[Federal Register Volume 87, Number 131 (Monday, July 11, 2022)]
[Notices]
[Pages 41152-41153]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-14635]


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SECURITIES AND EXCHANGE COMMISSION

[SEC File No. 270-649; OMB Control No. 3235-0701]


Proposed Collection; Comment Request; Extension: Rule 18a-1

Upon Written Request, Copies Available From: Securities and Exchange 
Commission, Office of FOIA Services, 100 F Street NE, Washington, DC 
20549-2736

    Notice is hereby given that pursuant to the Paperwork Reduction Act 
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange 
Commission (``Commission'') is soliciting comments on the existing 
collection of information provided for in Rule 18a-1 (17 CFR 240.18a-
1), under the Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) 
(``Exchange Act''). The Commission plans to submit this existing 
collection of information to the Office of Management and Budget 
(``OMB'') for extension and approval.
    Rule 18a-1 establishes net capital requirements for nonbank 
security-based swap dealers that are not also broker-dealers registered 
with the Commission (``stand-alone SBSDs''). First, under paragraphs 
(a)(2) and (d) of Rule 18a-1, a stand-alone SBSD may apply to the 
Commission to be authorized to use internal value-at-risk (``VaR) 
models to compute net capital, and a stand-alone SBSD authorized to use 
internal models must review and update the models it uses to compute 
market and credit risk, as well as back-test the models. Second, under 
paragraph (f) of Rule 18a-1, a stand-alone SBSD is required to comply 
with certain requirements of Exchange Act Rule 15c3-4 (17 CFR 240.15c3-
4). Rule 15c3-4 requires OTC derivatives dealers and firms subject to 
its provisions to establish, document, and maintain a system of 
internal risk management controls to assist the firm in managing the 
risks associated with business activities, including market, credit, 
leverage, liquidity, legal, and operational risks. Third, for purposes 
of calculating ``haircuts'' on credit default swaps, paragraph 
(c)(1)(vi)(B)(1)(iii) of Rule 18a-1 requires stand-alone SBSDs that are 
not using internal models to use an industry sector classification 
system that is documented and reasonable in terms of grouping types of 
companies with similar business activities and risk characteristics. 
Fourth, under paragraph (h) of Rule 18a-1, stand-alone SBSDs are 
required to provide the Commission with certain written notices with 
respect to equity withdrawals. Fifth, under paragraph (c)(5) of 
Appendix D to Rule 18a-1 (17 CFR 240.18a-1d), stand-alone SBSDs are 
required to file with the Commission two copies of any proposed 
subordinated loan agreement (including nonconforming subordinated loan 
agreements) at least 30 days prior to the proposed execution date of 
the agreement. Finally, under paragraph (c)(1)(ix)(C) of Rule 18a-1, a 
nonbank SBSD may treat collateral held by a third-party custodian to 
meet an initial margin requirement of a security-based swap or swap 
customer as being held by the nonbank SBSD for purposes of the capital 
in lieu of margin charge provisions of the rule if certain conditions 
are met. In particular, the SBSD must execute an account control 
agreement and must maintain written documentation of its analysis that 
in the event of a legal challenge the account control agreement would 
be held to be legal, valid, binding, and enforceable under the 
applicable law.
    The aggregate annual burden for all respondents is estimated to be 
21,024 hours. The aggregate annual cost burden for all respondents is 
estimated to be $2,598,500.
    Written comments are invited on: (a) whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information 
shall have practical utility; (b) the accuracy of the Commission's 
estimates of the burden of the proposed collection of information; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on respondents, including through the use of automated 
collection techniques or other forms of information technology. 
Consideration will be given to comments and suggestions submitted by 
September 9, 2022.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information under the PRA unless it 
displays a currently valid OMB control number.
    Please direct your written comments to: David Bottom, Director/
Chief Information Officer, Securities and Exchange Commission, c/o John 
Pezzullo, 100 F Street NE, Washington,

[[Page 41153]]

DC 20549, or send an email to: [email protected].

    Dated: July 5, 2022.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-14635 Filed 7-8-22; 8:45 am]
BILLING CODE 8011-01-P


