regarding natural persons.\181\ Furthermore, the Commission
preliminarily estimates that SBS Entities would make fewer than seven
applications on an average annual basis.\182\ Based on those figures,
the Commission estimates the economic costs to prepare, review, and
submit applications under proposed Rule of Practice 194 to be less than
$95,380 per

year.\183\ The Commission seeks comment on the reasonableness and
accuracy of these estimates.
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    \181\ See Section IV.D, supra.
    \182\ See id.
    \183\ This estimate is based on the following. Total burden
hours = [(40 hours) x (2 SBS Entities applying with respect to
associated persons that are entities) + (30 hours) x (5 SBS Entities
applying with respect to associated persons that are natural
persons) + (3 hours) x (7 SBS Entities filing notices]. Attorney at
$380 per hour x 251 burden hours = $95,380. The hourly cost figure
is based upon data from SIFMA's Management & Professional Earnings
in the Securities Industry 2013 (modified by the Commission staff to
account for an 1,800-hour-work-year and multiplied by 5.35 to
account for bonuses, firm size, employee benefits, and overhead).
---------------------------------------------------------------------------

    Notably, an SBS Entity would only submit such applications where
the SBS Entity believed that the economic value of retaining a
particular person to effect security-based swaps or continuing
association with a statutorily disqualified entity outweighed the
application costs associated with proposed Rule of Practice 194. In
other words, any application costs would be incurred by SBS Entities on
a voluntary basis. Furthermore, the decision to incur application costs
would also reflect an SBS Entity's assessment of the likelihood of the
Commission granting relief under the public interest standard set forth
in proposed Rule of Practice 194(b).
    We also note that, under the baseline, an SBS Entity would not be
precluded under Exchange Act Section 15F(b)(6) from seeking Commission
relief.\184\ However, as already discussed, SBS Entities would lack
clarity about the application process and, though they may look to Rule
of Practice 193 or similar processes as a guide, could potentially
expend more resources than necessary due to process uncertainty. Thus,
notwithstanding the cost estimates above, the proposed rule may
mitigate application costs relative to the baseline due to the
structured process. We expect that this cost mitigation would be most
significant for SBS Entities that would be among the first to seek
relief; SBS Entities seeking relief later would have the benefit of
learning by observing the process experienced by first-movers.
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    \184\ See Section V.C, supra.
---------------------------------------------------------------------------

b. Costs of the Commission, CFTC, SRO, Registered Futures Association
Provision
    Exchange Act Rule 19h-1 provides for Commission review of notices
filed by SROs proposing to admit any person to, or continue any person
in, membership or association with a member, notwithstanding statutory
disqualification.\185\ The Commission does not review or approve
statutory disqualification decisions of NFA or CFTC. As a result,
associated persons may be able to transact in security-based swap
markets on behalf of SBS Entities where the Commission would not have
made a determination on an individualized basis that it is consistent
with the public interest to permit them to do so had these persons been
reviewed independently by the Commission. Since this provision would
result in a potentially greater number of disqualified associated
persons being permitted to effect or be involved in effecting security-
based swaps on behalf of SBS Entities, it may increase compliance and
counterparty risks, but may decrease costs of business restructuring by
affected SBS Entities, as discussed in section V.D.
---------------------------------------------------------------------------

    \185\ 17 CFR 240.19h-1.
---------------------------------------------------------------------------

c. Costs of the Temporary Exclusion
    The temporary exclusion pending decision by the Commission, the
CFTC, an SRO or a registered futures association\186\ is designed to
mitigate SBS Entity costs of reassigning or disassociating from
statutorily disqualified associated person entities during the review
process. However, the provision allows associated person entities to
continue to effect or be involved in effecting security-based swaps on
behalf of an SBS Entity after conduct that triggered statutory
disqualification and before the Commission, the CFTC, an SRO or a
registered futures association has made an individualized favorable
determination. Statutory disqualification triggers may point to risks
of repeated misconduct or compliance shortcomings, and a review by the
Commission, the CFTC, an SRO or a registered futures association may
result in a determination that permitting such associations is not
consistent with the public interest. In these instances, statutorily
disqualified associated person entities would have been effecting or
involved in effecting security-based swaps on behalf of SBS Entities,
raising counterparty risks during the review process as a result of the
temporary exclusion. We note that if the Commission, the CFTC, an SRO
or a registered futures association does not render a decision within
180 days, the temporary exclusion expires and SBS Entities will have 60
days to conform with the general statutory prohibition.\187\ The time-
limited nature of the exclusion pending review partially mitigates the
potential risks to counterparties from disqualified entities effecting
or being involved in effecting security-based swaps on behalf of SBS
Entities before the Commission renders a decision on the application.
---------------------------------------------------------------------------

    \186\ See proposed Rule of Practice 194(i).
    \187\ See proposed Rule of Practice 194(i)(1)(ii), (iii).
---------------------------------------------------------------------------

    Finally, if the CFTC, an SRO or a registered futures association
renders an adverse decision with respect to an entity that is an
associated person an SBS Entity, SBS Entities will have 60 days to
conform with the general statutory prohibition.\188\ In cases where the
Commission has made a determination that allowing an SBS Entity to
permit an associated person entity that is subject to a statutory
disqualification to effect or be involved in effecting security-based
swaps is not consistent with the public interest, the Commission may
provide an extension to the temporary exclusion by order.\189\
Associated person entities that are subject to a statutory
disqualification would be able to effect or be involved in effecting
security-based swaps on behalf of SBS Entities where the Commission,
the CFTC, an SRO or NFA have made an adverse determination based on the
assessment of the facts and circumstances of the application, which may
pose risks to counterparties. However, these provisions provide time
for SBS Entities to restructure and comply with the statutory
prohibition in Exchange Act Section 15F(b)(6) after disposition of the
application. Further, with respect to the temporary exclusion pending
review by the Commission, in cases where an application has been
disapproved, the Commission will only provide an extension to the
temporary exclusion where it deems doing so is necessary or
appropriate.\190\
---------------------------------------------------------------------------

    \188\ See proposed Rule of Practice 194(i)(1)(iii).
    \189\ See proposed Rule of Practice 194(i)(3).
    \190\ See id.
---------------------------------------------------------------------------

d. Additional Costs
    As we noted above, under proposed Rule of Practice 194, the
Commission will make public orders either approving or denying an
application under the rule.\191\ We note that SBS Entities may prefer
for such information to remain private if they believe that
counterparties will use this information as a signal of quality.
Therefore, the reputational costs associated with going through the
process and potentially associating with statutorily disqualified
persons may discourage some SBS Entities from applying for relief under
the proposed rule; such SBS Entities may instead choose to disassociate
with disqualified persons or reassign them (in the case of natural
persons) to responsibilities that do not involve

effecting or being involved in effecting security-based swaps.
---------------------------------------------------------------------------

    \191\ See Section II.C.7, supra.
---------------------------------------------------------------------------

    Disassociation itself may be costly, particularly for SBS Entities
associated with a statutorily disqualified entity that is responsible
for a large share of security-based swap business. In considering
disassociation, an SBS Entity will weigh reputational costs against the
cost of disassociation. For disqualified natural persons, such costs
include the cost to an SBS Entity of replacing an employee (or other
associated person), and will depend on the scarcity and value of a
particular person's skills. For statutorily disqualified associated
person entities, such costs may include the cost of eliminating or
restructuring an entire business line.
3. Effects on Efficiency, Competition, and Capital Formation
    The Commission has preliminarily assessed the effects arising from
proposed Rule of Practice 194 on efficiency, competition, and capital
formation. As noted above, limiting the ability of statutorily
disqualified persons to effect security-based swaps on behalf of SBS
Entities may mitigate compliance and counterparty risks and may
facilitate competition among higher quality SBS Entities, enhancing
integrity of security-based swap markets. At the same time, limits on
disqualified person participation in security-based swap markets may
involve costly business restructuring or costs of applying to the
Commission for relief. As with the other economic effects already
discussed, effects on efficiency, competition, and capital formation
flow primarily from how the rule alters an SBS Entity's evaluation of
the tradeoff between the value of an associated person's skill and
expertise in effecting security-based swaps against the costs of
applying for relief, and how the rule alters an SBS Entity's ultimate
decision to seek relief.
    As noted above, by providing a structured process and clarity as to
the standard of review, proposed Rule of Practice 194 may conserve
resources relative to the baseline for SBS Entities applying for relief
under Section 15F(b)(6), and therefore create a more efficient process
for SBS Entities that choose to apply. To the extent that the savings
resulting from the proposed rule may encourage more SBS Entities to
apply for relief, especially in the case of associated person entities,
a greater number of SBS Entities may be able to effect security-based
swaps without potentially costly business restructuring.
    SBS Entities incur reputational and application costs of permitting
statutorily disqualified persons to effect or be involved in effecting
security-based swaps, and weigh these costs against the level and
substitutability of disqualified persons' skills and expertise. Should
more SBS Entities apply for relief, a greater number of disqualified
persons may seek employment and business opportunities in security-
based swap markets. However, persons eligible to rely on paragraph (j)
to proposed Rule of Practice 194, regarding disqualifications already
reviewed by the Commission, the CFTC, an SRO or a registered futures
association, may enjoy a competitive advantage over persons not
eligible for the same treatment. Because SBS Entities would not need to
expend resources filing an application, they may prefer associating
with persons who can rely on proposed Rule of Practice 194(j) over
their disqualified counterparts. If SBS Entities exhibit a preference
for persons that can take advantage of proposed Rule of Practice
194(j), it could create competitive disparities among associated
persons.
    A temporary exclusion pending review by the Commission, the CFTC,
an SRO or a registered futures association, set forth in paragraph (i)
to proposed Rule of Practice 194, would enable SBS Entities to continue
their security-based swap market participation without incurring the
costs of reassigning or disassociating from disqualified persons. As a
result, SBS Entities associating with entities that become subject to a
statutory disqualification can continue dealing in security-based swaps
without incurring costs of business restructuring until the disposition
of the application.\192\ SBS Entities that begin to associate with
statutorily disqualified entities would be eligible for the same
temporary relief, conditional on timeliness of the application. If the
Commission denies the application under proposed Rule of Practice 194
related to an associated person entity that is subject to a statutory
disqualification, the Commission may by order grant a temporary
extension of the exclusion to enable the SBS Entity to become compliant
with the statutory prohibition in Exchange Act Section 15F(b)(6).\193\
Broadly, this temporary exclusion may lower costs to SBS Entities of
associating or beginning to associate with statutorily disqualified
entities.
---------------------------------------------------------------------------

    \192\ We note that with respect to applications for Commission
review the proposed temporary exclusion is time limited. If the
Commission has not rendered a decision within 180 days of filing a
completed application under the Proposed Rule of Practice 194, SBS
Entities will have 60 days to become in compliance with the general
statutory prohibition. See proposed Rule of Practice 194(i)(1)(ii).
If the Commission approves the application after the temporary
exclusion has expired, SBS Entities will again be able to permit the
disqualified associated entity to effect or be involved in effecting
security-based swaps on their behalf.
    \193\ See proposed Rule of Practice 194(i)(3).
---------------------------------------------------------------------------

    The overall effects of the temporary exclusion from the general
statutory prohibition pending review are unclear. On the one hand, it
may serve to mitigate potential disruptions should associated entities
of a number of SBS Entities become disqualified, leading some SBS
Entities to temporarily cease dealing activity pending Commission,
CFTC, an SRO or registered futures association review, or to effect
business restructuring. At the same time, the presence and magnitude of
the potential market disruption is unclear, since other SBS Entities
are likely to begin competing for the newly opened market share. The
overall effects of this provision on security-based swap market quality
and competition depend primarily on whether and which SBS Entities are
able to win the newly opened market share in such cases.
    Clarity about the items that the Commission will consider in making
determinations may allow SBS Entities to make informed assessments
about whether a particular application is likely to be approved or
denied. Increased certainty about the process may, in turn, alter an
SBS Entity's evaluation of its own cost-benefit tradeoff in determining
whether to file an application for relief, enabling the entity to more
efficiently expend resources.
    Finally, while security-based swaps are important financial
instruments that may facilitate the capital formation process, we
preliminarily believe that the impact of proposed Rule of Practice 194
on capital formation will be de minimis. Given that nothing about the
statute precludes either SBS Entities from seeking relief or the
Commission from granting relief in the absence of a rule, and given the
low expected incidence of statutory disqualification among natural
persons associated with SBS Entities, we do not believe the rule will
materially affect the ability of either issuers to raise capital or
financial intermediaries to hedge their investments with issuers.
Therefore, we do not expect the rule to have a material effect on
capital formation, either positively or negatively.

E. Rule Alternatives

    In addition to proposed Rule of Practice 194, the Commission has
considered five primary alternative

approaches. We discuss these approaches below.
1. Relief for All Entities From Exchange Act Section 15F(b)(6)
    The Commission has considered blanket relief from the general
prohibition in Exchange Act Section 15F(b)(6) with respect to all
associated person entities. Under this alternative, SBS Entities cross-
registered as Swap Entities with the CFTC would experience potential
economies of scope in associating with persons that are entities.
Further, SBS Entities will avoid all costs of business restructuring if
associated person entities become statutorily disqualified, or in the
event of new associations with statutorily disqualified associated
person entities effecting or involved in effecting security-based swaps
on their behalf.
    Relative to the proposed temporary exclusion approach, SBS Entities
would be less constrained by the general statutory prohibition and
would be able to associate with any and all disqualified entity persons
in any capacity without applying for relief under Exchange Act Section
15F(b)(6) or under Rule of Practice 194. Further, the uniform entity
exemption approach gives SBS Entities certainty about their ability to
permit disqualified entity persons to effect or be involved in
effecting security-based swaps, whereas the proposed temporary
exclusion expires after 180 days, and SBS Entities have 60 days to
conform to the general statutory prohibition if the Commission, the
CFTC, an SRO or a registered futures association does not render a
decision on the application within that timeframe.
    At the same time, the counterparty and compliance risks under the
uniform entity exemption approach may be greater than those under the
proposed approach. If the Commission excludes all disqualified
associated entities from the scope of the general statutory
prohibition, the Commission would be unable to make an individualized
determination under proposed Rule of Practice 194 about whether
permitting an associated person entity that is subject to a statutory
disqualification to effect or be involved in effecting security-based
swaps on behalf of an SBS Entity is consistent with the public
interest.\194\ Further, statutory disqualification and an inability to
continue associating with SBS Entities may create a disincentive
against underlying misconduct for associated persons, and a blanket
exception for disqualified associated persons that are entities may
reduce the disincentive against misconduct.
---------------------------------------------------------------------------

    \194\ However, the Commission could, by order, censure, place
limitations on the activities or functions of the associated person,
or suspend or bar such person from being associated with an SBS
Entity. See 15 U.S.C. 78o-10(l)(3) and Note 98, supra.
---------------------------------------------------------------------------

    The overall effects of this alternative on security-based swap
markets are unclear. Under this alternative, disqualified persons would
not undergo substantive review and all disqualified entity persons
would be able to effect or be involved in effecting security-based
swaps on behalf of SBS Entities, which may increase counterparty and
compliance risks. However, SBS Entities associating with disqualified
persons would not have to undergo business restructuring, the costs of
which may flow through to counterparties, further mitigating the risk
of disruptions.
2. A Modified Temporary Exclusion
    The Commission could adopt a modified temporary exclusion, where if
the Commission does not render a decision within 180 days the
application would be considered granted. This alternative would
effectively default to relief from the statutory prohibition for
applications for Commission review, since SBS Entities would be able to
permit disqualified associated entities to effect or be involved in
effecting security-based swaps on their behalf, unless the Commission
makes an individualized determination that it is not consistent with
the public interest to enable them to do so within 180 days of the
application being filed. This may benefit SBS Entities by lowering
uncertainty about the need to restructure the business and disassociate
from the disqualified entity person. However, it may lead some
applications to be considered granted before the Commission is able to
perform an individualized assessment of the facts of each case,
particularly in complex cases that may require an extensive review.
These modifications may benefit SBS Entities, but may allow some
disqualified associated entities to be able to effect or be involved in
effecting security-based swaps on behalf of SBS Entities where the
Commission would not have deemed it consistent with the public interest
to permit them to do so.
3. Relief for Non-Investment-Related Offenses
    The Commission could also adopt the approach of automatically
excepting SBS Entities that associate with statutorily disqualified
persons if the matters that triggered the statutory disqualification
were non-investment-related, while requiring SBS Entities to apply for
relief under the proposed rules for investment-related statutory
disqualifications.\195\ Such an approach would eliminate restructuring
or application costs for SBS Entities associating with statutorily
disqualified persons when statutory disqualification arises out of non-
investment related offenses, which may increase competition among SBS
Entity associated persons and attract new natural persons into the SBS
Entity labor market. SBS Entities associating with persons statutorily
disqualified for investment-related offenses would have to bear costs
of disassociating or applying for relief and would have to compete with
a greater number of SBS Entities that do not have to apply for relief.
---------------------------------------------------------------------------

    \195\ As discussed in the baseline, in a somewhat analogous
scenario for broker dealers, 10 out of 24, or approximately 42% of
MC-400 applications for relief for individuals received by FINRA in
2014 were for exclusively non-investment-related disqualifications.
Over a 5 year period between 2010 and 2014, 2 out of 5 re-offenses
by individuals were not investment-related (177 MC-400 applications
have been received over the same time period). Reoffenses include
subsequent regulatory actions and criminal offense convictions after
previous approvals to associate pursuant to Rule 19h-1, 17 CFR
240.19h-1.
---------------------------------------------------------------------------

    Statutory disqualification and the potential inability to deal in
various markets may present an incentive against misconduct, including
non-investment-related misconduct. This alternative would also lower
the information benefits of reviewing applications and supporting
materials, including information concerning supervisory structure,
terms of employment and other items, which will inform Commission
understanding of SBS Entity associations and ongoing oversight.
Finally, some statutory disqualification triggers that may not fall in
the ``investment related offense'' category (e.g., thefts) may point to
a higher risk of future misconduct, including violations of securities
laws, federal rules and regulations thereunder. Uniformly excepting
such statutorily disqualified associated persons without an opportunity
for the Commission to review the circumstances of each case and to make
a determination that allowing SBS Entities to permit them to effect
security-based swaps is consistent with the public interest may pose
risks to counterparties and security-based swap markets.
4. No Relief for CFTC, SRO, Registered Futures Association Review
    The proposed rules allow SBS Entities to permit statutorily
disqualified persons to effect or be involved in

effecting security-based swaps on their behalf without an application
to the Commission, if the associated person's membership, association,
registration or listing as a principal has been granted or otherwise
approved by the CFTC, an SRO or a registered futures association. The
proposed approach also provides a time limited temporary exclusion for
disqualified associated entities while their application before the
CFTC, an SRO or a registered futures association is pending; the
proposed exclusion expires 180 days after the filing of an application
or initiation of a similar process, after which point SBS Entities have
60 days to conform with the general statutory prohibition. The
Commission could adopt an alternative approach, under which such
disqualified associated persons would not be automatically permitted to
effect or be involved in effecting security-based swaps on behalf of
SBS Entities, and would have to apply directly for a substantive review
by the Commission under Rule of Practice 194. The temporary exclusion
pending Commission review would apply as proposed.
    This alternative approach would allow the Commission to review the
facts and circumstances of each case and make an individualized public
interest determination with respect to each disqualified associated
person concerning whether they should be permitted to effect or be
involved in effecting security-based swaps on behalf of SBS Entities,
and under which conditions. If fewer SBS Entities choose to go through
a separate review by the Commission, this alternative may result in a
smaller number of disqualified associated persons effecting or involved
in effecting security-based swaps. To the extent that statutory
disqualification and terms and conditions of reassociation may indicate
compliance and counterparty risks, this may improve compliance and
counterparty protections for security-based swap market participants.
    However, this alternative may increase costs for SBS Entities.
Specifically, this alternative would require SBS Entities to incur the
application costs under Rule of Practice 194 with respect to associated
persons that have already been approved by the CFTC, SRO or a
registered futures association, or costs of restructuring the business
or disassociating from such persons altogether. If the application is
denied, SBS Entities would need to restructure the business or
disassociate from the associated person. In addition, in light of the
high degree of integration among swap and security-based swap markets
and expected cross-registration, many SBS Entities are expected to
transact across swap, security-based swap and reference security
markets, and some SBS Entities may be relying on the same personnel and
entities in effecting, for instance, single name and index CDS. This
approach would limit SBS Entity flexibility in hiring and retaining
disqualified associated persons where the SBS Entity believes the
person's quality and expertise outweigh the reputational costs of
associating with a disqualified person and where the CFTC, an SRO or a
registered futures association has made a favorable finding with
respect to the associated person.
    The effects of this alternative on security-based swap markets will
depend on the extent of reliance by SBS Entities on disqualified
persons approved by the CFTC, an SRO or a registered futures
association, magnitude of the above business restructuring costs,
significance of bilateral counterparty relationships, and the severity
of compliance and counterparty risks posed by disqualified associated
persons. As discussed in earlier sections, we lack data or other
information to quantify these effects with any degree of certainty.
5. No Relief for Entities From Exchange Act Section 15(F)(b)(6)
    Lastly, the Commission could establish a uniform prohibition on
associated person entities subject to statutory disqualification
effecting or being involved in effecting security-based swaps on behalf
of SBS Entities. Under this approach, all disqualified associated
entities not covered by the exemption in final registration rules would
be barred from intermediating security-based swaps on behalf of SBS
Entities. To the extent that past disqualifications can point to higher
compliance and counterparty risks, this alternative could potentially
strengthen counterparty protections. Further, the inability to
participate in various markets due to disqualification disincentivizes
misconduct. Adopting this approach would strengthen these incentive
effects, which may improve compliance with federal securities laws,
rules and regulations.
    However, barring all disqualified associated entities from
effecting or being involved in effecting security-based swaps on behalf
of SBS Entities would impose costs of business restructuring for a
number of SBS Entities, which may in turn affect market quality. In the
event of a disqualification after the compliance date of the final
registration rules, SBS Entities would be required to cease
intermediating security-based swaps and restructure their business to
disassociate from all disqualified entities. If a number of entities
associated with different SBS Entities become disqualified at the same
time, a number of SBS Entities may become temporarily unable to effect
security-based swaps due to disqualification. Currently, inter-dealer
transactions account for over 60% of single-name CDS transactions,
which reflects the central position of a small number of dealers, each
of which may intermediate trades between many hundreds of
counterparties. If some of the central dealers are temporarily unable
to effect security-based swaps, higher transaction costs or market
disruptions may occur. However, we note that other SBS Entities may
step in to pick up the market share. The overall economic effects will
depend on: (i) The costs and the required length of time for business
restructuring; (ii) which SBS Entities would be able to pick up the
newly available market share; and (iii) the relative importance of
bilateral relationships between SBS Entities and counterparties.
    Lastly, this alternative may decrease the number of entities
seeking to associate with SBS Entities since disqualified entity
persons will no longer be able to effect or be involved in effecting
security-based swaps. Such disqualified entities may seek to associate
with security-based swap market participants that are not required to
register (entities falling within the de minimis exception set forth in
Exchange Act Rule 3a71-2 \196\).
---------------------------------------------------------------------------

    \196\ 17 CFR 240.3a-71-2.F. Request for Comment
---------------------------------------------------------------------------

    The Commission is requesting comments regarding the economic
analysis set forth here. To the extent possible, the Commission
requests that market participants and other commenters provide
supporting data and analysis with respect to the benefits, costs, and
effects on competition, efficiency, and capital formation of adopting
proposed Rule of Practice 194, or any reasonable alternatives.
    Although the Commission is seeking comments on the economic
analysis generally, the Commission is also soliciting comment on the
following specific issues:
    Q-53. Has the Commission accurately characterized the costs and
benefits of proposed Rule of Practice 194? If not, why not? Should any
of the costs or benefits be modified? What, if any, other costs or
benefits should the Commission take into account?

    Q-54. Has the Commission accurately characterized the effects on
competition, efficiency, and capital formation arising from proposed
Rule of Practice 194? If not, why not?
    Q-55. Has the Commission reasonably estimated the application costs
associated with proposed Rule of Practice 194? Has the Commission
reasonably estimated the average number of applicants per year (with
respect to both natural persons and entities)? Are there any other
costs that the Commission should take into account regarding preparing,
reviewing, and submitting an application under proposed Rule of
Practice 194? If the application costs are too high, how specifically
should the Commission modify proposed Rule of Practice 194 to reduce
application costs?
    Q-56. Is it a reasonable characterization that the effects of the
rule on capital formation will be de minimis? If not, why not?
    Q-57. Has the Commission accurately characterized the costs,
benefits, and effects on competition, efficiency, and capital formation
of the alternatives specified above? If not, why not? Should any of the
costs or benefits be modified? What, if any, other costs or benefits
should the Commission take into account?
    Q-58. Are there other reasonable alternatives that the Commission
should consider? What are the costs, benefits, and effects on
competition, efficiency, and capital formation of any other
alternatives?

VI. Regulatory Flexibility Act Certification

A. Regulatory Framework

    The Regulatory Flexibility Act (``RFA'') \197\ requires federal
agencies, in promulgating rules, to consider the impact of those rules
on small entities. Section 603(a) \198\ of the Administrative Procedure
Act,\199\ as amended by the RFA, generally requires the Commission to
undertake a regulatory flexibility analysis of all proposed rules, or
proposed rule amendments, to determine the impact of such rulemaking on
``small entities.'' \200\ Section 605(b) of the RFA provides that this
requirement shall not apply to any proposed rule or proposed rule
amendment, which if adopted, would not have a significant economic
impact on a substantial number of small entities.\201\
---------------------------------------------------------------------------

    \197\ 5 U.S.C. 601 et seq.
    \198\ 5 U.S.C. 603(a).
    \199\ 5 U.S.C. 551 et seq.
    \200\ Although Section 601(b) of the RFA defines the term
``small entity,'' the statute permits the Commission to formulate is
own definition. The Commission has adopted definitions for the term
small entity for the purposes of Commission rulemaking in accordance
with the RFA. Those definitions, as relevant to this proposed
rulemaking, are set forth in Rule 0-10, 17 CFR 240.0-10. See
Exchange Act Release No. 18451, 47 FR 5212 (Feb. 4, 1982).
    \201\ See 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    For purposes of Commission rulemaking in connection with the RFA, a
small entity includes: (i) When used with reference to an ``issuer'' or
a ``person,'' other than an investment company, an ``issuer'' or
``person'' that, on the last day of its most recent fiscal year, had
total assets of $5 million or less,\202\ or (ii) a broker-dealer with
total capital (net worth plus subordinated liabilities) of less than
$500,000 on the date in the prior fiscal year as of which its audited
financial statements were prepared pursuant to Rule 17a-5(d) under the
Exchange Act,\203\ or, if not required to file such statements, a
broker-dealer with total capital (net worth plus subordinated
liabilities) of less than $500,000 on the last day of the preceding
fiscal year (or in the time that it has been in business, if shorter);
and is not affiliated with any person (other than a natural person)
that is not a small business or small organization.\204\
---------------------------------------------------------------------------

    \202\ See 17 CFR 240.0-10(a).
    \203\ See 17 CFR 240.17a-5(d).
    \204\ See 17 CFR 240.0-10(c).
---------------------------------------------------------------------------

    Under the standards adopted by the Small Business Administration,
small entities in the finance and insurance industry include the
following:
    (i) For entities engaged in certain credit intermediation and
related activities, entities with $550 million or less in assets; \205\
---------------------------------------------------------------------------

    \205\ See 13 CFR 121.201 (Subsector 522).
---------------------------------------------------------------------------

    (ii) for entities engaged in non-depository credit intermediation
and certain other activities, entities with $38.5 million or less in
annual receipts; \206\
---------------------------------------------------------------------------

    \206\ See id. at Subsector 522.
---------------------------------------------------------------------------

    (iii) for entities engaged in financial investments and related
activities, entities with $38.5 million or less in annual receipts;
\207\
---------------------------------------------------------------------------

    \207\ See id. at Subsector 523.
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    (iv) for insurance carriers and entities engaged in related
activities, entities with $38.5 million or less in annual receipts, or
1,500 employees for direct property and casualty insurance carriers;
\208\ and
---------------------------------------------------------------------------

    \208\ See id. at Subsector 524.
---------------------------------------------------------------------------

    (v) for funds, trusts, and other financial vehicles, entities with
$32.5 million or less in annual receipts.\209\
---------------------------------------------------------------------------

    \209\ See id. at Subsector 525.
---------------------------------------------------------------------------

    SBA definitions of small businesses apply to a firm's parent
company and all affiliates as a single entity.\210\
---------------------------------------------------------------------------

    \210\ See 13 CFR 121.201 (``The number of employees or annual
receipts indicates the maximum allowed for a concern and its
affiliates to be considered small.'') (emphasis added); see also 13
CFR 121.103 (listing how SBA determines affiliation).
---------------------------------------------------------------------------

B. Assessment of Impact

    Proposed Rule of Practice 194 would, if adopted, establish rules
concerning an application by SBS Entity to the Commission for an order
permitting an associated person that is a natural person and that is
subject to a statutorily disqualification to effect or be involved in
effecting security-based swaps on behalf of an SBS Entity. With respect
to SBS Entities, based on feedback from market participants and our
information about the security-based swap markets, the Commission
continues to believe that (1) the types of entities that would engage
in more than a de minimis amount of dealing activity involving
security-based swap--which generally would be large financial
institutions--would not be ``small entities'' for purposes of the RFA;
and (2) the types of entities that may have security-based swap
positions above the level required to be a ``major security-based swap
participant'' would not be ``small entities'' for purposes of the
RFA.\211\
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    \211\ See Cross-Border Adopting Release, 79 FR at 47368.
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C. Certification and Request for Comment

    For the foregoing reasons, the Commission certifies that the
proposed Rule of Practice 194 would not, if adopted, have a significant
economic impact on a substantial number of small entities for purposes
of the RFA.
    The Commission encourages written comments regarding this
certification. The Commission requests that commenters describe the
nature of any impact on small entities and provide supporting data to
support the extent of the impact.

VII. Consideration of Impact on the Economy

    For purposes of the Small Business Regulatory Enforcement Fairness
Act of 1996 (``SBREFA'') \212\ the Commission requests comment on the
potential effect of proposed Rule of Practice 194 on the United States
economy on an annual basis. The Commission also requests comment on any
potential increases in costs or prices for consumers or individual
industries, and any potential effect on competition, investment, or

innovation. Commenters are requested to provide empirical data and
other factual support for their views to the extent possible.
---------------------------------------------------------------------------

    \212\ Public Law 104-121, Tit. II, 110 Stat. 857 (1996).
---------------------------------------------------------------------------

VIII. Statutory Authority

    The Commission is proposing Rule of Practice 194 pursuant to
Exchange Act Section 15F(b)(4) and (6),\213\ as added by Section 764(a)
of the Dodd-Frank Act, and Exchange Act Section 23(a).\214\
---------------------------------------------------------------------------

    \213\ 15 U.S.C. 78o-10(b)(4), (6).
    \214\ 15 U.S.C. 78w(a).
---------------------------------------------------------------------------

    In accordance with the foregoing, the Securities and Exchange
Commission is proposing to amend Title 17, Chapter II of the Code of
Federal Regulations as follows:

PART 201--RULES OF PRACTICE

0
1. The authority citation for subpart D is revised to read as follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77h-1, 77j, 77s, 77u,
77sss, 77ttt, 78(c)(b), 78d-1, 78d-2, 78l, 78m, 78n, 78o(d), 78o-3,
78o-10(b)(6), 78s, 78u-2, 78u-3, 78v, 78w, 80a-8, 80a-9, 80a-37,
80a-38, 80a-39, 80a-40, 80a-41, 80a-44, 80b-3, 80b-9, 80b-11, 80b-
12, 7202, 7215, and 7217.

0
2. Add Sec.  201.194 to subpart D to read as follows:

Sec.  201.194.  Applications by security-based swap dealers or major
security-based swap participants for statutorily disqualified
associated persons to effect or be involved in effecting security-based
swaps.

    A security-based swap dealer or major security-based swap
participant making an application under this section should refer to
Appendix A to Sec.  201.194--Note Concerning Applications by Security-
Based Swap Dealers or Major Security-Based Swap Participants for
Statutorily Disqualified Associated Persons To Effect or Be Involved In
Effecting Security-Based Swaps.
    (a) Scope of rule. Applications by a security-based swap dealer or
major security-based swap participant for the Commission to permit an
associated person (as provided in 15 U.S.C. 78c(a)(70)) to effect or be
involved in effecting security-based swaps on behalf of a registered
security-based swap dealer or major security-based swap participant, or
to change the terms and conditions thereof, may be made pursuant to
this section where the associated person is subject to a statutory
disqualification and thereby prohibited from effecting or being
involved in effecting security-based swaps on behalf of a security-
based swap dealer or major security-based swap participant under
Exchange Act Section 15F(b)(6) (15 U.S.C. 78o-10(b)(6)).
    (b) Required showing. The applicant shall make a showing that it
would be consistent with the public interest to permit the person
associated with the security-based swap dealer or major security-based
swap participant who is subject to a statutory disqualification to
effect or be involved in effecting security-based swaps on behalf of
the security-based swap dealer or major security-based swap
participant.
    (c) Form of application--natural persons. Each application with
respect to an associated person that is a natural person that is
subject to a statutory disqualification shall be supported by a written
statement, signed by a knowledgeable person authorized by the security-
based swap dealer or major security-based swap participant, which
addresses the items set forth in paragraph (d) of this section. The
application shall be filed pursuant to Rules of Practice 151, 152 and
153 (17 CFR 201.151, 201.152 and 201.153). Each application shall
include as exhibits:
    (1) A copy of the order or other applicable document that resulted
in the associated person being subject to a statutory disqualification;
    (2) An undertaking by the applicant to notify promptly the
Commission in writing if any information submitted in support of the
application becomes materially false or misleading while the
application is pending;
    (3) A copy of the questionnaire or application for employment
specified in 17 CFR 240.15Fb6-2(b), with respect to the associated
person; and
    (4) If the associated person has been the subject of any proceeding
resulting in the imposition of disciplinary sanctions during the five
years preceding the filing of the application or is the subject of a
pending proceeding by the Commission, the Commodity Futures Trading
Commission, any federal or state regulatory or law enforcement agency,
registered futures association (as provided in 7 U.S.C. 21), foreign
financial regulatory authority, registered national securities
association, or any other self-regulatory organization (as provided in
15 U.S.C. 78c(a)(26)), or commodities exchange, or any court, the
applicant should include a copy of any order, decision, or document
issued by the court, agency, self-regulatory organization (as provided
in 15 U.S.C. 78c(a)(26)) or other relevant authority involved.
    (d) Written statement--natural persons. The written statement
required by paragraph (c) of this section shall address each of the
following, to the extent applicable:
    (1) The associated person's compliance with any order resulting in
statutory disqualification, including whether the associated person has
paid fines or penalties, disgorged monies, made restitution or paid any
other monetary compensation required by any such order;
    (2) The associated person's employment during the period subsequent
to becoming subject to a statutory disqualification;
    (3) The capacity or position in which the person subject to a
statutory disqualification proposes to be associated with the security-
based swap dealer or major security-based swap participant;
    (4) The terms and conditions of employment and supervision to be
exercised over such associated person and, where applicable, by such
associated person;
    (5) The qualifications, experience, and disciplinary history of the
proposed supervisor(s) of the associated person;
    (6) The compliance and disciplinary history, during the five years
preceding the filing of the application, of the applicant;
    (7) The names of any other associated persons at the applicant who
have previously been subject to a statutory disqualification and
whether they are to be supervised by the associated person;
    (8) Any relevant courses, seminars, examinations or other actions
completed by the associated person subsequent to becoming subject to a
statutory disqualification to prepare for his or her participation in
the security-based swap business;
    (9) Notwithstanding the event resulting in statutory
disqualification, the applicant should provide a detailed statement of
why the associated person should be permitted to effect or be involved
in effecting security-based swaps on behalf of the security-based swap
dealer or major security-based swap participant, including what steps
the associated person or applicant has taken, or will take, to ensure
that the statutory disqualification does not negatively impact upon the
ability of the associated person to effect or be involved in effecting
security-based swaps on behalf of the security-based swap dealer or
major security-based swap participant in compliance with the applicable
statutory and regulatory framework;
    (10) Whether the associated person has been involved in any
litigation during the five years preceding the filing of the
application concerning investment or investment-related activities or
whether there are any unsatisfied judgments outstanding

against the associated person concerning investment or investment-
related activities, to the extent not otherwise covered by paragraph
(d)(9) of this section. If so, the applicant should provide details
regarding such litigation or unsatisfied judgments; and
    (11) Any other information that the applicant believes to be
material to the application.
    (e) Form of application--other persons. Each application with
respect to an associated person that is not a natural person and that
is subject to a statutory disqualification shall be supported by a
written statement, signed by a knowledgeable person authorized by the
security-based swap dealer or major security-based swap participant,
which addresses the items set forth in paragraph (f) of this section.
The application shall be filed pursuant to Rules of Practice 151, 152
and 153 (17 CFR 201.151, 201.152 and 201.153). Each application shall
include as exhibits:
    (1) A copy of the order or other applicable document that resulted
in the associated person being subject to a statutory disqualification;
    (2) An undertaking by the applicant to notify immediately the
Commission in writing if any information submitted in support of the
application becomes materially false or misleading while the
application is pending;
    (3) Organizational charts of the associated person, if available;
    (4) Policies and procedures relating to the conduct resulting in
the statutory disqualification that the associated person has in place
to ensure compliance with the federal or state securities laws, the
Commodity Exchange Act, the rules or regulations thereunder, or the
rules of the Municipal Securities Rulemaking Board, or any self-
regulatory organization (as provided in 15 U.S.C. 78c(a)(26)), or any
foreign regulatory authority, as applicable;
    (5) If the associated person has been the subject of any
proceedings resulting in the imposition of disciplinary sanctions
during the five years preceding the filing of the application or is the
subject of a pending proceeding by the Commission, the Commodity
Futures Trading Commission, any federal or state regulatory or law
enforcement agency, registered futures association (as provided in 7
U.S.C. 21), foreign financial regulatory authority, registered national
securities association, or any other self-regulatory organization (as
provided in 15 U.S.C. 78c(a)(26)), or commodities exchange, or any
court, the applicant should include a copy of any order, decision, or
document issued by the court, agency, self-regulatory organization (as
provided in 15 U.S.C. 78c(a)(26)) or other relevant authority involved,
if available; and
    (6) The names of any natural persons employed by the associated
person that are subject to a statutory disqualification and that would
effect or be involved in effecting security-based swaps on behalf of
the security-based swap dealer or major security-based swap
participant. For any such natural person, the applicant should indicate
if the individual is an officer, partner, direct or indirect owner of
the associated person.
    (f) Written statement--other persons. The written statement
required by paragraph (e) of this section shall address each of the
following, to the extent applicable:
    (1) General background information about the associated person,
including number of employees; number and location of offices; the
type(s) of business(es) in which the associated person is engaged; and
self-regulatory organization (as provided in 15 U.S.C. 78c(a)(26))
memberships of the associated person and the effective dates of
membership, if applicable;
    (2) The associated person's compliance with any order resulting in
a statutory disqualification, including whether the associated person
has paid fines or penalties, disgorged monies, made restitution or paid
any other monetary compensation required by any such order;
    (3) The capacity or position in which the person subject to a
statutory disqualification proposes to be associated with the security-
based swap dealer or major security-based swap participant;
    (4) A description of whether, with respect to the statutory
disqualification and the sanctions imposed, the associated person was
ordered to undertake any changes to its organizational structure or
policies and procedures set forth in paragraph (e)(4) of this section.
To the extent that such changes were mandated, describe what changes
were mandated and whether the associated person has implemented them;
    (5) Notwithstanding the conduct resulting in a statutory
disqualification, the applicant should provide a detailed statement of
why the associated person should be permitted to effect or be involved
in effecting security-based swaps on behalf of the security-based swap
dealer or major security-based swap participant, including what steps
the associated person or applicant have taken, or will take, to ensure
that the statutory disqualification does not negatively impact upon the
ability of the associated person to effect or be involved in effecting
security-based swaps on behalf of the security-based swap dealer or
major security-based swap participant in compliance with the applicable
statutory and regulatory framework;
    (6) The compliance and disciplinary history, during the five years
preceding the filing of the application, of the applicant;
    (7) Whether the associated person has been involved in any
litigation during the five years preceding the filing of the
application concerning investment or investment-related activities or
whether there are any unsatisfied judgments outstanding against the
associated person concerning investment or investment-related
activities, to the extent not otherwise covered by paragraph (f)(6) of
this section. If so, the applicant should provide details regarding
such litigation or unsatisfied judgments; and
    (8) Any other information that the applicant believes to be
material to the application.
    (g) Prior applications or processes. In addition to the information
specified above, any person making an application under this rule shall
provide any order, notice or other applicable document reflecting the
grant, denial or other disposition (including any dispositions on
appeal) of any prior application or process concerning the associated
person:
    (1) Pursuant to this section;
    (2) Pursuant to Rule of Practice 193 (17 CFR 201.193);
    (3) Pursuant to Investment Company Act Section 9(c) (15 U.S.C. 80a-
9(c));
    (4) Pursuant to Section 19(d) of the Securities Exchange Act of
1934 (15 U.S.C. 78s(d)), Rule 19h-1 under the Securities Exchange Act
of 1934 (17 CFR 240.19h-1), or a proceeding by a self-regulatory
organization (as provided in 15 U.S.C. 78c(a)(26)) for a person to
become or remain a member, or an associated person of a member,
notwithstanding the existence of a statutory disqualification; or
    (5) By the Commodity Futures Trading Commission or a registered
futures association (as provided in 7 U.S.C. 21) for registration,
including as an associated person, or listing as a principal,
notwithstanding the existence of a statutory disqualification,
including:
    (i) Any order or other document providing that the associated
person may be listed as a principal or registered as an associated
person of a futures commission merchant, retail foreign exchange
dealer, introducing broker,

commodity pool operator, commodity trading advisor, or leverage
transaction merchant, or any person registered as a floor broker or a
floor trader, notwithstanding that the person is subject to a statutory
disqualification from registration under Section 8a(2) or 8a(3) of the
Commodity Exchange Act (7 U.S.C. 12a(2), (3)); or
    (ii) Any determination by a registered futures association (as
provided in 7 U.S.C. 21) that had the associated person applied for
registration as an associated person of a swap dealer or a major swap
participant, notwithstanding statutory disqualification, the
application would have been granted or denied.
    (h) Notification to applicant and written statement. In the event
an adverse recommendation is proposed by Commission staff with respect
to an application made pursuant to this rule, the applicant shall be so
advised and provided with a written statement of the reasons for such
recommendation. The applicant shall then have 30 days thereafter to
submit a written statement in response.
    (i) Temporary exclusion for other persons. (1) Unless otherwise
ordered by the Commission, or the Commission, Commodity Futures Trading
Commission, self-regulatory organization (as provided in 15 U.S.C.
78c(a)(26)) or a registered futures association (as provided in 7
U.S.C. 21) has previously denied membership, association, registration
or listing as a principal with respect to the associated person, the
security-based swap dealer or major security-based swap participant
shall be excluded from the prohibition in Section 15F(b)(6) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-10(b)(6)) with respect
to an associated person that is not a natural person and that is
subject to a statutory disqualification as follows:
    (i) For 30 days following the associated person becoming subject to
a statutory disqualification or 30 days following the person that is
subject to a statutory disqualification becoming an associated person
of a security-based swap dealer or major security-based swap
participant; and
    (ii) For 180 days following the filing of a complete application
pursuant to this section and a notice pursuant to paragraph (i)(2) by a
security-based swap dealer or major security-based swap participant if
the application and notice are filed within the time period specified
in paragraph (i)(1)(i), or until such time the Commission makes a
determination on such application within the 180-day time period;
provided that where the Commission does not render a decision within
180 days following the filing of such application, the applicant shall
have 60 days to comply with the prohibition in Section 15F(b)(6) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-10(b)(6)); or
    (iii) For 180 days following the filing of a complete application
with, or initiation of a process by, the Commodity Futures Trading
Commission, self-regulatory organization (as provided in 15 U.S.C.
78c(a)(26)) or a registered futures association (as provided in 7
U.S.C. 21) with respect to the associated person for the membership,
association, registration or listing as a principal, where such
application has been filed or process started prior to or within the
time period specified in paragraph (i)(1)(i) of this section and a
notice has been filed with the Commission pursuant to (i)(2) of this
section within the time period specified in paragraph (i)(1)(i);
provided that where the Commodity Futures Trading Commission, self-
regulatory organization (as provided in 15 U.S.C. 78c(a)(26)) or a
registered futures association (as provided in 7 U.S.C. 21) does not
render a decision or renders an adverse decision with respect to the
associated person within the 180-day time period, the applicant shall
have 60 days to comply with the prohibition in Section 15F(b)(6) of the
Securities Exchange Act of 1934 (15 U.S.C. 78o-10(b)(6)).
    (2) A security-based swap dealer or major security-based swap
participant shall be excluded from the prohibition in Section 15F(b)(6)
of the Securities Exchange Act of 1934 (15 U.S.C. 78o-10(b)(6)) as
provided in paragraph (i)(1)(ii) or (iii) of this section where the
security-based swap dealer or major security-based swap participant has
filed a notice with the Commission setting forth the name of the
security-based swap dealer or major security-based swap participant and
the name of the associated person that is subject to a statutory
disqualification, and attaching as an exhibit to the notice a copy of
the order or other applicable document that resulted in the associated
person being subject to a statutory disqualification.
    (3) Where the Commission denies an application pursuant to this
section with respect to an associated person that is not a natural
person, the Commission may provide by order an extension of the
exclusion provided for in paragraph (i)(1)(ii) of this section as is
necessary or appropriate to allow the applicant to comply with the
prohibition in Section 15F(b)(6) of the Securities Exchange Act of 1934
(15 U.S.C. 78o-10(b)(6)).
    (j) Notice in lieu of an application. (1) A security-based swap
dealer or major security-based swap participant may permit a person
associated with it that is subject to a statutory disqualification to
effect or be involved in effecting security-based swaps on its behalf,
without making an application pursuant to this section, where the
conditions in paragraph (j)(2) of this section are met, and where:
    (i) The person has been admitted to or continued in membership, or
participation or association with a member, of a self-regulatory
organization (as provided in 15 U.S.C. 78c(a)(26)), notwithstanding
that such person is subject to a statutory disqualification under
Section 3(a)(39)(A) through (F) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(39)(A) through (F));
    (ii) The person is a natural person and has been granted consent to
associate pursuant to the Rule of Practice 193 (17 CFR 201.193);
    (iii) The person has been permitted to effect or be involved in
effecting security-based swaps on behalf of a security-based swap
dealer or major security-based swap participant pursuant to this
section; or
    (iv) The person has been registered as, or listed as a principal
of, a futures commission merchant, retail foreign exchange dealer,
introducing broker, commodity pool operator, commodity trading advisor,
or leverage transaction merchant, registered as an associated person of
any of the foregoing, registered as or listed as a principal of a swap
dealer or major swap participant, or registered as a floor broker or
floor trader, notwithstanding that the person is subject to a statutory
disqualification under Sections 8a(2) or 8a(3) of the Commodity
Exchange Act (7 U.S.C. 12a(2), (3)), and the person is not subject to a
Commission bar or suspension pursuant to Sections 15(b), 15B, 15E, 15F
or 17A of the Securities Exchange Act of 1934 (15 U.S.C. 78o(b), 78o-4,
78o-7, 78o-10, 78q-1), Section 9(b) of the Investment Company Act of
1940 (15 U.S.C. 80a-9(b)) or Section 203(f) of the Investment Advisers
Act of 1940 (15 U.S.C. 80b-3(f)).
    (2) A security-based swap dealer or major security-based swap
participant may permit a person associated with it that is subject to a
statutory disqualification to effect or be involved in effecting
security-based swaps on its behalf, without making an application
pursuant to this section, as provided in paragraph (j)(1) of this
section, subject to the following conditions:

    (i) All matters giving rise to a statutory disqualification under
Section 3(a)(39)(A) through (F) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(39)(A) through (F)) have been subject to a process
where the membership, association, registration or listing as a
principal has been granted or otherwise approved by the Commission,
Commodity Futures Trading Commission, self-regulatory organization (as
provided in 15 U.S.C. 78c(a)(26)) or a registered futures association
(as provided in 7 U.S.C. 21);
    (ii) The terms and conditions of the association with the security-
based swap dealer or major security-based swap participant are the same
in all material respects as those approved in connection with a
previous order, notice or other applicable document granting the
membership, association, registration or listing as a principal, as
provided in paragraph (j)(1) of this section;
    (iii) Where the associated person is a natural person, the
security-based swap dealer or major security-based swap participant has
filed a notice with the Commission, setting forth, as appropriate:
    (A) The name of the security-based swap dealer or major security-
based swap participant;
    (B) The name of the associated person subject to a statutory
disqualification;
    (C) The name of the associated person's prospective supervisor(s)
at the security-based swap dealer or major security-based swap
participant;
    (D) The place of employment for the associated person subject to a
statutory disqualification; and
    (E) Identification of any agency, self-regulatory organization (as
provided in 15 U.S.C. 78c(a)(26)) or a registered futures association
(as provided in 7 U.S.C. 21) that has indicated its agreement with the
terms and conditions of the proposed association, registration or
listing as a principal; and
    (iv) Where the associated person is not a natural person, the
security-based swap dealer or major security-based swap participant has
filed a notice with the Commission setting forth:
    (A) The name of the security-based swap dealer or major security-
based swap participant;
    (B) The name of the associated person that is subject to a
statutory disqualification; and
    (C) Identification of any agency, self-regulatory organization (as
provided in 15 U.S.C. 78c(a)(26)) or a registered futures association
(as provided in 7 U.S.C. 21) that has indicated its agreement with the
terms and conditions of the proposed association, registration or
listing as a principal.

Appendix A to Sec.  201.194--Note Concerning Applications by Security-
Based Swap Dealers or Major Security-Based Swap Participants for
Statutorily Disqualified Associated Persons To Effect or Be Involved In
Effecting Security-Based Swaps

    (a) Under Section 15F(b)(6) of the Securities Exchange Act of
1934 (15 U.S.C. 78o-10(b)(6)), except to the extent otherwise
specifically provided by rule, regulation, or order of the
Commission, it shall be unlawful for a security-based swap dealer or
a major security-based swap participant to permit any person
associated with a security-based swap dealer or a major security-
based swap participant who is subject to a statutory
disqualification to effect or be involved in effecting security-
based swaps on behalf of the security-based swap dealer or major
security-based swap participant, if the security-based swap dealer
or major security-based swap participant knew, or in the exercise of
reasonable care should have known, of the statutory
disqualification.
    (b) In accordance with the authority granted in Section
15F(b)(6) of the Securities Exchange Act of 1934 (15 U.S.C. 78o-
10(b)(6)), this rule governs applications to the Commission by a
security-based swap dealer or major security-based swap participant
for the Commission to issue an order to permit an associated person
of a security-based swap dealer or major security-based swap
participant who is subject to a statutory disqualification to effect
or be involved in effecting security-based swaps on behalf of the
security-based swap dealer or major security-based swap participant.
    (c) Applications made pursuant to this rule must show that it
would be consistent with the public interest to permit the
associated person of the security-based swap dealer or major
security-based swap participant to effect or be involved in
effecting security-based swaps on behalf of the security-based swap
dealer or major security-based swap participant. In addition to the
information specifically required by the rule, with respect to
associated persons that are natural persons, applications should be
supplemented, where appropriate, by written statements of
individuals who are competent to attest to the associated person's
character, employment performance, and other relevant information.
In addition to the information required by the rule, the Commission
staff may request supplementary information to assist in the
Commission's review. Intentional misstatements or omissions of fact
may constitute criminal violations of 18 U.S.C. 1001, et seq. and
other provisions of law. The Commission will not consider any
application that attempts to reargue or collaterally attack the
findings that resulted in the statutory disqualification.
    (d) The nature of the supervision that an associated person that
is a natural person will receive or exercise as an associated person
with a registered entity is an important matter bearing upon the
public interest. In meeting the burden of showing that permitting
the associated person to effect or be involved in effecting security
based swaps on behalf of the security-based swap dealer or major
security-based swap participant is consistent with the public
interest, the application and supporting documentation must
demonstrate that the terms or conditions of association, procedures
or proposed supervision, are reasonably designed to ensure that the
statutory disqualification does not negatively impact upon the
ability of the associated person to effect or be involved in
effecting security-based swaps on behalf of the security-based swap
dealer or major security-based swap participant in compliance with
the applicable statutory and regulatory framework.
    (e) Normally, the applicant's burden of demonstrating that
permitting the associated person to effect or be involved in
effecting security based swaps on behalf of the security-based swap
dealer or major security-based swap participant is consistent with
the public interest will be difficult to meet where the associated
person that is a natural person is to be supervised by, or is to
supervise, another statutorily disqualified individual. In addition,
where the associated person wishes to become the sole proprietor of
a registered entity and thus is applying to the Commission to issue
an order permitting the associated person to effect or be involved
in effecting security-based swaps on behalf of the security-based
swap dealer or major security-based swap participant notwithstanding
an absence of supervision, the applicant's burden will be difficult
to meet. The associated person may be limited to association in a
specified capacity with a particular registered entity and may also
be subject to specific terms and conditions.

    By the Commission.

    Dated: August 5, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015-19662 Filed 8-24-15; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register Volume 81, Number 166 (Friday, August 26, 2016)]
[Notices]
[Pages 58942-58944]
[FR Doc No: 2016-20472]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2016-N-2496]

Agency Information Collection Activities; Proposed Collection;
Comment Request; User Account Management Function for the Import Trade
Auxiliary Communication System

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing an
opportunity for public comment on the proposed collection of certain
information by the Agency. Under the Paperwork Reduction Act of 1995
(the PRA), Federal Agencies are required to publish notice in the
Federal Register concerning each proposed collection of information,
and to allow 60 days for public comment in response to the notice. This
notice solicits comments on the collection of information required to
implement user account management function in FDA's Import Trade
Auxiliary Communication System (ITACS). Secure user accounts will allow
import trade users to receive Notices of FDA Action and requests for
specific information via email or via download within ITACS.

DATES: Submit either electronic or written comments on the collection
of information by October 25, 2016.

ADDRESSES: You may submit comments as follows:

Electronic Submissions

    Submit electronic comments in the following way:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. Comments submitted
electronically, including attachments, to http://www.regulations.gov
will be posted to the docket unchanged. Because your comment will be
made public, you are solely responsible for ensuring that your comment
does not include any confidential information that you or a third party
may not wish to be posted, such as medical information, your or anyone
else's Social Security number, or confidential business information,
such as a manufacturing process. Please note that if you include your
name, contact information, or other information that identifies you in
the body of your comments, that information will be posted on http://www.regulations.gov.
     If you want to submit a comment with confidential
information that you do not wish to be made available to the public,
submit the comment as a written/paper submission and in the manner
detailed (see ``Written/Paper Submissions'' and ``Instructions'').

Written/Paper Submissions

    Submit written/paper submissions as follows:
     Mail/Hand delivery/Courier (for written/paper
submissions): Division of Dockets Management (HFA-305), Food and Drug
Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.
     For written/paper comments submitted to the Division of
Dockets Management, FDA will post your comment, as well as any
attachments, except for information submitted, marked and identified,
as confidential, if submitted as detailed in ``Instructions.''
    Instructions: All submissions received must include the Docket No.
FDA-2016-N-2496 for ``Agency Information Collection Activities;
Proposed Collection; Comment Request; User Account Management Function
for the Import Trade Auxiliary Communication System.'' Received
comments will be placed in the docket and, except for those submitted
as ``Confidential Submissions,'' publicly viewable at http://www.regulations.gov or at the Division of Dockets Management between 9
a.m. and 4 p.m., Monday through Friday.
     Confidential Submissions--To submit a comment with
confidential information that you do not wish to be

made publicly available, submit your comments only as a written/paper
submission. You should submit two copies total. One copy will include
the information you claim to be confidential with a heading or cover
note that states ``THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.''
The Agency will review this copy, including the claimed confidential
information, in its consideration of comments. The second copy, which
will have the claimed confidential information redacted/blacked out,
will be available for public viewing and posted on http://www.regulations.gov. Submit both copies to the Division of Dockets
Management. If you do not wish your name and contact information to be
made publicly available, you can provide this information on the cover
sheet and not in the body of your comments and you must identify this
information as ``confidential.'' Any information marked as
``confidential'' will not be disclosed except in accordance with 21 CFR
10.20 and other applicable disclosure law. For more information about
FDA's posting of comments to public dockets, see 80 FR 56469, September
18, 2015, or access the information at: http://www.fda.gov/regulatoryinformation/dockets/default.htm.
    Docket: For access to the docket to read background documents or
the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in
the heading of this document, into the ``Search'' box and follow the
prompts and/or go to the Division of Dockets Management, 5630 Fishers
Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT: FDA PRA Staff, Office of Operations,
Food and Drug Administration, Three White Flint North, 10A63, 11601
Landsdown St., North Bethesda, 20852<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: Under the PRA (44 U.S.C. 3501-3520), Federal
Agencies must obtain approval from the Office of Management and Budget
(OMB) for each collection of information they conduct or sponsor.
``Collection of information'' is defined in 44 U.S.C. 3502(3) and 5 CFR
1320.3(c) and includes Agency requests or requirements that members of
the public submit reports, keep records, or provide information to a
third party. Section 3506(c)(2)(A) of the PRA (44 U.S.C. 3506(c)(2)(A))
requires Federal Agencies to provide a 60-day notice in the Federal
Register concerning each proposed collection of information before
submitting the collection to OMB for approval. To comply with this
requirement, FDA is publishing notice of the proposed collection of
information set forth in this document.
    With respect to the following collection of information, FDA
invites comments on these topics: (1) Whether the proposed collection
of information is necessary for the proper performance of FDA's
functions, including whether the information will have practical
utility; (2) the accuracy of FDA's estimate of the burden of the
proposed collection of information, including the validity of the
methodology and assumptions used; (3) ways to enhance the quality,
utility, and clarity of the information to be collected; and (4) ways
to minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques, when
appropriate, and other forms of information technology.
Account Management Function for the Import Trade Auxiliary
Communication System--OMB Control Number 0910-NEW
    ITACS currently provides the import trade community with four
functions: The ability to check the status of FDA-regulated entries and
lines, the ability to submit entry documentation electronically, the
ability to electronically submit the location of goods for those lines
targeted for FDA physical examination, and the ability to check
estimated laboratory analysis completion dates. No user login accounts
are currently necessary to access these functions; all that is
necessary is a valid customs entry number that has been successfully
transmitted to FDA.
    FDA has developed ITACS user account management functionality.
Implementation of this functionality would allow members of the import
trade community to create and manage secure user accounts in ITACS,
which would enable FDA to distribute Notices of FDA Action to users
electronically via email (rather than regular mail), enable users to
download Notices of FDA Action from within ITACS, and allow users to
view in ITACS the details of specific information requests which are
currently delivered via hard copy Notices of FDA Action. ITACS user
account management functionality would also allow for potential future
ITACS enhancements, requested by the import trade community, that
require user authentication.
    To create a secure user account for ITACS via the user account
management function, a person would have to enter basic information
such as the person's name, their employer's name, a contact email
address, an account password, etc., into ITACS via the user account
management function interface.
    FDA estimates the burden of this collection of information as
follows:

                                 Table 1--Estimated Annual Reporting Burden \1\
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                                                   Number of
           Activity                Number of     responses per   Total annual    Average burden     Total hours
                                  respondents     respondent       responses      per response
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Creation of ITACS account.....           5,000               1           5,000  0.5 (30 minutes)           2,500
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\1\ There are no capital costs or operating and maintenance costs associated with this collection of
  information.

    Dated: August 22, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-20472 Filed 8-25-16; 8:45 am]
 BILLING CODE 4164-01-P


[Federal Register Volume 85, Number 102 (Wednesday, May 27, 2020)]
[Notices]
[Page 31774]
[FR Doc No: 2020-11329]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

Combined Notice of Filings #2

    Take notice that the Commission has received the following Natural
Gas Pipeline Rate and Refund Report filings:

    Docket Numbers: RP20-876-000.
    Applicants: Shell Energy North America (US), L.P., National Fuel
Gas Company.
    Description: Joint Petition for Temporary Waivers of Capacity
Release Regulations and Policies, et al. of Shell Energy North America
(US), L.P., et al. under RP20-876.
    Filed Date: 5/18/20.
    Accession Number: 20200518-5198.
    Comments Due: 5 p.m. ET 6/1/20.

    Docket Numbers: RP20-879-000.
    Applicants: Antero Resources Corporation, MU Marketing LLC.
    Description: Joint Petition for Temporary Waivers of Capacity
Release Regulations, et al. of Antero Resources Corporation, et al.
under RP20-879.
    Filed Date: 5/19/20.
    Accession Number: 20200519-5169.
    Comments Due: 5 p.m. ET 6/1/20.

    The filings are accessible in the Commission's eLibrary system by
clicking on the links or querying the docket number.
    Any person desiring to intervene or protest in any of the above
proceedings must file in accordance with Rules 211 and 214 of the
Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00
p.m. Eastern time on the specified date(s). Protests may be considered,
but intervention is necessary to become a party to the proceeding.
    eFiling is encouraged. More detailed information relating to filing
requirements, interventions, protests, service, and qualifying
facilities filings can be found at: http://www.ferc.gov/docs-filing/efiling/filing-req.pdf. For other information, call<PHONE_NUMBER>
(toll free). For TTY, call<PHONE_NUMBER>.

    Dated: May 20, 2020.
Nathaniel J. Davis, Sr.,
Deputy Secretary.
[FR Doc. 2020-11329 Filed 5-26-20; 8:45 am]
BILLING CODE 6717-01-P