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Federal Register / Vol. 86, No. 27 / Thursday, February 11, 2021 / Rules and Regulations Third, the Commission is making certain amendments to the ACR
regulations in existing 37.1501e 260 in order to remove duplicative or unnecessary information requirements and streamline existing requirements.
The Commission is removing existing 37.1501e2i, which requires a SEF
to include in the ACR a review of all of the Commission regulations applicable to the SEF and identify the written policies and procedures designed to ensure compliance with the Act and Commission regulations. The Commission is also eliminating certain specific content required under existing 37.1501e4.261 The Commission is amending existing 37.1501e5 262 to require a SEF to only discuss material noncompliance matters and explain the corresponding actions taken to resolve such matters, rather than describing all compliance matters. The Commission is amending existing 37.1501e6 263 to limit a SEF CCOs certification of an ACRs accuracy and completeness to all material respects of the report, rather than the entire report. The Commission is streamlining and reorganizing the remaining ACR content requirements, including consolidating the CCOs required description of the SEFs policies and procedures under existing 37.1501e1 264 with the CCOs required assessment of the effectiveness of these policies and procedures under existing 37.1501e2ii, and consolidating the CCOs required narrative of any material changes made during the prior year along with any recommended potential or prospective changes and areas of improvement to the compliance program as required under existing 37.1501e3 and existing 37.1501e2iii,265 respectively.
The Commission is finalizing several amendments to simplify the ACR
submission procedures. The Commission is amending existing 37.1501f2 266 to provide SEFs with an additional 30 days to file the ACR
with the Commission. Additionally, the 260 This
requirement is in amended 37.1501d.
requirement is in amended 37.1501d3. The eliminated provisions currently require a discussion of the SEFs compliance staffing and structure, a catalogue of investigations and disciplinary actions taken over the last year, and a review of disciplinary committee and panel performance.
262 This requirement is in amended 37.1501d4.
263 This requirement is in amended 37.1501d5.
264 This requirement is in amended 37.1501d1.
265 This requirement is in amended 37.1501d2.
266 This requirement is in amended 37.1501e2.

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Commission is eliminating the substantial and undue hardship standard required for ACR extension requests and replacing it with a reasonable and valid standard set forth in existing 37.1501f4.267 The Commission is amending existing 37.1501f3 268 to require that the CCO submit an amended ACR to the SEFs board of directors or, in the absence of a board of directors, the senior officer of the SEF, for review prior to submitting the amended ACR to the Commission.
In addition to these substantive changes, the Commission is adopting a number of conforming, clarifying, and streamlining changes that would not impose new costs or result in new benefits and are not discussed below.
The Commission is eliminating the CCOs obligations to the ROC, including existing 37.1501c1iii, which requires a quarterly meeting with the ROC and existing 37.1501c1iv, which requires the CCO to provide selfregulatory program information to the ROC. The Final Rule will not impact SEFs as there is no requirement that a SEF have a ROC.
Additionally, the Commission is consolidating existing 37.1501b and c into final 37.1501b. The Commission is eliminating existing 37.1501b1, which requires a SEF to designate a CCO and existing 37.1501c2, which requires the CCO
to report directly to the board of directors or the senior officer of the SEF, as these requirements are already contained under 37.1500.
The Commission is eliminating the requirement under existing 37.1501f1 that a SEF document the submission of the ACR to the SEFs board of directors or senior officer in the board minutes or some other similar written record. This requirement is already covered in the general recordkeeping requirements in amended 37.1501f, which is existing 37.1501g.
The Commission is finalizing an amendment to 37.1501a2 to define a senior officer as the chief executive officer or other equivalent officer of the swap execution facility. 269 Finally, the Commission is adopting a new acceptable practice to Core Principle 15
267 This requirement is in amended 37.1501e4.
268 This requirement is in amended 37.1501e3.
269 In the SEF Core Principles Final Rule, the Commission did not adopt a definition of senior officer, but noted that the statutory term would only include the most senior executive officer of the legal entity registered as a SEF. See SEF Core Principles Final Rule at 33544.

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in Appendix B that provides a nonexclusive list of factors that a SEF may consider when evaluating an individuals qualifications to be a CCO.270 This acceptable practice will provide a safe harbor and not impose new obligations.
ii. Benefits The amendments give the senior officer the same authority as the board of directors to oversee the CCO and provide SEFs with greater opportunity to structure the management and oversight of the CCO based on the SEFs particular corporate structure, size, and complexity. This could increase efficiency and reduce costs.
Additionally, the quality of oversight of the CCO could improve if the senior officer is better positioned than the board of directors to provide day-to-day oversight of the CCO.
The amendments permit a CCO to use any means to identify noncompliance issues and are less prescriptive than the existing rule, which could increase efficiency and reduce costs. The amendment to 37.1501d refines the scope of the required information in an ACR and should make the ACR process more efficient and reduce costs. The removal of 37.1501e2i and certain specific content set forth under 37.1501e4 should reduce the amount of time that a CCO and his or her staff spend preparing the ACR.
Amended 37.1501d4, which requires SEFs to focus on describing material non-compliance matters, rather than describing all compliance matters, should streamline the ACR requirement and provide more useful information to the Commission. Additionally, the clarification under 37.1501e3 that the CCO must submit an amended ACR
to the SEFs board of directors or, in the absence of a board of directors, the senior officer of the SEF, should reduce the need for extensive follow-up discussions.
Finally, the amendment allowing SEFs more time to submit their ACRs should reduce the time and resource burden on CCOs and SEFs compliance departments. This additional time should allow SEFs to fully complete their ACRs and meet their other end-ofyear reporting obligations such as the fourth-quarter financial report.
However, the Commission understands that those SEFs that already may rely on Commission staff no-action relief for an extra 30 days to complete the ACR may have already availed themselves of the benefits associated with the extended reporting deadline.
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