[Federal Register Volume 86, Number 26 (Wednesday, February 10, 2021)]
[Notices]
[Pages 8977-8982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02755]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91071; File No. SBSDR-2020-01]


Security-Based Swap Data Repositories; DTCC Data Repository 
(U.S.), LLC; Notice of Filing of Application for Registration as a 
Security-Based Swap Data Repository

February 5, 2021.

I. Introduction

    On December 22, 2020, DTCC Data Repository (U.S.), LLC (``DDR'') 
filed with the Securities and Exchange Commission (``Commission'') an 
application on Form SDR to register as a security-based swap data 
repository (``SDR'') pursuant to Section 13(n)(1) of the Securities 
Exchange Act of 1934 (``Exchange Act'') and 17 CFR 240.13n-1 (``Rule 
13n-1'') thereunder,\1\ and as a securities information processor 
(``SIP'') under Section 11A(b) of the Exchange Act.\2\ DDR intends to 
operate as a registered SDR for security-based swap (``SBS'') 
transactions in the equity, credit, and interest rate derivatives asset 
classes.\3\ The Commission is publishing this notice to solicit 
comments from interested persons regarding DDR's application,\4\ and 
the Commission will consider any comments it receives in making its 
determination whether to approve DDR's application for registration as 
an SDR and as a SIP.
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    \1\ 15 U.S.C. 78m(n)(1); 17 CFR 240.13n-1. A copy of DDR's 
application on Form SDR and non-confidential exhibits thereto are 
available for public viewing on the Commission's website. In 2016, 
DDR submitted a prior application for registration as an SDR. See 
Release No. 34-78216 (June 30, 2016), 81 FR 44379 (July 7, 2016); 
Release No. 34-81302 (Aug. 3, 2017), 82 FR 37276 (Aug. 9, 2017). DDR 
withdrew this prior application in 2018. See Letter from Chris 
Childs, Managing Director, DDR, Mar. 27, 2018, https://www.sec.gov/divisions/marketreg/sdr/dtcc-sdr-application-withdrawal-letter-032718.pdf.
    \2\ 15 U.S.C. 78k-1(b).
    \3\ DDR has included the interest rate asset class in its 
application based on feedback from potential users of its SDR 
services. The potential users have identified certain types of 
transactions that will be reported through DDR's infrastructure for 
interest rate derivatives as falling within the Exchange Act 
definition of an SBS transaction.
    \4\ The descriptions set forth in this notice regarding the 
structure and operations of DDR have been derived, excerpted, or 
summarized from DDR's application on Form SDR.
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II. Background

A. SDR Registration, Duties, and Core Principles

    Section 13(n) of the Exchange Act makes it unlawful for any person, 
unless registered with the Commission, directly or indirectly, to make 
use of the mails or any means or instrumentality of interstate commerce 
to perform the functions of an SDR.\5\ To be registered and maintain 
registration, an SDR must comply with certain requirements and core 
principles described in Section 13(n), as well as any requirements that 
the Commission may impose by rule or regulation.\6\ In 2015, the 
Commission adopted 17 CFR 240.13n-1 to 13n-12 under the Exchange Act to 
establish Form SDR, the procedures for registration as an SDR, and the 
duties and core principles applicable to an SDR (``SDR Rules'').\7\ The 
Commission provided a temporary exemption from compliance with the SDR 
Rules and also extended exemptions from the provisions of the Dodd-
Frank Act set forth in a Commission order providing temporary 
exemptions and other temporary relief from compliance with certain 
provisions of the Exchange Act concerning security-based swaps, and 
these temporary exemptions expired in 2017.\8\
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    \5\ 15 U.S.C. 78m(n).
    \6\ Id.
    \7\ See Release No. 34-74246 (Feb. 11, 2015), 80 FR 14438, 14438 
(Mar. 19, 2015) (``SDR Adopting Release''). In 2016, the Commission 
subsequently amended 17 CFR 240. 13n-4 to address third-party 
regulatory access to SBS data obtained by an SDR. See Release No. 
34-78716 (Aug. 29, 2016), 81 FR 60585 (Sep. 2, 2016).
    \8\ See Release No. 34-80359 (Mar. 31, 2017), 82 FR 16867 (Apr. 
6, 2017).
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    The Commission also has adopted 17 CFR 242.900 to 909 under the 
Exchange Act (collectively, ``Regulation SBSR''), which governs 
regulatory reporting and public dissemination of security-based swap 
transactions.\9\ Among other things, Regulation SBSR requires each 
registered SDR to register with the Commission as a SIP,\10\ and the 
Form SDR constitutes an application for

[[Page 8978]]

registration as a SIP, as well as an SDR.\11\
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    \9\ Release No. 34-74244 (Feb. 11, 2015), 80 FR 14563 (Mar. 19, 
2015); Release No. 34-78321 (July 14, 2016), 81 FR 53546 (Aug. 12, 
2016). Regulation SBSR and the SDR Rules are referred to 
collectively as the ``SBS Reporting Rules.''
    \10\ See 17 CFR 242.909.
    \11\ See Form SDR, Instruction 2.
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    In 2019, the Commission stated that implementation of the SBS 
Reporting Rules can and should be done in a manner that carries out the 
fundamental policy goals of the SBS Reporting Rules while minimizing 
burdens as much as practicable.\12\ Noting ongoing concerns among 
market participants about incurring unnecessary burdens and the 
Commission's efforts to promote harmonization between the SBS Reporting 
Rules and swap reporting rules, the Commission took the position that, 
for four years following Regulation SBSR's Compliance Date 1 in each 
asset class,\13\ certain actions with respect to the SBS Reporting 
Rules would not provide a basis for a Commission enforcement 
action.\14\ The no-action statement's relevance to DDR's application 
for registration as an SDR and SIP is discussed further below.
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    \12\ Release No. 34-87780 (Dec. 18, 2019), 85 FR 6270, 6347 
(Feb. 4, 2020) (``ANE Adopting Release'').
    \13\ See id. Under Regulation SBSR, the first compliance date 
(``Compliance Date 1'') for affected persons with respect to an SBS 
asset class is the first Monday that is the later of: (i) Six months 
after the date on which the first SDR that can accept transaction 
reports in that asset class registers with the Commission; or (ii) 
one month after the compliance date for registration of SBS dealers 
and major SBS participants (``SBS entities''). Id. at 6346. The 
compliance date for registration of SBS entities is October 6, 2021. 
See id. at 6270, 6345.
    \14\ See id. The specific rule provisions of the SBS Reporting 
Rules affected by the no-action statement are discussed in Part 
II.B.
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B. Standard for Registration

    As noted above, to be registered with the Commission as an SDR and 
maintain such registration, an SDR is required to comply with the 
requirements and core principles described in Section 13(n) of the 
Exchange Act, as well as with any requirement that the Commission may 
impose by rule or regulation.\15\ In addition, Rule 13n-1(c)(3) under 
the Exchange Act provides that the Commission shall grant the 
registration of an SDR if it finds that the SDR is so organized, and 
has the capacity, to be able to: (i) Assure the prompt, accurate, and 
reliable performance of its functions as an SDR; (ii) comply with any 
applicable provisions of the securities laws and the rules and 
regulations thereunder; and (iii) carry out its functions in a manner 
consistent with the purposes of Section 13(n) of the Exchange Act and 
the rules and regulations thereunder.\16\ The Commission shall deny the 
registration of an SDR if it does not make any such finding.\17\ 
Similarly, to be registered with the Commission as a SIP, the 
Commission must find that such applicant is so organized, and has the 
capacity, to be able to assure the prompt, accurate, and reliable 
performance of its functions as a SIP, comply with the provisions of 
the Exchange Act and the rules and regulations thereunder, carry out 
its functions in a manner consistent with the purposes of the Exchange 
Act, and, insofar as it is acting as an exclusive processor, operate 
fairly and efficiently.\18\
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    \15\ See 15 U.S.C. 78m(n)(3).
    \16\ 17 CFR 240.13n-1(c)(3).
    \17\ Id.
    \18\ See 15 U.S.C. 78k-1(b)(3).
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    In determining whether an applicant meets the criteria set forth in 
Rule 13n-1(c), the Commission will consider the information reflected 
by the applicant on its Form SDR, as well as any additional information 
obtained from the applicant. For example, Form SDR requires an 
applicant to provide a list of the asset classes for which the 
applicant is collecting and maintaining data or for which it proposes 
to collect and maintain data, a description of the functions that it 
performs or proposes to perform, general information regarding its 
business organization, and contact information.\19\ Obtaining this 
information and other information reflected on Form SDR and the 
exhibits thereto--including the applicant's overall business structure, 
financial condition, track record in providing access to its services 
and data, technological reliability, and policies and procedures to 
comply with its statutory and regulatory obligations--will enable the 
Commission to determine whether to grant or deny an application for 
registration.\20\ Furthermore, the information requested in Form SDR 
will enable the Commission to assess whether the applicant is so 
organized and has the capacity to comply and carry out its functions in 
a manner consistent with the federal securities laws and the rules and 
regulations thereunder, including the SBS Reporting Rules.\21\
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    \19\ See SDR Adopting Release, supra note 7, at 14459.
    \20\ See id. at 14458.
    \21\ See id. at 14458-59.
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    Consistent with the Commission's no-action statement in the ANE 
Adopting Release,\22\ an entity wishing to register with the Commission 
as an SDR must still submit an application on Form SDR but can address 
the rule provisions included in the no-action statement by discussing 
how the SDR complies with comparable Commodity Futures Trading 
Commission (``CFTC'') requirements.\23\ Accordingly, in such instances 
the Commission will not assess an SDR application for consistency or 
compliance with the rule provisions included in the Commission's no-
action statement. Specifically, the Commission identified the following 
provisions as not providing a basis for an enforcement action against a 
registered SDR for the duration of the relief provided in the 
Commission statement: Under Regulation SBSR, aspects of 17 CFR 
242.901(a), 901(c)(2) through (7), 901(d), 901(e), 902, 903(b), 906(a) 
and (b), and 907(a)(1), (a)(3), and (a)(4) through (6); under the SDR 
Rules, aspects of Section 13(n)(5)(B) of the Exchange Act and 17 CFR 
240.13n-4(b)(3) thereunder, and aspects of 17 CFR 240.13n-5(b)(1)(iii); 
and under Section 11A(b) of the Exchange Act, any provision pertaining 
to SIPs.\24\ Thus, an SDR applicant will not need to include materials 
in its application explaining how it would comply with the provisions 
noted above, and could instead rely on its discussion about how it 
complies with comparable CFTC requirements.\25\ The applicant may 
instead represent in its application that it: (i) Is registered with 
the CFTC as a swap data repository; (ii) is in compliance with 
applicable requirements under the swap reporting rules; (iii) satisfies 
the standard for Commission registration of an SDR under Rule 13n-1(c); 
and (iv) intends to rely on the no-action statement included in the ANE 
Adopting Release for the period set forth in the ANE Adopting Release 
with respect to any SBS asset class or classes for which it intends to 
accept transaction reports.\26\
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    \22\ See supra notes 12-14 and accompanying text.
    \23\ See supra note 14.
    \24\ The ANE Adopting Release provides additional discussion of 
the particular aspects of the affected rules that would not provide 
a basis for an enforcement action. See ANE Adopting Release, supra 
note 12, at 6347-48.
    \25\ Id. at 6348.
    \26\ Id. For example, an applicant need not describe in Exhibit 
S its functions as a SIP.
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III. Summary of DDR's Application on Form SDR

    As noted above, DDR intends to operate as a registered SDR for the 
equity, credit, and interest rate derivatives asset classes.\27\ In its 
application, DDR represents that it is provisionally registered with 
the CFTC as a swap data repository, is in compliance with applicable 
requirements under the CFTC reporting rules applicable to a registered 
swap data repository, and intends to rely on

[[Page 8979]]

the Commission's position outlined in the ANE Adopting Release for 
applicable reporting rules and SBSDR duties for the period set forth 
therein.\28\ Below is an overview of the representations made in the 
application materials.
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    \27\ See Rulebook, Ex. HH, sec. 3.1; see also Disclosure 
Document, Ex. D6, sec. 1.
    \28\ See Form SDR, cover letter from Katherine Delp, General 
Manager, DTCC Data Repository (U.S.) LLC.
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A. Organization and Governance

    DDR is a New York limited liability company and a wholly owned 
subsidiary of DTCC Deriv/SERV LLC (``Deriv/SERV''), which in turn is a 
wholly owned subsidiary of The Depository Trust & Clearing Corporation 
(``DTCC'').\29\ DDR is governed by a board of directors (``DDR 
Board'').\30\ The number of directors on the DDR Board is determined by 
Deriv/SERV as the sole LLC member of DDR.\31\ The DDR Board is composed 
of individuals selected from the following groups: Employees of DDR's 
users (either fees paying users or end users) with derivatives industry 
experience, buy-side representatives, independents, and members of 
senior management or the Board of DTCC.\32\ The Deriv/SERV Nominations 
Committee shall periodically review the composition of the DDR Board to 
assure that the level of representation of directors from users, 
management and non-users is appropriate for the interests of these 
constituencies in DDR.\33\
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    \29\ Rulebook, Ex. HH, sec. 2.1.
    \30\ Id. at sec. 2.2.
    \31\ Id.
    \32\ Id.
    \33\ Id.
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    In addition, the DDR Board is responsible for the appointment and 
removal of the chief compliance officer (``CCO'') and approval of CCO 
compensation, which is at the discretion of the Board and effected by a 
majority vote.\34\ The CCO is responsible for establishing and 
administering the compliance program that is designed to prevent 
violations of the obligations of a swap data repository under the Dodd-
Frank Act and other applicable regulations and is ultimately 
responsible for ensuring that DDR complies with the requirements of the 
Commodity Exchange Act, the Securities Exchange Act and other 
applicable laws and regulations.\35\ The Chief Compliance Officer has 
oversight over all compliance functions and staff related to DDR's 
compliance program.\36\ The duties of the CCO include, but are not 
limited to, the following: (a) Oversee and review DDR's compliance with 
applicable law in jurisdictions where DDR is registered, designated, 
recognized or otherwise licensed; (b) in consultation with the DDR 
Board or the Senior Officer, resolve any conflicts of interests that 
may arise, including, but not limited to, conflicts between business 
considerations and compliance requirements, conflicts between business 
considerations and compliance requirements for fair and open access, 
and conflicts between the management and members of the DDR Board; (c) 
establish and administer written policies and procedures reasonably 
designed to prevent violation of law; (d) take reasonable steps to 
ensure compliance with applicable law relating to agreements, contracts 
or transactions and confidentiality agreements entered into with 
foreign or domestic regulators; (e) establish procedures for the 
remediation of non-compliance issues identified by the CCO through a 
compliance office review, look-back, internal or external audit 
finding, self-reported error, or validated complaint; (f) notify the 
DDR Board as soon as practicable upon becoming aware of a circumstance 
indicating that DDR, or an individual acting on its behalf, is in non-
compliance with the applicable laws of a jurisdiction in which it 
operates and either: (1) The non-compliance creates a risk to a user; 
(2) the non-compliance creates a risk of harm to the capital markets in 
which it operates; (3) the non-compliance is part of a pattern of non-
compliance; or (4) the non-compliance may have an impact on DDR's 
ability to carry on business as a trade repository in compliance with 
applicable law; (g) establish and follow appropriate procedures for the 
handling, management response, remediation, retesting and closing of 
noncompliance issues; (h) establish and administer a written code of 
ethics; and (i) prepare and sign an annual compliance report in 
accordance with applicable regulations and associated 
recordkeeping.\37\ In addition, the application provides that the CCO 
or a delegate thereof has the authority to investigate any potential 
rule violation and is responsible for enforcing sanctions related to 
violations and for following the procedures outlined for DDR system 
restrictions.\38\
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    \34\ Rulebook, Ex. HH, sec. 2.3.
    \35\ Ex. P.
    \36\ Id.
    \37\ Rulebook, Ex. HH, sec. 2.3.
    \38\ Rulebook, Ex. HH, sec. 10.5.
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    The CCO, in consultation with the DDR Audit Committee, will resolve 
all conflicts of interest.\39\ Any conflict of interest not resolved by 
the DDR Audit Committee shall be escalated to the DDR Board for 
resolution.\40\ When resolving conflicts of interest involving DDR 
staff, the DDR CCO, DDR's senior officer, the audit committee, and the 
DDR Board consider all relevant facts and circumstances.\41\ With 
regard to director conflicts of interest, the application provides that 
a director conflict is present whenever the interests of DDR compete 
with the interests of a director or any party associated with a 
director.\42\ The application also provides that a director conflict is 
present whenever a director's corporate or personal interests could be 
reasonably viewed as affecting his or her objectivity or independence 
in fulfilling his or her duties.\43\ According to the application 
materials, DDR expects its directors to act on the side of caution and 
immediately bring to the attention of the DDR CCO and either the Board 
Chairman or DDR's legal counsel any matters involving conflicts of 
interest.\44\
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    \39\ Rulebook, Ex. HH, sec. 11.1.
    \40\ Id.
    \41\ Id.
    \42\ Rulebook, Ex. HH, sec. 11.2.
    \43\ Id.
    \44\ Id. at sec. 11.3.
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B. Access and Information Security

    According to DDR, access to and usage of its SDR service will be 
available to all market participants that engage in SBS transactions, 
and DDR does not and will not bundle or tie its SDR services with any 
other services.\45\ The application provides that DDR's services would 
be available to all market participants on a fair, open, and equal 
basis.\46\ Further, DDR does not impose membership qualifications on 
users of its services beyond (i) requiring execution of membership 
documents, such as a user agreement, (ii) the ability to comply with 
the technical specifications published by DDR, and (iii) compliance 
with applicable law, specifically those related to sanctions 
administered and enforced by the Office of Foreign Assets Control of 
the U.S. Department of the Treasury (``OFAC'').\47\
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    \45\ See id. at sec. 1.1.
    \46\ See id.
    \47\ See id.
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    To be granted access to the DDR system, receive trade information, 
confirm or verify transactions, submit messages, or receive reports, a 
market participant must be an onboarded user.\48\ For those market 
participants that onboard, DDR will provide a mechanism for users to 
access the DDR system to confirm and verify transactions. Users are 
required to maintain at least two Super Access Coordinators 
(``SuperACs'') on the DDR System; SuperACs are responsible for: (1) 
Providing access to other individuals (referred to as ``ACs'') who are 
eligible

[[Page 8980]]

to access the System and use the SDR Services on behalf of the user; 
and (2) removing access for any individuals who should no longer access 
the System on behalf of the user.\49\
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    \48\ See id.
    \49\ Id. at sec. 1.2.
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    To participate in the SDR services offered by DDR, each user will 
be required to enter into a user agreement; by entering into a user 
agreement each user agrees to be bound by the terms of the user 
agreement and DDR Operating Procedures, which incorporate terms of 
DDR's Rulebook.\50\ In addition, the DDR Rulebook provides that each 
user must comply with all reasonable requests by DDR for information, 
documentation, or data concerning such user and related to such user's 
use of the DDR system as DDR may deem necessary.\51\ The DDR Rulebook 
also states that DDR has the right to audit or inspect a user (and its 
facilities) with respect to its use of the DDR system, upon reasonable 
notice.\52\ Furthermore, the DDR Rulebook provides that users must 
cooperate with such audits or inspections and with other inquiries by 
DDR concerning their use of the DDR system.\53\
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    \50\ Id. at sec. 1.3.
    \51\ Id. at sec. 10.5.
    \52\ Id.
    \53\ Id.
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    The DDR Operating Procedures provide that each user agrees to 
defend and indemnify DDR from and against all reasonable losses, 
liabilities, damages, judgments, settlements, fines, costs, and 
expenses DDR may incur directly arising out of or directly relating to 
the acts or omissions of a user's participation or failure to 
participate (for itself or on behalf of others) in DDR's services or 
DDR's system, any unauthorized access to DDR's system through such 
user's interface with DDR's system, or any other matter directly 
relating to such user that is not the responsibility of DDR under the 
DDR Operating Procedures, except to the extent that such losses arise 
out of or relate to the DDR's negligence or willful misconduct.\54\
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    \54\ Id., app. A, at sec. 9.
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    With respect to prohibiting or limiting a person's access to SDR 
services, the DDR Rulebook outlines the process required for DDR to 
decline an application to become a user of SDR services.\55\ For 
example, DDR may deny an applicant's access to the DDR system if 
required pursuant to applicable law (e.g., due to sanctions against the 
application administered and enforced by OFAC or the Canadian 
Government's Office of the Superintendent of Financial 
Institutions).\56\ The DDR Rulebook provides that any such applicants 
would receive notice and an opportunity for a hearing in the event that 
DDR declines an application.\57\ The DDR Rulebook also provides that, 
if the denial of an application is reversed by the DDR Board or by the 
Commission pursuant to Section 11A of the Exchange Act, such 
application will be accepted and the applicant granted access following 
completion of onboarding requirements.\58\
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    \55\ See id. at sec. 10.2.
    \56\ See id.
    \57\ See id.
    \58\ See id.
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    With respect to DDR temporarily denying a user access to or 
imposing restrictions on its use of the DDR system, the DDR Rulebook 
provides that DDR may take such action where a user: (i) Violates DDR 
rules; (ii) refuses to or neglects to comply with any direction DDR 
deems reasonably necessary to protect its systems and other users; 
(iii) or any error, delay, or other conduct that materially and 
adversely affects the operations of DDR (each a ``Subject Event'').\59\ 
Limits to the activities, functions, or operation of users may include, 
but are not limited to, restricting access to the DDR system or a 
user's ability to submit data via a non-approved source and assessing 
users with all costs incurred by DDR in connection with a ``Subject 
Event'' and apply any deterrent financial penalties that DDR may deem 
necessary.\60\ The DDR Rulebook provides that DDR is required to 
provide prompt notice to the designated regulators of any such 
action,\61\ as well as furnish the user with a concise written 
statement describing the Subject Event applicable to the user.\62\
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    \59\ See id. at sec. 10.4.1.
    \60\ See id.
    \61\ See id.
    \62\ See id. at sec. 10.4.2 (setting out DDR's procedures for 
restrictive proceedings, including the user's response to the 
Subject Event written statement, the user's opportunity for a 
hearing, and the user's right to apply for review to the DDR Board).
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    In addition, the DDR Rulebook provides that DTCC has established a 
Technology Risk Management Team, whose role is to manage information 
security risk and ensure the availability, integrity, and 
confidentiality of the organization's information assets.\63\ DDR will 
be responsible for monitoring the performance of DTCC regarding 
implementation and maintenance of information security within its 
infrastructure.\64\ The DDR Rulebook specifies that various policies 
have been developed to provide the framework for both physical security 
and information security are routinely refreshed.\65\ According to DDR, 
the Technology Risk Management Team carries out a series of processes 
to endeavor to ensure DDR is protected in a cost-effective and 
comprehensive manner, while still meeting the requirements of 
applicable regulations.\66\ This includes preventive controls such as 
firewalls, appropriate encryption technology, and authentication 
methods.\67\ Vulnerability scanning is used to identify high risks to 
be mitigated and managed and to measure conformance against the 
policies and standards.\68\
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    \63\ Id. at sec. 9.2.
    \64\ Id. at sec. 9.1.
    \65\ Id. at sec. 9.2.
    \66\ Id.
    \67\ Id.
    \68\ Id.
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    The DDR system is supported by DTCC and relies on the disaster 
recovery program maintained by DTCC.\69\ To enable DDR to provide 
timely resumption of critical services should there be any disruption 
to its business, DDR follows these key principles for business 
continuity and disaster recovery: (i) Achieve recovery of critical 
services within a four-hour window with faster recovery time in less 
extreme situations; (ii) disperse staff across geographically diverse 
operating facilities; (iii) operate multiple back-up data centers 
linked by a highly resilient network technology; (iv) maintain 
emergency command and out-of-region operating control; (v) utilize new 
technology which provides high-volume, high-speed, asynchronous data 
transfer over distances of 1,000 miles or more; (vi) maintain processes 
that mitigate marketplace, operational and cyber-attack risks; (vii) 
test continuity plan readiness and connectivity on a regular basis 
ensuring that users and third-party vendors/service providers can 
connect to DDR's primary and back-up sites; (viii) communicate on an 
emergency basis with the market, users and government agency decision-
makers; and (ix) evaluate, test, and utilize best business continuity 
and resiliency practices.\70\
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    \69\ See id. at sec. 8.1.
    \70\ See id.
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C. Acceptance and Use of SBS Data

    The application provides that DDR will provide Market Participants 
with the ability to submit data for over-the-counter (``OTC'') 
derivatives for credits, equities, rates, foreign exchange (``FX'') and 
other commodity asset classes.\71\ DDR may reject a transaction record 
submitted due the submission failing to meet DDR validations, including 
but not limited to the submission failing to be

[[Page 8981]]

in a format that can be ingested by DDR, failing to meet jurisdictional 
requirements or failing to provide required data elements.\72\ A 
rejected submission is deemed not to have been submitted at all with 
respect to reporting to the jurisdiction for which it was rejected (it 
is possible that one transaction record is submitted to comply with 
reporting in more than one jurisdiction and may be acceptable for one 
jurisdiction, but rejected for the other).\73\ Upon submission, the DDR 
System will perform validation checks to ensure that each submitted 
record is complete and accurate, in accordance DDR's message ingestion 
requirements.\74\ This process is completed through validation and 
consistency checks.\75\ If the record fails these validation or 
consistency checks, the record will be rejected, and such rejection 
status will be communicated to the user(s) to correct and re-
submit.\76\ According to DDR, the SDR process is an end-to-end straight 
through process; from the receipt of data, processing and maintenance 
of data, and dissemination of data, processes are automated and do not 
require manual intervention; this straight through processing model is 
a key mitigant to modification or invalidation of any data.\77\
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    \71\ Id. at sec. 3.1; see also Disclosure Document, Ex. D6, sec. 
1.
    \72\ Rulebook, Ex. HH, sec. 1.3.
    \73\ Id.
    \74\ Id. at sec. 10.1.1.
    \75\ Id.
    \76\ Id.
    \77\ Ex. EE.
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    DDR's Operating Procedures provides that DDR and each user agrees 
that each will treat as confidential (both during and after the 
termination of a user's access to DDR's system) all confidential 
information (defined as: (i) With respect to DDR, transaction data 
specified in records received by DDR and any data, reports, summaries 
or payment amounts which may be produced as a result of processing such 
transaction data, and (ii) with respect to any user, the technical 
specifications of DDR's system (to the extent not publicly disclosed by 
DDR; but confidential information does not include data distributed to 
the public in accordance will applicable law).\78\
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    \78\ Rulebook, Ex. HH, app. A, sec. 8; see also Disclosure 
Document, Ex. D6, sec. 5 (DDR's privacy and confidentiality policies 
and procedures).
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D. Fees

    The application includes DDR's fee schedules.\79\ There are two 
types of fees, Position Maintenance Fees and Account Management 
Fees.\80\ DDR charges a monthly ``Position Maintenance Fee,'' based on 
the number of positions open at any time during the applicable month 
and which decreases as the number of open positions increases on a 
tiered basis.\81\ Position count includes positions even if terminated 
or exited prior to the month end.\82\ Platforms, as that term is 
defined by Commission rules,\83\ are not charged position maintenance 
fees.\84\ For a position where a clearing agency (``Clearer'') is a 
counterparty, the Clearer shall be responsible for the Position 
Maintenance Fee, less a 75% reduction.\85\ For all other positions, the 
Reporting Side, as that term is defined by Commission rules,\86\ will 
be responsible for Position Maintenance Fees.\87\ For entities grouped 
as a single account with subaccounts (``Grouped Accounts''), positions 
will be aggregated for purposes of determining position count threshold 
and to determine the applicable tiered Position Maintenance Fees.\88\
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    \79\ See Ex. M. Additionally, DDR provides a fee schedule for 
DDR Users on its website at http://www.dtcc.com/derivatives-services/global-trade-repository/gtr-us.
    \80\ See Ex. M.
    \81\ The Position Maintenance Fees only apply for a position 
count of five hundred or more open positions during any month. See 
id. For examples of the calculation of the Position Maintenance Fee, 
see Annex A to Exhibit M of the application.
    \82\ See Ex. M.
    \83\ See 17 CFR 242.900(v) (defining ``platform'' as a national 
securities exchange or security-based swap execution facility that 
is registered or exempt from registration).
    \84\ See Ex. M.
    \85\ See id.
    \86\ See 17 CFR 242.900(gg) (defining ``reporting side'' as the 
side of a security-based swap identified by Rule 901(a)(2) as having 
the duty to report the transaction).
    \87\ See Ex. M.
    \88\ See id.
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    In addition to the Position Maintenance Fee, the application 
indicates that DDR will charge an annual ``Account Management Fee,'' 
currently set at $1,200.00, that will apply to all accounts and will be 
prorated in the year the account is opened.\89\ Accounts may be set up 
on an individual entity basis or, in certain instances, as Grouped 
Accounts, such as a corporate family \90\ that chooses to structure its 
account as a single account with subaccounts for affiliates or an asset 
manager that chooses to structure its account as a single account with 
subaccounts for its managed funds. Grouped Accounts will be charged one 
Account Management Fee.\91\
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    \89\ See id.
    \90\ DDR organizes its users into families (each, a ``Family'') 
as directed by the users (through User Agreements or in such other 
manner as designated by DDR from time to time) that desire to be so 
organized. See Rulebook, Ex. HH, app. A, sec. 2.
    \91\ See id.
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    DDR's fee policy further provides that users will have the option 
to elect to enter into a long-term commitment for a period ending 
December 31, 2024 (``Long Term Commitment''), which would reduce the 
applicable Position Maintenance Fee and Account Management Fee by ten 
percent, exclusive of tax, for the duration of the Long-Term 
Commitment.\92\ If the Long Term Commitment is terminated prior to the 
end of the applicable Long Term Commitment period, DDR explains that 
the non-Clearer User will be subject to an early termination fee equal 
to: (a) The difference between the total amount of fees due after 
application of the Long Term Commitment incentive and the total amount 
of fees that would have been due during the applicable portion of the 
Long Term Commitment period had no incentive been provided (``Total 
Incentive Provided''); plus (b) the greater of five percent of the 
Total Incentive Provided or $500.00.\93\
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    \92\ See id.
    \93\ See id.
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E. Recordkeeping

    The DDR Rulebook provides that DDR will maintain all information as 
required by applicable law as well as maintain swap and security-based 
swap data throughout the existence of the swap and security-based swap 
and for 15 years following termination of the swap or security-based 
swap or as otherwise required by applicable regulations.\94\ The 
records will be readily accessible throughout the life of a swap or 
security-based swap and for 5 years following its termination and shall 
be in an electronic format that is non-rewriteable and non-
erasable.\95\ For the remainder of the retention period, the swap or 
security-based swap record will be retrievable within 3 business 
days.\96\ In the event DDR ceases doing business or ceases to be a 
registered or designated trade repository it shall continue, for a 
period of not less than five (5) years or upon transfer to the 
Designated Regulator or its designee or another registered or 
designated trade repository for that jurisdiction, to preserve, 
maintain, and make accessible to each Designated Regulator or its 
designee, the records and data required by Applicable Regulation in 
accordance with DDR's Wind-Down Policies and Procedures document.\97\
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    \94\ Rulebook, Ex. HH, sec. 1.4.1.
    \95\ Id.
    \96\ Id.
    \97\ Id.

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[[Page 8982]]

F. Disclosure

    DDR publishes a disclosure document to provide a summary of 
information regarding its service offerings and the SBS data it 
maintains.\98\ Specifically, the disclosure document sets forth a 
description of the following: (i) A description of access to services 
offered and swap data maintained; (ii) criteria for those seeking to 
connect to or link with its SDR; (iii) criteria for those seeking to 
connect to or link with DDR systems; (iv) policies and procedures with 
respect to DDR systems safeguards; (v) policies and procedures related 
to privacy and confidentiality; (vi) policies and procedures regarding 
its non-commercial and commercial use of transaction data; \99\ (vii) 
procedures for dispute resolution; (viii) fees, rates, dues and other 
charges; and (ix) governance arrangements.\100\
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    \98\ See Disclosure Document, Ex. D6.
    \99\ See also Rulebook, Ex. HH, sec. 6.3 (``As part of the SDR 
Services, DDR receives and collects swap and security-based swap 
data in the ordinary course of its business from various Market 
Participants and registered entities for the purpose of maintaining 
a centralized recordkeeping facility for swaps and security-based 
swaps. The collection and maintenance of this data is designed to 
enhance the transparency, promote standardization and reduce 
systemic risk by making this data available to regulators and the 
public pursuant to Applicable Law. Therefore, access to data 
maintained by DDR to Market Participants is generally prohibited, 
except to either counterparty to that particular swap or security-
based swap, such counterparty's authorized third party service 
providers or other parties specifically authorized by the User or 
counterparty pursuant to Rule 1.3 or 6.4, or to other regulators or 
entities in accordance with Rule 6.5 below. DDR shall not, as a 
condition of the reporting of swap or security-based swap 
transaction data, require a Reporting Party to consent to the use of 
reported data for commercial or business purposes. DDR shall not 
make commercial use of real-time swap data prior to its public 
dissemination.'').
    \100\ See id.
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G. Regulatory Reporting and Public Dissemination

    As a registered SDR, DDR would carry out an important role in the 
regulatory reporting and public dissemination of SBS transactions. As 
noted above, DDR has stated that it intends to rely on the no-action 
statement included in the ANE Adopting Release for the period set forth 
in the ANE Adopting Release with respect to any SBS asset class or 
classes for which it intends to accept transaction reports.\101\ 
Therefore, DDR does not need to include materials in its application 
explaining how it would comply with the provisions of the SBS Reporting 
Rules noted in the no-action statement.\102\ Instead, DDR may rely on 
its discussion about how it complies with comparable CFTC requirements 
pertaining to regulatory reporting and public dissemination of swap 
transactions.
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    \101\ See supra note 25 and accompanying text.
    \102\ However, the DDR application includes provisions 
explaining how DDR would require users to identify SBS, as required 
by Rule 901(c)(1) of Regulation SBSR. See Exhibit HH2, sec. 4.4 
(regarding Unique Product Identifiers). The DDR application also 
includes a provision explaining how DDR would comply with a 
condition to the no-action statement included in the ANE Adopting 
Release. See Exhibit GG2, sec. 15.2.3.2 (providing, in the case of a 
credit security-based swap, for dissemination of a capped notional 
size of $5 million if the true notional size of the transaction is 
$5 million or greater).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning DDR's Form SDR, including whether DDR has 
satisfied the requirements for registration as an SDR and as a SIP. 
Commenters are requested, to the extent possible, to provide empirical 
data and other factual support for their views. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/proposed.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SBSDR-2020-01 on the subject line.

Paper Comments

     Send paper comments to Secretary, Securities and Exchange 
Commission, 100 F Street NE, Washington, DC 20549-1090. All submissions 
should refer to File Number SBSDR-2020-01.

To help the Commission process and review your comments more 
efficiently, please use only one method of submission. The Commission 
will post all comments on the Commission's internet website (http://www.sec.gov/rules/other.shtml).
    Copies of the Form SDR, all subsequent amendments, all written 
statements with respect to the Form SDR that are filed with the 
Commission, and all written communications relating to the Form SDR 
between the Commission and any person, other than those that may be 
withheld from the public in accordance with the provisions of 5 U.S.C. 
552, will be available for website viewing and printing in the 
Commission's Public Reference Section, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m.
    All comments received will be posted without change. Persons 
submitting comments are cautioned that we do not redact or edit 
personal identifying information from comment submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SBSDR-2020-01 and should be 
submitted on or before March 3, 2021.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-02755 Filed 2-9-21; 8:45 am]
BILLING CODE 8011-01-P


