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Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Rules and Regulations
dealing activity in security-based swaps or may place an undue burden on access to this market.53 In crafting the securitybased swap dealer requirements, the Commission has considered the benefits for financial stability as well as the burden on competition and the promotion of efficiency, competition, and capital formation.54 As such, in the Commissions view, applying requirements for clearing agencies to entities engaging in dealing activity in security-based swaps for performing customary dealing activity is not necessary to achieve the goals of the Dodd-Frank Act.
Similarly, security-based swap execution facilities will have to register with the Commission and abide by the standards listed in the Dodd-Frank Act, as implemented by future Commission rules.55 Providing data to participants to compare settlement terms or acting on behalf of a clearing agency to facilitate clearing services to the security-based swap execution facilities customers, while related to clearing and settlement, does not expose the security-based swap execution facility to market volatility, so the Commission does not believe that these activities alone justify requiring security-based swap execution facilities to adopt the risk management practices required of clearing agencies.
The cost savings associated with new Rule 17Ad24 may promote competition among entities engaging in dealing activity in security-based swaps and security-based swap execution facilities. For example, new Rule 17Ad 24 may lower barriers to entry for entities engaging in dealing activity in security-based swaps, promoting competition among liquidity providers in the security-based swap market.
Similarly, lower costs for security-based swap execution facilities that provide trade processing services should increase competition in providing these services, which may reduce the price and/or increase the quality of these services. To the extent that new Rule 17Ad24 increases the availability of 53 See Clearing Agency Standards adopting release, supra note 4, at 6624243. In particular, security-based swap dealers do not have members like clearing agencies do. Requiring that they accept any participant that has net capital above $50
million may unduly restrict their ability to mitigate risks and function as a dealer.
54 See, e.g., Risk Mitigation Techniques adopting release, supra note 44, at 6390 requiring certain risk mitigation techniques for registered securitybased swap dealers who hold uncleared swaps because the risks of the counterparties failure to manage credit risk adequately may not become apparent until the onset of a financial crisis, as well as discussing the rules burden on competition and promotion of efficiency, competition, and capital formation.
55 See 15 U.S.C. 78c4.

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and competition between either liquidity providers or trade execution services, it may marginally improve efficiency of these services. The Commission does not anticipate new Rule 17Ad24 to have a substantial impact on capital formation.
IV. Paperwork Reduction Act The Paperwork Reduction Act of 1995
PRA imposes certain requirements on Federal agencies in connection with the conducting or sponsoring of any collection of information. 56 An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Further, 44 U.S.C. 3507a provides that, before adopting or revising a collection of information requirement, an agency must, among other things, publish notice in the Federal Register stating that the agency has submitted the proposed collection of information to the Office of Management and Budget OMB and setting forth certain required information, including i a title for the collection of information; ii a summary of the collection of information; iii a brief description of the need for the information and the proposed use of the information; iv a description of the likely respondents and proposed frequency of response to the collection of information; v an estimate of the paperwork burden that shall result from the collection of information; and vi notice that comments may be submitted to the agency and director of OMB.57
The proposing release provided notice that Rule 17Ad24 does not impose recordkeeping or information collection requirements and would not be a collection of information within the meaning of the PRA. The Commission received no comments in response, and the Commission continues to believe that Rule 17Ad-24 does not impose a recordkeeping burden.

determine the impact of such rulemaking on small entities. 60 The Commission certified in the proposing release, pursuant to Section 605b of the RFA, that Rule 17Ad24 would not, if adopted, have a significant impact on a substantial number of small entities.61
The Commission received no comments on this certification.
Because the exemptions provided in Rule 17Ad24 ensure that certain activities of registered security-based swap dealers, registered security-based swap execution facilities, and entities engaging in dealing activity in securitybased swaps that are eligible for an exception under 17 CFR 240.3a712a or subject to the period set forth in 17
CFR 240.3a712b do not trigger the requirement to register as a clearing agency,62 the Commission certifies that Rule 17Ad24 will not have a significant economic impact on a substantial number of small entities.
VI. Other Matters If any of the provisions of this rule, or the application thereof to any person or circumstance, is held to be invalid, such invalidity shall not affect other provisions or application of such provisions to other persons or circumstances that can be given effect without the invalid provision or application.
Pursuant to the Congressional Review Act,63 the Office of Information and Regulatory Affairs has designated these rules as not a major rule, as defined by 5 U.S.C. 8042.
VII. Statutory Authority Pursuant to the Exchange Act, particularly Sections 17A and 36
thereof, 15 U.S.C. 78q1 and 15 U.S.C.
78mm, the Commission is adopting Rule 17Ad24.
List of Subjects in 17 CFR Part 240

V. Regulatory Flexibility Act Certification
Reporting and recordkeeping requirements, Securities.

The Regulatory Flexibility Act RFA requires the Commission, in promulgating rules, to consider the impact of those rules on small entities.58
Section 603a of the Administrative Procedure Act,59 as amended by the RFA, generally requires the Commission to undertake a regulatory flexibility analysis of all proposed rules to
Text of Amendment
56 See
44 U.S.C. 3501 et seq.; 44 U.S.C. 35023.
44 U.S.C. 3507a1D; see also 5 CFR
1320.5a1iv.
58 See 5 U.S.C. 601 et seq.
59 5 U.S.C. 603a.
57 See
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In accordance with the foregoing, title 17, chapter II of the Code of Federal Regulations is amended as follows:
60 Section 601b of the RFA permits agencies to formulate their own definitions of small entities.
See 5 U.S.C. 601b. The Commission has adopted definitions for the term small entity for the purposes of rulemaking in accordance with the RFA. These definitions, as relevant to this rulemaking, are set forth in 17 CFR 240.010.
61 See 5 U.S.C. 605b.
62 See supra Part III.
63 5 U.S.C. 801 et seq.

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