of information requirements'' within the
meaning of the Paperwork Reduction Act of 1995 (``PRA'').\175\ The
Commission is therefore submitting relevant information to the Office
of Management and Budget (``OMB'') for review in accordance with 44
U.S.C. 3507 and 5 CFR 1320.11. Compliance with the collection of
information requirements would be mandatory. An agency may not conduct
or sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid control number.
Specific collections of information are discussed further below.
---------------------------------------------------------------------------

    \175\ 44 U.S.C. 3501 et seq.
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A. Definitions--Rule 900

    Proposed Rule 900 of Regulation SBSR contains only definitions of
relevant terms and, thus, would not be a ``collection of information''
within the meaning of the PRA.

B. Reporting Obligations--Rule 901 of Regulation SBSR

    Proposed Rule 901 of Regulation SBSR contains ``collection of
information requirements'' within the meaning of the PRA. The title of
this collection is ``Rule 901--Reporting Obligations.''
1. Summary of Collection of Information
    The Dodd-Frank Act amended the Exchange Act to require the
reporting of SBS transactions. Accordingly, the Commission is proposing
Rule 901 under the Exchange Act to implement this requirement. Proposed
Rule 901 would specify who reports SBS transactions, where such
transactions are to be reported, what information is to be reported,
and in what format. Counterparties to a SBS would be responsible for
reporting the SBS to a registered SDR, or, if there is no registered
SDR that would accept the SBS, to the Commission. Proposed Rule 901
generally would divide the SBS information that must be reported into
three categories: (1) Information that must be reported in real time
pursuant

to proposed Rule 901(c); \176\ (2) additional information that must be
reported pursuant to proposed Rule 901(d) within specified timeframes;
\177\ and (3) life cycle events that must be reported pursuant to
proposed Rule 901(e).\178\
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    \176\ Proposed Rule 901(c) would provide that, for each SBS for
which it is the reporting party, the reporting party shall report
the following information in real time: (1) The asset class of the
SBS and, if the SBS is an equity derivative whether it is a total
return swap or is otherwise designed to offer risks and returns
proportional to a position in the equity security or securities on
which the SBS is based; (2) information that identifies the SBS
instrument and the specific asset(s) or issuer of a security on
which the SBS is based; (3) the notional amount(s), and the
currenc(ies) in which the notional amount(s) is expressed; (4) the
date and time, to the second, of execution, expressed using UTC; (5)
the effective date; (6) the scheduled termination date; (7) the
price; (8) the terms of any fixed or floating rate payments, and the
frequency of any payments; (9) whether or not the SBS will be
cleared by a clearing agency; (10) if both counterparties to a SBS
are SBS dealers, an indication to that effect; (11) if applicable,
an indication that the transaction does not accurately reflect the
market; and (12) if the SBS is customized to the extent that the
information provided in items (1) through (11) does not provide all
of the material information necessary to identify such customized
SBS or does not contain the data elements necessary to calculate the
price, an indication to that effect. See supra Section III.B.
    \177\ Proposed Rule 901(d)(1) would provide that, in addition to
the information required under proposed Rule 901(c), for each SBS
for which it is the reporting party, the reporting party shall
report: (1) The participant ID of each counterparty; (2) as
applicable, the broker ID, desk ID, and trader ID of the reporting
party; (3) the amount(s) and currenc(ies) of any up-front payment(s)
and a description of the payment streams of each counterparty; (4)
the title of any master agreement, or any other agreement governing
the transaction (including the title of any document governing the
satisfaction of margin obligations), incorporated by reference and
the date of any such agreement; (5) the data elements necessary for
a person to determine the market value of the transaction; (6) if
the SBS will be cleared, the name of the clearing agency; (7) if the
SBS is not cleared, whether the exception in Section 3C(g) of the
Exchange Act was invoked; (8) if the SBS is not cleared, a
description of the settlement terms, including whether the SBS is
cash-settled or physically settled, and the method for determining
the settlement value; and (9) the venue where the SBS was executed.
Under proposed Rule 901(d)(2), any information required to be
reported pursuant to paragraph (d)(1) must be reported promptly, but
in no event later than: (1) 15 minutes after the time of execution
for a SBS that is traded and confirmed electronically; (2) 30
minutes after the time of execution for a SBS that is confirmed
electronically but not traded electronically; or (3) 24 hours after
execution for a SBS that is not executed or confirmed
electronically. See supra Sections IV.B. and C.
    \178\ Proposed Rule 901(e) would require that, for any life
cycle event, and any adjustment due to a life cycle event, that
results in a change to information previously reported pursuant to
proposed Rule 901(c) or (d), the reporting party shall promptly
provide updated information reflecting such change to the entity to
which it reported the original transaction, using the transaction
ID, subject to two enumerated exceptions. However, if a reporting
party ceases to be a counterparty to a SBS due to an assignment or
novation, the new counterparty shall be the reporting party
following such assignment or novation, if the new counterparty is a
U.S. person. If, following an assignment or novation, the new
counterparty is not a U.S. person, the counterparty that is a U.S.
person shall be the reporting party. See supra Section IV.D.
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    Proposed Rule 901(i) would require the reporting of all of the
information required by proposed Rules 901(c) and (d) for any pre-
enactment SBSs or transitional SBSs, to the extent such information is
available.
    Proposed Rule 901 also would impose certain duties on a registered
SDR that receives SBS transaction data. Proposed Rule 901(f) would
require a registered SDR to time stamp, to the second, its receipt of
any information submitted to it pursuant to proposed Rule 901(c), (d),
or (e). Proposed Rule 901(g) would require a registered SDR to assign a
transaction ID to each SBS reported by a reporting party.
2. Proposed Use of Information
    The SBS transaction information required to be reported pursuant to
proposed Rule 901 would be used by registered SDRs, market
participants, the Commission, and other regulators. The information
reported by reporting parties pursuant to proposed Rule 901 would be
used by registered SDRs to publicly disseminate real-time reports of
SBS transactions, as well as to offer a resource for regulators to
obtain detailed information about the SBS market. Market participants
would use the public market data feed to assess the current market for
SBSs and for valuation purposes. The Commission and other regulators
would use information about SBS transactions reported to and held by
registered SDRs for prudential oversight and to monitor potential
systemic risks, as well as to examine for improper behavior and to take
enforcement actions, as appropriate.
    The transaction ID would be used on any subsequent transaction
report or information submitted by a reporting party regarding that SBS
(e.g., on an error report to identify the original transaction to which
the error report pertains).
3. Respondents
    Proposed Rule 901 would apply to reporting parties.\179\ The
Commission preliminarily believes that up to 1,000 entities could be
reporting parties under proposed Rule 901(a), and that it is reasonable
to use the figure of 1,000 respondents for estimating collection of
information burdens under the PRA. The Commission preliminarily
believes, based on information currently available to it, that there
are and would continue to be approximately 1,000 entities regularly
engaged in the CDS marketplace, and that most of these entities are
likely to regularly participate in other SBS markets.\180\ Accordingly,
the Commission preliminarily believes that an estimate of 1,000
respondents (i.e., reporting parties) is appropriate.
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    \179\ See proposed Rule 900 (defining ``reporting party'' as the
counterparty to an SBS with the duty to report information in
accordance with proposed Regulation SBSR to a registered SDR, or if
there is no registered SDR that would receive the information, to
the Commission).
    \180\ The Commission includes in its estimate of reporting
parties clearing agencies, which under proposed Rule 901(e)(i) could
become the reporting parties for SBS transactions where the original
reporting party ceases to be a counterparty to the SBS following a
novation of the transaction. See supra Section IV.D.
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    Proposed Rule 901 also would impose certain duties on registered
SDRs. Pursuant to Section 13(n) of the Exchange Act, an SDR must
register with the Commission.\181\ The Commission preliminarily
believes that the number of SDRs seeking to register would not exceed
ten. Accordingly, for purposes of estimating collection of information
burdens under proposed Regulation SBSR, including proposed Rule 901,
the Commission believes that it is reasonable to use ten as an estimate
of the number of registered SDRs.
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    \181\ See 15 U.S.C. 78m(n). The Commission today is separately
proposing several rules to implement this requirement. See SDR
Registration Proposing Release, supra note 6.
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4. Total Initial and Annual Reporting and Recordkeeping Burdens
a. For Reporting Parties
    Pursuant to proposed Rule 901, all SBS transactions must be
reported to a registered SDR or to the Commission. Together, sections
(a), (b), (c), (d), (e) and (h) of proposed Rule 901 set forth the
parameters that market participants must follow to report SBS
transactions. Proposed Rule 901(i) addresses the reporting of pre-
enactment SBSs. The proposed SBS reporting requirements would impose
initial and ongoing burdens on reporting parties. The Commission
preliminarily believes that these burdens would be a function of, among
other things, the number of reportable SBS transactions and the data
elements required to be reported for each SBS transaction.
    Based on publicly available information and consultation with
industry sources, the Commission preliminarily believes that even the
most active participants in the SBS market do not enter into a large
number of new SBSs on a daily basis. Rather, most regularly active SBS
market

participants enter into only a small number of new SBSs during any
given time period, while a few larger dealers participate in the
majority of SBS transactions. The Commission has sought available
information in an effort to quantify the number of aggregate SBS
transactions on an annual basis. According to publicly available data
from DTCC, recently, there have been an average of approximately 36,000
CDS transactions per day,\182\ corresponding to a total number of CDS
transactions of approximately 13,140,000 per year. The Commission
preliminarily believes that CDSs represent 85% of all SBS
transactions.\183\ Accordingly, and to the extent that historical
market activity is a reasonable predictor of future activity,\184\ the
Commission preliminarily estimates that the total number of SBS
transactions that would be subject to proposed Rule 901 on an annual
basis would be approximately 15,460,000, which is an average of
approximately 42 per reporting party per day.\185\
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    \182\ See, e.g., http://www.dtcc.com/products/derivserv/data_
table_iii.php (weekly data as updated by DTCC).
    \183\ The Commission's estimate is based on internal analysis of
available SBS market data. The Commission is seeking comment about
the overall size of the SBS market.
    \184\ The Commission notes that regulation of the SBS markets,
including by means of proposed Regulation SBSR, could impact market
participant behavior.
    \185\ These figures are based on the following: [13,140,000/
0.85] = 15,458,824. [((15,458,824 estimated SBS transactions)/(1,000
estimated reporting parties))/(365 days/year)] = 42.35, or
approximately 42 transactions per day. The Commission understands
that many of these transactions may arise from previously executed
SBS transactions.
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    The Commission believes that reporting parties would face three
categories of burdens to comply with proposed Rule 901 of Regulation
SBSR. First, each reporting party would likely need to develop an
internal order and trade management system (``OMS'') capable of
capturing relevant SBS transaction information. The OMS would have to
include or be connected to a system designed to store SBS transaction
information. The Commission understands that it is current industry
practice, in many cases, to add SBS transaction details to the
transaction record post-execution in a process known as ``enrichment.''
Accordingly, the OMS would likely need to link both to the trade desk--
to permit real-time transaction reporting under proposed Rule 901(c)--
and to the back office--to facilitate reporting of complete
transactions as required under proposed Rule 901(d).
    Second, each reporting party would have to implement a reporting
mechanism. This would include a system that ``packages'' SBS
transaction information from the reporting party's OMS, sends such
information, and tracks it. The reporting mechanism would also include
necessary data transmission lines to the appropriate registered SDR.
    Third, each reporting party would have to establish an appropriate
compliance program and support for the operation of the OMS and
reporting mechanism. Relevant elements of the compliance program would
include transaction verification and validation protocols; the ability
to identify and correct erroneous transaction reports; and necessary
technical, administrative, and legal support. Additional operational
support would include new product development, systems upgrades, and
ongoing maintenance.
    Internal Order Management. To comply with their reporting
obligations, reporting parties would likely need to develop and
maintain an internal OMS that can capture relevant SBS data. The
Commission preliminarily estimates that capturing SBS data in a manner
sufficient to comply with proposed Rule 901 would impose an initial
one-time aggregate burden of approximately 355,000 burden hours, which
corresponds to a burden of 355 hours for each reporting party.\186\
This estimate includes an estimate of the number of potential burden
hours required to amend internal procedures, design or reprogram
systems, and implement processes to ensure that SBS transaction data
are captured and preserved. The Commission further preliminarily
estimates that capturing SBS data in a manner sufficient to comply with
proposed Rule 901 would impose an annual aggregate burden of
approximately 436,000 burden hours, 436 burden hours for each reporting
party.\187\ This figure would include day-to-day support of the OMS, as
well as an estimate of the amortized annual burden associated with
system upgrades and periodic ``re-platforming'' (i.e., implementing
significant updates based on new technology). The Commission
preliminarily estimates that, to capture and maintain relevant
information and documents, reporting parties could incur aggregate
annual dollar cost burden (first-year and ongoing) of $1,000,000, which
corresponds to $1,000 for each participant.\188\ The figure is an
estimate of the hardware and associated maintenance costs for
sufficient memory to capture and store SBS transactions, including
redundant back-up systems.
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    \186\ This figure is based on discussions of Commission staff
with various market participants and is calculated as follows:
[((Sr. Programmer at 160 hours) + (Sr. Systems Analyst at 160 hours)
+ (Compliance Manager at 10 hours) + (Director of Compliance at 5
hours) + (Compliance Attorney at 20 hours)) x (1,000 reporting
parties)] = 355,000 burden hours, which is 355 hours per reporting
party (assuming 1,000 reporting parties). The Commission
preliminarily believes that information on SBS transactions is
currently being retained by many market participants in the ordinary
course of business. This may result in lesser burdens for those
parties.
    \187\ This figure is based on discussions of Commission staff
with various market participants and is calculated as follows:
[((Sr. Programmer at 32 hours) + (Sr. Systems Analyst at 32 hours) +
(Compliance Manager at 60 hours) + (Compliance Clerk at 240 hours) +
(Director of Compliance at 24 hours) + (Compliance Attorney at 48
hours)) x (1,000 reporting parties)] = 436,000 burden hours, which
is 436 hours per reporting party.
    \188\ This estimate is based on discussions of Commission staff
with various market participants and is calculated as follows:
[($250/gigabyte of storage capacity) x (4 gigabytes of storage) x
(1,000 reporting parties)] = $1,000,000. The Commission
preliminarily believes that storage costs associated with saving
relevant SBS information and documents would not vary significantly
between the first year and subsequent years. Accordingly, the
Commission has preliminarily estimated the initial and ongoing
storage costs to be the same. Moreover, the per-entity annual data
storage figure of $1,000 is an average. Some parties may face higher
costs, while others would simply use existing storage resources.
---------------------------------------------------------------------------

    Summing these burdens, the Commission preliminarily estimates that
the initial (i.e., first-year) aggregate annualized burden on reporting
parties for internal order management under proposed Rule 901 would be
791,000 burden hours, which corresponds to 791 burden hours for each
reporting party.\189\ The Commission preliminarily estimates that the
initial aggregate annualized dollar cost burden would be $1,000,000,
which would correspond to $1,000 for each reporting party.\190\ The
Commission further preliminarily estimates that the ongoing aggregate
annualized burden on reporting parties for internal order management
under proposed Rule 901 would be 436,000 burden hours, which
corresponds to 436 burden hours for each reporting party.\191\ The
Commission preliminarily estimates that the ongoing aggregate
annualized dollar cost burden would be $1,000,000, which corresponds to
$1,000 for each reporting party.\192\
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    \189\ This estimate is based on the following: [((355 one-time
burden hours for systems development) + (436 burden hours for annual
costs)) x (1,000 reporting parties)] = 791,000 burden hours, which
corresponds to 791 burden hours per reporting party.
    \190\ See supra note 188.
    \191\ See supra note 187.
    \192\ See supra note 188.
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    SBS Reporting Mechanism. Reporting parties would be required to
incur

initial one-time costs to establish connectivity to a registered SDR to
report SBS transactions. Depending on the number of SBS asset classes
that a reporting party transacts in, and which registered SDRs accept
the resulting SBS transaction reports, multiple connections to
different registered SDRs could be necessary. For purposes of
estimating relevant burdens, the Commission preliminarily estimates
that, on average, each reporting party would require connections to two
registered SDRs. The Commission bases this estimate on discussions with
market participants. We recognize that, in light of the developing SBS
market and regulatory structure, the actual average number of SDR
connections maintained by each reporting party may be different.
    This estimate is based on the following factors. First, based on
discussions with SBS market participants, the Commission understands
that the majority of SBSs are comprised of CDS and equity-based swaps.
Accordingly, the Commission preliminarily believes that transactions in
these two asset classes would predominate. Moreover, the Commission
preliminarily believes that SBS market participants may not all
transact in each asset class. Thus, even if each registered SDR
accepted transaction reports only for a single SBS asset class, the
total number of connections needed by many reporting parties would
likely be limited. Next, the Commission also preliminarily believes
that, for operational efficiency, a reporting party would seek to use
only one registered SDR per asset class for repository services.
Accordingly, to the extent that a single registered SDR accepted SBSs
in multiple asset classes, a reporting party would need fewer
connections. Finally, a reporting party that required a significant
number of connections to registered SDRs could engage a third party--
for example, a dealer or connectivity services provider--instead of
independently establishing its own connections. Accordingly, the
Commission preliminarily believes that one connection may suffice for
many reporting parties.
    On this basis, the Commission preliminarily estimates that the cost
to establish and maintain connectivity to a registered SDR to
facilitate the reporting required by proposed Rule 901 would impose an
annual dollar cost burden of approximately $200,000,000, which
corresponds to a dollar cost burden of $200,000 for each reporting
party.\193\
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    \193\ This estimate is based on discussions of Commission staff
with various market participants, as well as the Commission's
experience regarding connectivity between securities market
participants for data reporting purposes. The Commission derived the
total estimated expense from the following: [($100,000 hardware- and
software-related expenses, including necessary back-up and
redundancy, per SDR connection) x (2 SDR connections per reporting
party) x (1,000 reporting parties)] = $200,000,000. The Commission
understands that many reporting parties already have established
linkages to entities that may register as SDRs, which could
significantly reduce the out-of-pocket costs associated with this
establishing the reporting function contemplated by proposed Rule
901.
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    Moreover, the Commission believes that establishing a reporting
mechanism for SBS transactions would impose internal burdens on each
reporting party, including the development of systems necessary to
capture and send information from the entity's OMS to the relevant
registered SDR, as well as corresponding testing and support. The
Commission preliminarily estimates an initial one-time aggregate burden
of 172,000 burden hours, which corresponds to a burden of 172 burden
hours for each reporting party.\194\ In addition, the Commission
preliminarily estimates that reporting specific SBS transactions to a
registered SDR as required by proposed Rule 901 would impose an ongoing
aggregate burden of 77,300 burden hours, which corresponds to a burden
of approximately 80 burden hours for each reporting party.\195\
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    \194\ This figure is based on discussions with various market
participants as follows: [((Sr. Programmer at 80 hours) + (Sr.
Systems Analyst at 80 hours) + (Compliance Manager at 5 hours) +
(Director of Compliance at 2 hours) + (Compliance Attorney at 5
hours)) x (1,000 reporting parties)] = 172,000 burden hours, which
is 172 hours per reporting party. The Commission preliminarily
believes that many dealers and major market participants already are
reporting SBS data to some extent in the ordinary course of
business. Thus, as a practical matter, these parties may face
substantially lower burdens.
    \195\ This figure is based on discussions of Commission staff
with various market participants, as well as the Commission's
experience regarding connectivity between securities market
participants, including alternative trading systems and self-
regulatory organizations for data reporting purposes. The Commission
derived the total estimated initial burden from the following:
[(15,460,000 estimated total annual SBS transactions) x (0.005
hours/transaction)] = 77,300 burden hours, which is 77.3 burden
hours per reporting party.
---------------------------------------------------------------------------

    Thus, the Commission preliminarily estimates that the initial
(first-year) aggregate annualized burden on reporting parties for
reporting under proposed Rule 901 would be 249,300 burden hours, which
corresponds to approximately 250 burden hours for each reporting
party.\196\ The Commission preliminarily estimates that the initial
aggregate annualized dollar cost burden would be $200,000,000, which
corresponds to $200,000 for each reporting party.\197\ In addition, the
Commission preliminarily estimates that the ongoing aggregate
annualized burden on reporting parties under proposed Rule 901 would be
77,300 burden hours, which corresponds to approximately 80 burden hours
for each reporting party.\198\ The Commission preliminarily estimates
that the ongoing aggregate annualized dollar cost burden would be
$200,000,000, which corresponds to $200,000 for each reporting
party.\199\
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    \196\ This estimate is based on the following: [((172 one-time
burden hours) + (77.3 burden hours for ongoing costs)) x (1,000
reporting parties)] = 249,300 burden hours, which corresponds to
249.3 burden hours per reporting party.
    \197\ See supra note 193.
    \198\ See supra note 195.
    \199\ See supra note 193.
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    Compliance and Ongoing Support. As stated above, in complying with
proposed Rule 901, each reporting party also would need to establish
and maintain an appropriate compliance program and support for the
operation of the OMS and reporting mechanism, which would include
transaction verification and validation protocols, and necessary
technical, administrative, and legal support. Additional operational
support would include new product development, systems upgrades, and
ongoing maintenance. The Commission preliminarily believes that initial
burdens associated with this aspect of proposed Rule 901--i.e., the
establishment of relevant compliance capability--would in significant
part involve the development of appropriate policies and procedures,
which, for those participants who are SBS dealers or major SBS
participants, is addressed in connection with proposed Rule
906(c).\200\ A reporting party also would need to design its OMS to
include tools to ensure accurate, complete reporting. On an ongoing
basis, a reporting party would need to employ appropriate technical and
compliance staff to maintain and support the operation of its order
management and reporting systems over time.
---------------------------------------------------------------------------

    \200\ See infra Section XIII.G.
---------------------------------------------------------------------------

    The Commission preliminarily estimates that designing and
implementing an appropriate compliance and support program would impose
an initial, one-time aggregate burden of approximately 180,000 burden
hours, which corresponds to a

burden of 180 burden hours for each reporting party.\201\
---------------------------------------------------------------------------

    \201\ This figure is based on discussions with various market
participants and is calculated as follows: [((Sr. Programmer at 100
hours) + (Sr. Systems Analyst at 40 hours) + (Compliance Manager at
20 hours) + (Director of Compliance at 10 hours) + (Compliance
Attorney at 10 hours)) x (1,000 reporting parties)] = 180,000 burden
hours, which corresponds to 180 hours per reporting party.
---------------------------------------------------------------------------

    The Commission further preliminarily estimates that maintaining a
reporting party's compliance and support program would impose an
ongoing aggregate burden of approximately 218,000 burden hours, which
corresponds to a burden of 218 burden hours for each reporting
party.\202\ This figure includes day-to-day support of the OMS, as well
as an estimate of the amortized annual burden associated with system
upgrades and periodic re-platforming (i.e., implementing significant
updates based on new technology).
---------------------------------------------------------------------------

    \202\ This figure is based on discussions with various market
participants and is calculated as follows: [((Sr. Programmer at 16
hours) + (Sr. Systems Analyst at 16 hours) + (Compliance Manager at
30 hours) + (Compliance Clerk at 120 hours) + (Director of
Compliance at 12 hours) + (Compliance Attorney at 24 hours)) x
(1,000 reporting parties)] = 218,000 burden hours, which is 218
hours per reporting party.
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimates the initial
aggregate annualized burden on reporting parties for compliance and
ongoing support under proposed Rule 901 would be 398,000 burden hours,
which corresponds to 398 burden hours for each reporting party.\203\
The Commission further preliminarily estimates that the ongoing
aggregate annualized burden on reporting parties for compliance and
ongoing support under proposed Rule 901 would be 218,000 burden hours,
which corresponds to 218 burden hours for each reporting party.\204\
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    \203\ This estimate is based on the following: [((180 one-time
burden hours) + (218 annual burden hours)) x (1,000 reporting
parties)] = 398,000 burden hours, which corresponds to 398 burden
hours per reporting party.
    \204\ See supra note 202.
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    Aggregate Burdens. Thus, the Commission estimates that the total
first-year burden--the initial aggregate annualized burden--on
reporting parties associated with proposed Rule 901 would be 1,438,300
burden hours, which corresponds to approximately 1,438 burden hours per
reporting party.\205\ In addition, the Commission preliminarily
estimates that the initial aggregate annualized dollar cost burden on
reporting parties associated with proposed Rule 901 would be
$301,000,000, which corresponds to a dollar cost burden of $301,000 per
reporting party.\206\
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    \205\ This figure is based on summing the initial aggregate
annualized burdens for reporting parties under proposed Rule 901:
[(791,000) + (249,300) + (398,000)] = 1,438,300 burden hours.
    \206\ This figure is based on summing the estimated first-year
aggregate annualized dollar cost burdens as follows: [($300,000,000)
+ ($1,000,000)] = $301,000,000.
---------------------------------------------------------------------------

    Likewise, the Commission estimates that the ongoing aggregate
annual burdens on reporting parties associated with proposed Rule 901
would be 731,300 burden hours, which corresponds to 731 burden hours
per reporting party.\207\ In addition, the Commission preliminarily
estimates that the ongoing, aggregate annualized dollar cost burden on
reporting parties associated with proposed Rule 901 would be
$301,000,000, which corresponds to a dollar cost burden of $301,000 per
reporting party.\208\
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    \207\ This figure is based on summing estimated ongoing annual
aggregate burdens as follows: [(436,000) + (77,300) + (218,000)] =
731,300 burden hours.
    \208\ This figure is based on summing the estimated first-year
aggregate annualized dollar cost burdens as follows: [($300,000,000)
+ ($1,000,000)] = $301,000,000.
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b. For Registered SDRs
    Proposed Rule 901(f) would require a registered SDR to time-stamp
information that it receives. Proposed Rule 901(g) would require a
registered SDR to assign a unique transaction ID to each SBS it
receives. The Commission preliminarily believes that a registered SDR
would need to design its systems to include these capabilities, but
that such design elements would not pose additional significant burdens
to incorporate in the context of designing and building the
technological framework that would be required of a SDR to become
registered.\209\ Therefore, the Commission preliminarily estimates that
proposed Rules 901(f) and (g) would impose an initial one-time
aggregate burden of 1,200 burden hours, which corresponds to 120 burden
hours per registered SDR.\210\ This figure is based on an estimate of
ten registered SDRs. Once operational, these elements of each
registered SDR's system would have to be supported and maintained.
Accordingly, the Commission estimates that proposed Rule 901(f) and (g)
would impose an annual aggregate burden of 1,520 burden hours, which
corresponds to 152 burden hours per registered SDR.\211\ This figure
represents an estimate of the burden for a registered SDR for support
and maintenance costs for the registered SDR's systems to time stamp
incoming submissions and assign transaction IDs.
---------------------------------------------------------------------------

    \209\ The Commission is proposing Rules 13n-4(b), 13n-5, and
13n-6 under the Exchange Act, which would relate to the duties, data
collection and maintenance, and automated systems requirements for
SDRs. See SDR Registration Proposing Release, supra note 6.
    \210\ This figure is based on discussions with various market
participants and is calculated as follows: [((Sr. Programmer at 80
hours) + (Sr. Systems Analyst at 20 hours) + (Compliance Manager at
8 hours) + (Director of Compliance at 4 hours) + (Compliance
Attorney at 8 hours)) x (10 registered SDRs)] = 1,200 burden hours,
which is 120 hours per registered SDR.
    \211\ This figure is based on discussions with various market
participants as follows: [((Sr. Programmer at 60 hours) + (Sr.
Systems Analyst at 48 hours) + (Compliance Manager at 24 hours) +
(Director of Compliance at 12 hours) + (Compliance Attorney at 8
hours)) x (10 SDRs)] = 1,520 burden hours, which is 152 hours per
registered SDR.
---------------------------------------------------------------------------

    Thus, the Commission preliminarily estimates that the first-year
aggregate annualized burden associated with proposed Rules 901(f) and
(g) would be 2,820 burden hours, which corresponds to 282 burden hours
per registered SDR.\212\ Correspondingly, the Commission preliminarily
estimates that the ongoing aggregate annualized burden associated with
proposed Rules 901(f) and (g) would be 1,520 burden hours, which
corresponds to 152 burden hours per registered SDR.\213\
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    \212\ This figure is based on the following: [(1,200) + (1,520)]
= 2,720 burden hours, which corresponds to 272 burden hours per
registered SDR.
    \213\ See supra note 211.
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5. Recordkeeping Requirements
    Concurrently with proposed Regulation SBSR, the Commission is
issuing the SDR Registration Proposing Release, which includes
recordkeeping requirements for SBS transaction data received by a
registered SDR pursuant to proposed Regulation SBSR. Specifically,
proposed Rule 13n-5(b)(4) would require a registered SDR to maintain
the transaction data that it collects for not less than five years
after the applicable SBS expires, and historical positions and
historical market values for not less than five years.\214\
Accordingly, SBS transaction reports received by a registered SDR
pursuant to proposed Rule 901 would be required to be retained by the
SDR for not less than five years.
---------------------------------------------------------------------------

    \214\ See SDR Registration Proposing Release, supra note 6.
---------------------------------------------------------------------------

6. Collection of Information is Mandatory
    Each collection of information discussed above would be a mandatory
collection of information.
7. Confidentiality of Responses to Collection of Information
    Information collected pursuant to proposed Rule 901(c) would be
widely available to the public to the extent it is incorporated into
SBS transaction reports that are publicly disseminated by a registered
SDR pursuant to

proposed Rule 902. A registered SDR would be under an obligation to
maintain the confidentiality of any information collected pursuant to
proposed Rule 901(d), pursuant to Sections 13(n)(5) of the Exchange Act
and proposed Rule 13n-9 thereunder.\215\ To the extent that the
Commission receives confidential information pursuant this collection
of information, such information would be kept confidential, subject to
the provisions of the Freedom of Information Act.
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    \215\ See id.
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8. Request for Comment
    The Commission requests public comment on its burden estimates. The
Commission also solicits comment as follows:
    201. Is the proposed collection of information necessary for the
performance of the functions of the agency? Would the information have
practical utility?
    202. How accurate are the Commission's preliminary estimates of the
burdens of the proposed collection of information associated with
proposed Rule 901? In particular, how many entities would incur
collection of information burdens pursuant to proposed Rule 901?
    203. Would covered entities incur any initial burdens associated
with systems design, programming, expanding systems capacity, and
establishing compliance programs pursuant to proposed Rule 901?
    204. Would there be different or additional burdens associated with
the collection of information under proposed Rule 901 that a covered
entity would not undertake in the ordinary course of business?
    205. Are there additional burdens that the Commission has not
addressed in its preliminary burden estimates?
    206. Can you suggest any ways to enhance the quality, utility, and
clarity of the information to be collected?
    207. Can you suggest any ways to minimize the burden of collection
of information on those who would be required to respond, including
through the use of automated collection techniques or other forms of
information technology?
    208. What entities may be subject to proposed Rule 901, whether
specific classes of entities may be impacted, how many entities may be
impacted, and will any such entity or class of entities be impacted
differently than others? In addition, the Commission seeks comment on
the accuracy of its estimates as to the number of participants in the
SBS market that would be required to report information pursuant to
proposed Rule 901.

C. Public Dissemination of Transaction Reports--Rule 902 of Regulation
SBSR

    Certain provisions of proposed Rule 902 of Regulation SBSR contain
``collection of information requirements'' within the meaning of the
PRA. The title of this collection is ``Rule 902--Public Dissemination
of Transaction Reports.''
1. Summary of Collection of Information
    Proposed Rule 902(a) generally would require that a registered SDR
publicly disseminate a transaction report for each SBS transaction
immediately upon receipt of information about the SBS submitted by a
reporting party pursuant to proposed Rule 901(c), along with any
indicator(s) contemplated by the registered SDR's policies and
procedures.\216\ If its systems are unavailable for publicly
disseminating transaction data immediately upon receipt, the registered
SDR would be required to disseminate the transaction data immediately
upon re-opening.
---------------------------------------------------------------------------

    \216\ See proposed Rule 907(a)(4).
---------------------------------------------------------------------------

    Pursuant to Rule 902(b), a registered SDR would be required to
publicly disseminate a transaction report of a SBS that constitutes a
block trade immediately upon receipt of information about the block
trade from the reporting party. The transaction report would consist of
all the information reported by the reporting party pursuant to
proposed Rule 901(c), except for the notional size, plus the
transaction ID and an indicator that the report represents a block
trade. The registered SDR would be required to publicly disseminate a
complete transaction report for such block trade (including the
transaction ID and the full notional size) at a later time.
    Proposed Rule 902(c) would prohibit a registered SDR from
disseminating: (1) the identity of either counterparty to a SBS; (2)
with respect to a SBS that is not cleared at a registered clearing
agency and that is reported to a registered SDR, any information
disclosing the business transactions and market positions of any
person; (3) any information regarding a SBS reported pursuant to
proposed Rule 901(i).
2. Proposed Use of Information
    The real-time public dissemination requirement contained in
proposed Rule 902 would provide post-trade transparency for SBS
transactions, as required by the Dodd-Frank Act. Publicly disseminated
reports of SBS transactions that are not block trades would include the
full notional size. Publicly disseminated reports of SBS transactions
that are block trades would occur pursuant to a two-step process.
First, a real-time report would be disseminated without the notional
size, but with an indication that the trade is a block trade as well as
a transaction ID. At a later time, a follow-on report would be
disseminated, including the notional size, with the transaction ID used
to connect the second report to the first report.
3. Respondents
    The collection of information associated with the proposed Rule 902
would apply to registered SDRs. As noted above, the Commission
preliminarily believes that an estimate of ten registered SDRs is
reasonable for purposes of its analysis of potential burdens under the
PRA.
4. Total Initial and Annual Reporting and Recordkeeping Burdens
    Although proposed Rule 902 would not prescribe a manner of public
dissemination, the Commission anticipates that a registered SDR would
establish a mechanism functionally similar to one established by TRACE,
which is a system operated by FINRA for collecting and disseminating to
the public reports of trades in corporate and agency debt securities.
    Simultaneously with this proposal, the Commission is proposing new
Rules 13n-1 through 13n-11 under the Exchange Act relating to the SDR
registration process, the duties of SDRs, and their core
principles.\217\ The SDR Registration Proposing Release covers
anticipated collections of information with respect to various aspects
of establishing and operating an SDR, including its start-up and
ongoing operations. Proposed Rule 13n-5(b)(1) would set forth
parameters each registered SDR would be required to follow with regard
to collecting and maintaining transaction data. Every SDR would be
required to (i) establish, maintain, and enforce written policies and
procedures for the reporting of transaction data to the SDR and shall
accept all transaction data that is reported in accordance with such
policies and procedures; (ii) accept all SBSs in any asset class that
are reported to it in accordance with its policies and procedures to
the extent that it accepts any SBS in a particular asset class; (iii)
establish, maintain, and enforce written policies and procedures to
verify the accuracy of the transaction data that has been submitted to
the SDR, including

clearly identifying the source for each trade side and the pairing
method (if any) for each transaction in order to identify the level of
quality of the transaction data; and (iv) promptly record the
transaction data it receives. The SDR Registration Proposing Release
describes the relevant burdens and costs that complying with proposed
Rule 13n-5(b)(1) would entail.
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    \217\ See SDR Registration Proposing Release, supra note 6.
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    The Commission preliminarily believes that a registered SDR would
be able to integrate the capability to publicly disseminate real-time
SBS transaction reports required under proposed Rule 902 as part of its
overall system development for transaction data. Accordingly, the
Commission believes that the burdens associated with enabling and
maintaining compliance with proposed Rule 902 would, as a practical
matter, represent a portion of a registered SDR's overall systems
development budget and process. Based on discussions with industry
participants, the Commission preliminarily estimates that to implement
and comply with the real-time public dissemination requirement of
proposed Rule 902, each registered SDR would incur a burden equal to an
additional 20% of the first-year and ongoing burdens discussed in the
SDR Registration Proposing Release.\218\
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    \218\ See Section IV.D.2 (SDR Duties, Data Collection and
Maintenance, Automated Systems, and Direct Electronic Access) of the
SDR Registration Proposing Release. This estimate is based on
discussions with industry members and market participants, including
potential SDRs who would be required to register as SDRs under the
Dodd-Frank Act, and includes time necessary to design and program a
registered SDR's system to calculate and disseminate initial and
subsequent trade reports as well as annual costs associated with
systems testing and maintenance necessary for the special handling
of block trades. These figures do not include the development of
policies and procedures necessary to calculate block trade levels
pursuant to proposed Rule 907(b).
---------------------------------------------------------------------------

    On this basis, the Commission preliminarily estimates that the
initial one-time aggregate burden imposed by the proposed Rule 902 for
development and implementation of the systems needed to disseminate the
required transaction information, including the necessary software and
hardware, would be approximately 84,000 hours and a dollar cost of $20
million, which would correspond to a burden of 8,400 hours and a dollar
cost of $2 million for each registered SDR.\219\ In addition, the
Commission preliminarily estimates that annual aggregate burden
(initial and ongoing) imposed by the proposed Rule 902 would constitute
approximately 50,400 hours and a dollar cost of $12 million, which
would correspond to a burden of 5,040 hours and a dollar cost of $1.2
million for each registered SDR.\220\ Thus, the Commission
preliminarily estimates that the total first-year (initial) aggregate
annualized burden on registered SDRs associated with real-time public
dissemination requirement under proposed Rule 902 would be
approximately 134,400 hours and a dollar cost of $32 million, which
would correspond to a burden of 13,440 hours and a dollar cost of $3.2
million for each registered SDR.\221\
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    \219\ See SDR Registration Proposing Release, supra note 6 for
the total burden associated with establishing SDR technology
systems. The Commission derived this estimated burden from the
following: [((Attorney at 1,400 hours) + (Compliance Manager at
1,600 hours) + (Programmer Analyst at 4,000 hours) + (Senior
Business Analyst at 1,400 hours)) x (10 registered SDRs)] = 84,000
burden hours, which corresponds to 8,400 hours per registered SDR.
    \220\ See SDR Registration Proposing Release, supra note 6 for
the total ongoing annual burdens associated with operating and
maintaining SDR technology systems. The Commission derived this
estimated burden from the following: [((Attorney at 840 hours) +
(Compliance Manager at 960 hours) + (Programmer Analyst at 2,400
hours) + (Senior Business Analyst at 840 hours)) x (10 registered
SDRs)] = 50,400 burden hours, which corresponds to 5,040 hours per
registered SDR.
    \221\ These estimates are based on the following: [(84,000 one-
time burden hours) + (50,400 annual burden hours)] = 134,400 burden
hours, which corresponds to 13,440 hours per registered SDR; [($20
million one-time dollar cost burden) + ([$12] million annual dollar
cost burden) = $32 million cost burden, which corresponds to $3.2
million per registered SDR.
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5. Recordkeeping Requirements
    Pursuant to proposed Rule 13n-7(b) under the Exchange Act,\222\ a
registered SDR would be required to keep and preserve at least one copy
of all documents, including all documents and policies and procedures
required by the Exchange Act and the rules or regulations thereunder,
for a period of not less than five years, the first two years in a
place that is immediately available to the staff of the Commission for
inspection and examination. This requirement would encompass real-time
SBS transaction reports disseminated by the registered SDR.
Accordingly, SBS transaction reports disseminated by a registered SDR
pursuant to proposed Rule 902 would be required to be retained for not
less than five years.
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    \222\ See SDR Registration Proposing Release, supra note 6.
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6. Collection of Information Is Mandatory
    Each collection of information discussed above would be a mandatory
collection of information.
7. Confidentiality of Responses to Collection of Information
    Information collected pursuant to proposed Rule 902 would be widely
available to the extent that it is incorporated into SBS transaction
reports that are publicly disseminated by a registered SDR pursuant to
proposed Rules 902(a) and (b). However, a registered SDR would be under
an obligation to maintain the confidentiality of any information that
is not subject to public dissemination. To the extent that the
Commission receives confidential information pursuant to this
collection of information, such information would be kept confidential,
subject to the provisions of the Freedom of Information Act.
8. Request for Comment
    The Commission requests public comment on its burden estimates. The
Commission also solicits comment as follows:
    209. Is the proposed collection of information necessary for the
performance of the functions of the agency? Would the information have
practical utility?
    210. How accurate are the Commission's preliminary estimates of the
burdens of the proposed collection of information associated with
proposed Rule 902? In particular, how many entities would incur
collection of information burdens pursuant to proposed Rule 902?
    211. Would registered SDRs incur any initial burdens associated
with systems design, programming, expanding systems capacity, and
establishing compliance programs pursuant to proposed Rule 902?
    212. Would there be different or additional burdens associated with
the collection of information under proposed Rule 902 that a registered
SDR would not undertake in the ordinary course of business?
    213. Are there additional burdens that the Commission has not
addressed in its preliminary burden estimates?
    214. Can you suggest any ways to enhance the quality, utility, and
clarity of the information to be collected?
    215. Can you suggest any ways to minimize the burden of collection
of information on those who would be required to respond, including
through the use of automated collection techniques or other forms of
information technology?

D. Coded Information--Rule 903 of Regulation SBSR

    The Commission does not believe that proposed Rule 903 would be a
``collection of information'' within the meaning of the PRA because the
rule would merely permit reporting parties and registered SDRs to use
codes in place of certain data elements, subject to

certain conditions. The rule would offer subject entities greater
flexibility in meeting the obligations specified elsewhere in proposed
Regulation SBSR related to the reporting of SBS transactions.

E. Operating Hours of Registered Security-Based Swap Data
Repositories--Rule 904 of Regulation SBSR

    Certain provisions of proposed Rule 904 contain ``collection of
information requirements'' within the meaning of the PRA. The title of
this collection is ``Rule 904--Operating Hours of Registered Security-
Based Swap Data Repositories.''
1. Summary of Collection of Information
    Proposed Rule 904 would require a registered SDR to operate
continuously, subject to two exceptions. First, a registered SDR could
establish normal closing hours during periods when, in its estimation,
the U.S. market and major foreign markets are inactive. A registered
SDR would be required to provide reasonable advance notice to
participants and to the public of its normal closing hours. Second, a
registered SDR could declare, on an ad hoc basis, special closing hours
to perform system maintenance that cannot wait until normal closing
hours. A registered SDR would, to the extent reasonably possible under
the circumstances, be required to avoid scheduling special closing
hours during when, in its estimation, the U.S. market and major foreign
markets are most active; and provide reasonable advance notice of its
special closing hours to participants and to the public.
    Paragraphs (c) and (e) of proposed Rule 904 would specify
requirements for handling and disseminating reported data during a
registered SDR's normal and special closing hours. First, during normal
closing hours and, to the extent reasonably practicable, during special
closing hours, a registered SDR would be required to have the
capability to receive and hold in queue transaction data it
receives.\223\ Second, if a registered SDR could not hold in queue
transaction data to be reported, it would be required, immediately upon
resuming normal operations, to send a notice to all participants that
it has resumed normal operations and to immediately disseminate the
transaction data required to be reported under proposed Rule 901(c) and
received from the participants following the notice.\224\
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    \223\ See proposed Rule 904(c).
    \224\ See proposed Rule 904(e).
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    Two of the requirements contained in Rule 904 constitute
requirements already contained in other proposed rules. First, the
requirement in Rule 904(d) that, immediately upon system re-opening, a
registered SDR would be required to publicly disseminate any
transaction data required to be reported under proposed Rule 901(c) and
held in queue, is also contained in the proposed Rule 902(a). Second,
the requirement in proposed Rule 904(e) that, if a reporting party that
has an obligation to report transaction data could not to do so because
a registered SDR's system was unavailable, it would be required to
submit that information immediately after it receives a notice that it
is possible to do so, is already implicitly contained in proposed Rule
901.
2. Proposed Use of Information
    The information that would be provided pursuant to proposed Rule
904 is necessary to allow participants and the public to know the
normal and special closing hours of the registered SDR, and to allow
participants to take appropriate action in the event that the
registered SDR cannot accept SBS transaction reports from participants.
3. Respondents
    Proposed Rule 904 would apply to all registered SDRs. As noted
above, the Commission preliminarily estimates that there would be ten
registered SDRs.
4. Total Initial and Annual Reporting and Recordkeeping Burdens
    The Commission preliminarily estimates that that the one-time,
initial burden, as well as ongoing annualized burden for each
registered SDR associated with proposed Rule 904 would be minimal,
because registered SDRs would already have undertaken necessary steps
in compliance with other proposed rules. First, simultaneously with
this proposal, the Commission is proposing the SDR Registration
Proposed Rules, including proposed Rules 13n-1 through 240-13n-11.\225\
The SDR Registration Proposed Rules cover collections of information
with respect to various aspects of establishing and operating a
registered SDR, including, implicitly, its hours of operation.\226\
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    \225\ See SDR Registration Proposing Release, supra note 6.
    \226\ The requirement in proposed Rule 904(e) for the
participants to report information to the registered SDR upon
receiving a notice that the registered SDR resumed its normal
operations is already part of the participant's reporting
obligations under proposed Rule 901 and is already contained in the
burden estimate for the proposed Rule 901.
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    The Commission preliminarily believes that the requirements for a
registered SDR to provide reasonable advance notice to participants and
to the public of its normal and special closing hours, as well as to
provide a notice to participants that it is possible to report
transaction data to a registered SDR after its system was unavailable,
would entail a minor burden. On this basis, the Commission
preliminarily estimates that the annual aggregate burden (first-year
and ongoing) imposed by proposed Rule 904 would be 360 hours, which
corresponds to 36 hours per registered SDR.\227\
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    \227\ This figure is based on the Commission's experience as
follows: [(Operations Specialist at 3 hours/month) x (12 months/
year) x (10 registered SDRs)] = 360 burden hours.
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5. Recordkeeping Requirements
    Concurrently with proposed Regulation SBSR, the Commission is
proposing the SDR Registration Proposed Rules.\228\ Proposed Rule 13n-
7(b) would require a registered SDR to keep and preserve at least one
copy of all documents, including all documents and policies and
procedures required by the Exchange Act and the rules or regulations
thereunder, for a period of not less than five years, the first two
years in a place that is immediately available to the staff of the
Commission for inspection and examination.\229\ This requirement would
encompass notices issued by a registered SDR to participants under
proposed Rule 904.
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    \228\ See SDR Registration Proposing Release, supra note 6.
    \229\ See id., proposed Rule 13n-7(b) under the Exchange Act.
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6. Collection of Information is Mandatory
    Each collection of information discussed above would be a mandatory
collection of information.
7. Confidentiality of Responses to Collection of Information
    The Commission anticipates that any notices issued by a registered
SDR to its participants would be publicly available.
8. Request for Comment
    The Commission requests public comment on its burden estimates. The
Commission also solicits comment as follows:
    216. Is the proposed collection of information necessary for the
performance of the functions of the agency? Would the information have
practical utility?
    217. How accurate are the Commission's preliminary estimates of the
burdens of the proposed collection of information associated with
proposed Rule 904? In particular, how many

entities would incur collection of information burdens pursuant to
proposed Rule 904?
    218. Would the burdens imposed under proposed Rule 904 be different
or additional to those that a registered SDR would undertake in the
ordinary course of business?
    219. Are there additional burdens that the Commission has not
addressed in its preliminary burden estimates?
    220. Can you suggest any ways to enhance the quality, utility, and
clarity of the information to be collected?
    221. Can you suggest any ways to minimize the burden of collection
of information on those who would be required to respond, including
through the use of automated collection techniques or other forms of
information technology?

F. Correction of Errors in Security-Based Swap Information--Rule 905 of
Regulation SBSR

    Certain provisions of proposed Rule 905 of Regulation SBSR contain
``collection of information requirements'' within the meaning of the
PRA. The title of this collection is ``Rule 905--Correction of Errors
in Security-Based Swap Information.''
1. Summary of Collection of Information
    Proposed Rule 905 would establish duties for SBS counterparties and
registered SDRs to correct errors in information that previously has
been reported.
    Counterparty Reporting Error. Under proposed Rule 905(a)(1), where
a counterparty that was not the reporting party for a SBS discovers an
error in the information reported with respect to such SBS, the
counterparty shall promptly notify the reporting party of the error.
Under proposed Rule 905(a)(2), where a reporting party for a SBS
transaction discovers an error in the information reported with respect
to a SBS, or receives notification from its counterparty of an error,
the reporting party shall promptly submit to the entity to which the
SBS was originally reported an amended report pertaining to the
original transaction report. The reporting party would submit an
amended report to the registered SDR in a manner consistent with the
policies and procedures of the registered SDR required pursuant to
proposed Rule 907(a)(3).
    Duty of Registered SDR to Correct. Proposed Rule 905(b) would set
forth the duties of a registered SDR relating to corrections. If the
registered SDR either discovers an error in a transaction on its system
or receives notice of an error from a counterparty, proposed Rule
905(b)(1) would require the registered SDR to verify the accuracy of
the terms of the SBS and, following such verification, promptly correct
the erroneous information contained in its system. Proposed Rule
905(b)(2) would further require that, if the erroneous transaction
information contained any data that fall into the categories enumerated
in proposed Rule 901(c) as information required to be reported in real
time, the registered SDR would be required to publicly disseminate a
corrected transaction report of the SBS promptly following verification
of the SBS by the counterparties to the SBS, with an indication that
the report relates to a previously disseminated transaction.
2. Proposed Use of Information
    The SBS transaction information required to be reported pursuant to
proposed Rule 905 would be used by registered SDRs, participants, the
Commission, and other regulators. Participants would be able to use
such information to evaluate and manage their own risk positions and
satisfy their duties to report corrected information to a registered
SDR. A registered SDR would need the required information to correct
its own records, in order to maintain an accurate record of a
participant's positions as well as to disseminate corrected
information. The Commission and other regulators would need the
corrected information to have an accurate understanding of the market
for surveillance and oversight purposes.
3. Respondents
    Proposed Rule 905 would apply to participants of a registered SDR.
As noted above, the Commission has estimated that there may be 1,000
entities regularly engaged in the CDS marketplace. In addition, the
Commission estimates that there may be up to 4,000 SBS counterparties
that transact SBSs much less frequently. The Commission preliminarily
believes that these SBS counterparties would not be reporting parties.
However, these additional 4,000 counterparties would be
``participants'' as defined by proposed Rule 900. Accordingly, with
respect to burdens applicable to all SBS counterparties, the Commission
preliminarily believes that it is reasonable to use the estimate of
5,000 respondents for purposes of estimating collection of information
burdens under the PRA.
    Proposed Rule 905 also would apply to registered SDRs. As noted
above, the Commission preliminarily estimates there would be ten
registered SDRs.
4. Total Initial and Annual Reporting and Recordkeeping Burdens
    The Commission preliminarily believes that promptly submitting an
amended transaction report to the appropriate registered SDR after
discovery of an error as required under proposed Rule 905(a)(2) would
impose a burden on reporting parties. Likewise, the Commission
preliminarily believes that promptly notifying the relevant reporting
party after discovery of an error as required under proposed Rule
905(a)(1) would impose a burden on non-reporting-party participants.
    With respect to reporting parties, the Commission preliminarily
believes that proposed Rule 905(a) would impose an initial, one-time
burden associated with designing and building the reporting party's
reporting system to be capable of submitting amended SBS transactions
to a registered SDR. In addition, reporting parties would be required
to support and maintain the error reporting function.\230\
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    \230\ The Commission preliminarily believes that the actual
submission of amended transaction reports required under proposed
Rule 905(a)(2) would not result in a material burden because this
would be done electronically though the reporting system that the
reporting party must develop and maintain to comply with proposed
Rule 901. The burdens associated with such a reporting system are
addressed in the Commission's analysis of proposed Rule 901. See
supra Section XIII.B.4.a and notes 193-195.
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    The Commission preliminarily believes that designing and building
appropriate reporting system functionality to comply with proposed Rule
905(a)(2) would be a component of, and represent an incremental ``add-
on'' to, the cost to build a reporting system and develop a compliance
function as required under proposed Rule 901. Based on discussions with
industry participants, the Commission preliminarily estimates this
incremental burden to be equal to 5% of the one-time and annual burdens
associated with designing and building a reporting system that is in
compliance with proposed Rule 901,\231\ plus 10% of the corresponding
one-time and annual burdens associated with developing the reporting
party's overall compliance program required under proposed Rule
901.\232\ Thus, for reporting parties, the Commission preliminarily
estimates that proposed Rule 905(a) would impose an initial (first-
year) aggregate burden of 52,400 hours, which is 52.4 burden hours per
reporting party,\233\ and an

ongoing aggregate annualized burden of 25,800 hours, which is 25.8
burden hours per reporting party.\234\
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    \231\ See supra notes 194 and 198.
    \232\ See supra notes 201 and 202.
    \233\ This figure is calculated as follows: [(((172 burden hours
one-time development of reporting system) x (0.05)) + ((80 burden
hours annual maintenance of reporting system) x (0.05)) + ((180
burden hours one-time compliance program development) x (0.1)) +
((218 burden hours annual support of compliance program) x (0.1))) x
(1,000 reporting parties)] = 52,400 burden hours, which is 52.4
burden hours per reporting party.
    \234\ This figure is calculated as follows: [(((80 burden hours
annual maintenance of reporting system) x (0.05)) + ((218 burden
hours annual support of compliance program) x (0.1))) x (1,000
reporting parties)] = 25,800 burden hours, which is 25.8 burden
hours per reporting party.
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    With regard to non-reporting-party participants, the Commission
preliminarily believes that proposed Rule 905(a) would impose an
initial and ongoing burden associated with promptly notifying the
relevant reporting party after discovery of an error as required under
proposed Rule 905(a)(1). The Commission preliminarily estimates that
the annual burden would be 2,920,000 hours, which corresponds to 730
burden hours per non-reporting-party participant.\235\ This figure is
based on the Commission's preliminary estimates of (1) 4,000 non-
reporting-party participants; (2) 11 transactions per day per non-
reporting-party participant; \236\ and (3) an error rate of one-third
(33%),\237\ or approximately 4 transactions per day per non-reporting-
party participant.
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    \235\ This figure is based on the following: [(4 error
notifications per non-reporting-party participant per day) x (365
days/year) x (Compliance Clerk at 0.5 hours/report) x (4,000 non-
reporting-party participants)] = 2,920,000 burden hours, which
corresponds to 730 burden hours per non-reporting-party participant.
The Commission preliminarily believes that participants already
monitor their SBS transactions and positions in the ordinary course
of business. Thus, the Commission preliminarily believes that, as a
practical matter, proposed Rule 905 would not result in any
significant new burdens for these participants.
    \236\ This figure is based on the following: [((15,458,824
estimated annual SBS transactions)/(4,000 estimated non-reporting-
party participants))/(365 days/year)] = 10.58, or approximately 11
transactions per day. See supra note 185. The Commission understands
that many of these transactions may arise from previously executed
SBS transactions.
    \237\ In other words, the Commission is estimating that one-
third of all SBS transactions will require an amended report to be
submitted to the registered SDR pursuant to proposed Rule 905(a).
For purposes of its PRA analysis, the Commission is further assuming
that the both the non-reporting-party participant and the reporting
party discover all errors. The Commission recognizes that, as a
practical matter, there may be instances where one party fails to
detect an error.
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    Proposed Rule 905(b) would require a registered SDR to develop
protocols regarding the reporting and correction of erroneous
information. The Commission preliminarily believes, however, that this
duty would represent only a minor extension of other duties for which
the Commission is estimating burdens, and consequently, would not