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Federal Register / Vol. 86, No. 2 / Tuesday, January 5, 2021 / Rules and Regulations
impact the valuation of swaps.5 In explaining the rationale for requiring SDs and MSPs to engage in portfolio reconciliation, the Commission noted that portfolio reconciliation can identify and reduce overall risk by identifying and managing mismatches in key economic terms and valuation for individual transactions across an entire portfolio. 6
On September 17, 2020, the Commission adopted a final rule revising parts 45, 46 and 49 of its regulations on swap data recordkeeping and reporting requirements for swap data repositories SDRs, derivatives clearing organizations DCOs, swap execution facilities, derivatives contract markets, SDs, MSPs, and swap counterparties that are neither SDs nor MSPs SDR Rule.7 As part of the SDR
Rule, the Commission made significant changes to appendix 1 of part 45 of the Commission regulations, which, as discussed above, is referenced in the definition of material terms set forth in Commission regulation 23.500g. As a result of these changes, among other things, the new appendix 1 will no longer use the concept of primary economic terms and will no longer contain the data fields that are explicitly referenced in 23.500g.8
II. Interim Final Rule To maintain the status quo for portfolio reconciliation requirements under 23.502 and ensure that SDs and MSPs can continue to engage in their required portfolio reconciliation exercises without disruption, in this Interim Final Rule the Commission is copying existing appendix 1 of part 45
as a new appendix 1 to subpart I of part 23, and amending 23.500g to reference appendix 1 to subpart I of part 23 instead of appendix 1 to part 45.9 By 5 17

CFR 23.500g.
Reconciliation Final Rule, 77 FR at 55927.
7 See Swap Data Recordkeeping and Reporting Requirements, 85 FR 75503 Nov. 25, 2020. The SDR Rule did not expressly contemplate making changes to the Portfolio Reconciliation Final Rule for SDs and MSPs.
8 See 17 CFR 23.500g.
9 Because appendix 1 to subpart I of part 23 only will be used as a reference in connection with the requirements for portfolio reconciliation exercises, the appendix will include only those terms that SDs and MSPs are required to reconcile under regulation 23.502.
Because 45.5 is being amended by the SDR Rule and will no longer discuss unique swap identifiers USIs, for clarity the Commission has changed only the explanatory comment in appendix 1 for each USI field from As provided in 45.5. to The USI is a unique identifier assigned to all swap transactions which identifies the transaction the swap and its counterparties uniquely throughout its duration. The Commission believes this change will mitigate possible confusion and serve to
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doing so, the Commission will enable SDs and MSPs to avoid having to modify their portfolio reconciliation procedures and practices under 23.502
despite the changes made by the SDR
Rule. By this Interim Final Rule, the Commission is making technical organizational changes to its regulations to ensure that market participants will continue engaging in portfolio reconciliation exercises in their current manner, without disruption. Thus, the goal of these technical amendments is to maintain the Commissions regulatory requirements in connection with portfolio reconciliation without change.
Without these amendments, market participants would lack meaningful regulatory reference concerning how to perform portfolio reconciliation exercises in light of changes made to appendix 1 of part 45 by the SDR Rule.
III. Public Participation The Commission is issuing this Interim Final Rule to maintain the status quo for portfolio reconciliation requirements under 23.502 and ensure that SDs and MSPs can continue to engage in their required portfolio reconciliation exercises without disruption, as discussed above. This approach enables these regulatory changes to take effect sooner than would be possible with the publication of a notice of proposed rulemaking in advance. Nonetheless, the Commission welcomes public comments from interested persons regarding any aspect of its consideration of, and the changes made by, this Interim Final Rule, as well as the following pertaining to potential additional amendments in the future.
Should the Commission propose modifying appendix 1 to subpart I of part 23 as adopted by this Interim Final Rule to make it more consistent with appendix 1 to part 45 as amended by the SDR Rule or make other changes?
If yes, what specific modifications should the Commission propose and why? In addition, should the Commission provide that the reconciliation of a Unique Product Identifier UPI constitutes the reconciliation of each other material term that is included in the UPI? Why or why not?
All comments must be submitted in English, or if not, accompanied by an English translation. Please refer to the ADDRESSES section above. Except as described below regarding confidential business information, all comments are considered part of the public record and will be posted as received to http
maintain current portfolio reconciliation processes for SDs and MSPs.

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comments.cftc.gov for public inspection.
The information made available online includes personal identifying information such as name and address which is voluntarily submitted by the commenter. You should submit only information that you wish to make available publicly.
If you want to submit material that you consider to be confidential business information as part of your comment, but do not want it to be posted online, you must submit your comment by mail or hand delivery/courier and include a petition for confidential treatment as described in 145.9 of the Commissions regulations.10
The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from http comments.cftc.gov that it may deem to be inappropriate for publication, such as obscene language.
All submissions that have been redacted or removed that contain comments on the merits of the rulemaking will be retained in the rulemaking record and will be considered as required under the Administrative Procedure Act APA 11 and other applicable laws, and may be accessible under the Freedom of Information Act.12
IV. Related Matters A. Administrative Procedure Act The APA generally requires federal agencies to publish a notice of proposed rulemaking and provide an opportunity for public comment before issuing a new rule.13 However, an agency may issue a new rule without a prepublication public comment period when it for good cause finds that prior notice and comment is impracticable, unnecessary, or contrary to the public interest. 14 The Commission has determined that there is good cause to find that a prepublication comment period is unnecessary because this Interim Final Rule involves technical, ministerial changes that simply move the placement of the current requirements from one part of the Commissions regulations part 45 to another part 23
to retain the status quo for purposes of part 23s mandated portfolio reconciliation exercises.15 For this 10 17

CFR 145.9.
U.S.C. 553 et seq.
12 5 U.S.C. 552.
13 See 5 U.S.C. 553b.
14 See 5 U.S.C. 553b3B.
15 Further, if the Commission were to provide an opportunity for notice and comment prior to the amendments effectiveness, the SDR Rule may take effect during the intervening period, causing 11 5

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