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Federal Register / Vol. 86, No. 4 / Thursday, January 7, 2021 / Rules and Regulations successful, the commenters suggested that the Commission allow for an appropriate transitional period so that affected clearing members and customers may migrate to other clearing organizations in an orderly manner.
The Commission agrees with the commenters that sufficient time for transition will be needed in the event that it terminates an exemption from registration. That is why the Commission proposed in 39.6f4i that it would issue an order of termination with an effective date intended to provide the exempt DCO
with a reasonable amount of time to wind down its swap clearing services for U.S. persons, including the liquidation or transfer of the positions and related collateral of U.S. persons, as necessary. The Commission is adopting 39.6f as proposed.
Furthermore, the Commission proposed 39.6g to set forth the framework under which an exempt DCO
may petition the Commission to terminate its exemption and the applicable procedures. Specifically, pursuant to proposed 39.6g1, an exempt DCO may request that the Commission terminate its exemption if the exempt DCO: i No longer qualifies for an exemption as a result of changed circumstances; ii intends to cease clearing swaps for U.S. persons; or iii submits an application for registration in accordance with 39.3a2 or 39.3a3, as applicable. The Commission further proposed in 39.6g2 that the petition for termination must include a detailed explanation for the request and describe the exempt DCOs plans for liquidation or transfer of the positions and related collateral of U.S. persons, if applicable.
Under proposed 39.6g3, the Commission would issue an order of termination within a reasonable time appropriate to the circumstances or in conjunction with the issuance of an order of registration, if applicable.
The Commission did not receive any comments on 39.6g. The Commission is adopting this provision as proposed.
Lastly, the Commission proposed 39.6h to provide that, following the Commissions issuance of an order of termination unless issued in conjunction with the issuance of an order of registration, the exempt DCO
must provide immediate notice of such termination to its clearing members. The notice must include: 1 A Copy of the Commissions order of termination; 2 a description of the procedures for orderly disposition of any open swaps positions that were cleared for U.S. persons; and 3 an instruction to clearing members, requiring that they provide the exempt
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DCOs notice of such termination to all U.S. persons clearing swaps through such clearing members. The Commission did not receive any comments on this provision. The Commission is adopting 39.6h as proposed.
D. Regulation 39.9Scope The Commission proposed to revise 39.9 to make it clear that the provisions of subpart B apply to any DCO, as defined under section 1a15 of the CEA and 1.3, that is registered with the Commission as a DCO pursuant to section 5b of the CEA, but do not apply to any exempt DCO. This revision was intended to clarify that the subpart B regulations that address compliance with the DCO Core Principles applicable to registered DCOs do not impose any obligations upon exempt DCOs. The Commission did not receive any comments on this proposal. The Commission is adopting 39.9 largely as proposed.43
III. Amendments to Part 140
The Commission initially proposed amendments to 140.94c to delegate authority to the Director of the Division of Clearing and Risk DCR for all functions reserved to the Commission in proposed 39.6, subject to certain exceptions. Specifically, the Commission did not propose to delegate its authority to grant, modify, or terminate an exemption or prescribe conditions to an exemption order.
Consistent with that proposal, the Commission further proposed to supplement its delegation to DCR to include certain functions related to the modification or termination of an exemption order upon the Commissions initiative. These functions would include, but would not be limited to, sending an exempt DCO
notice of an intention to modify or terminate its exemption order. However, the Commission alone would retain the authority to modify or terminate the exemption order. The Commission did not receive any comments on this proposal. The Commission is adopting the changes to 140.94c as proposed.
43 Subsequent to the 2018 Proposal, the Commission amended 39.9 in the Alternative Compliance rulemaking to take into account a DCO
registered subject to alternative compliance. See Registration with Alternative Compliance for NonU.S. Derivatives Clearing Organizations, 85 FR at 67171. The Commission is adding to those amendments the changes it had originally proposed in the 2018 Proposal. See Exemption From Derivatives Clearing Organization Registration, 83
FR at 39929.

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IV. Related Matters A. Regulatory Flexibility Act The Regulatory Flexibility Act RFA
requires that agencies consider whether the regulations they propose will have a significant economic impact on a substantial number of small entities and, if so, provide a regulatory flexibility analysis on the impact.44 The regulations being adopted by the Commission will affect clearing organizations. The Commission has previously established certain definitions of small entities to be used by the Commission in evaluating the impact of its regulations on small entities in accordance with the RFA.
The Commission has previous determined that clearing organizations are not small entities for the purpose of the RFA.45 Accordingly, the Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605b that the regulations adopted herein will not have a significant economic impact on a substantial number of small entities.
B. Paperwork Reduction Act The Paperwork Reduction Act of 1995
PRA 46 imposes certain requirements on Federal agencies including the Commission in connection with their conducting or sponsoring a collection of information as defined by the PRA. The regulations adopted herein would result in such a collection, as discussed below.
A person is not required to respond to a collection of information unless it displays a currently valid control number issued by the Office of Management and Budget OMB. The Commission requested a new OMB
control number for the collection of information in connection with the proposal.
The Commission received one comment regarding its cost burden analysis in the preamble to the Proposal.
JSCC stated in its October 2018
comment letter that the Commissions cost estimate of $10,500 47 for an application for exemption from DCO
registration substantially underestimated an applicants costs, which JSCC stated would require a significant amount of resources to understand any legal and/or regulatory implications arising from the DCO
exemption, as well as to identify any potential conflicts with the applicants 44 5

U.S.C. 601 et seq.
66 FR 45604, 45609 Aug. 29, 2001.
46 44 U.S.C. 3501 et seq.
47 Due to minor adjustments to the burden estimate for an exempt DCO application due to consolidating the burden estimates for components of the application, the current estimated cost is $10,000 per application.
45 See
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