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pdfSUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission
for Registration Requirements for Security-based Swap Dealers and Major Security-based
Swap Participants
OMB Control No. 3235-0696
A.
1.
JUSTIFICATION
Information Collection Necessity
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “DoddFrank Act”) added Section 15F to the Securities Exchange Act of 1934 (“Exchange Act”) to
create a regulatory structure to allow the Securities and Exchange Commission (the
“Commission”) to regulate security-based swap dealers and major security-based swap
participants (collectively, “SBS Entities”).
On August 5, 2015, the Commission adopted Rules 15Fb1-1 through 15Fb6-2 and Forms
SBSE, SBSE-A, SBSE-BD, SBSE-C, and SBSE-W to create a process to register SBS Entities. 1
When it adopted Rules 15Fb1-1 through 15Fb6-2 and the associated Forms, the
Commission recognized that firms would require time, before the registration rules required that
they register, to review rules not yet adopted that would be applicable to SBS Entities before
they could make informed decisions regarding whether they would continue to conduct a
security-based swap business in the U.S., and to determine which of their associated persons may
be subject to the statutory prohibition provision. Due to this, the Commission made compliance
with the registration requirements contingent on its future adoption of certain rules that would be
applicable to SBS Entities. More specifically, the “Registration Compliance Date” is “the later
of: six months after the date of publication in the Federal Register of a final rule release adopting
rules establishing capital, margin and segregation requirements for SBS Entities; the compliance
date of final rules establishing recordkeeping and reporting requirements for SBS Entities; the
compliance date of final rules establishing business conduct requirements under Exchange Act
Sections 15F(h) and 15F(k); or the compliance date for final rules establishing a process for a
registered SBS Entity to make an application to the Commission to permit an associated person
who is subject to a statutory disqualification to effect or be involved in effecting security-based
swaps on its behalf.” The Registration Compliance Date was October 6, 2021. 2
Beginning on August 6, 2021 (the “Counting Date”), market participants were required to
begin to assess whether they met the relevant thresholds to register as a security-based swap
1
See Registration of Security-Based Swap Dealers and Major Security-Based Swap Participants, Securities
Exchange Act Release No. 75611 (Aug. 5, 2015), 80 FR 48964 (Aug. 12, 2015). The OMB control number
is 3235-0696.
2
See Key Dates for Registration of Security-Based Swap Dealers and Major Security-Based Swap
Participants, available at: https://www.sec.gov/page/key-dates-registration-security-based-swap-dealersand-major-security-based-swap-participants#_ftnref2.
dealer or major security-based swap participant. 3 Market participants that met the definition of
“security-based swap dealer” based on their security-based swap activity since the Counting Date
had to register with the Commission by November 1, 2021. Similarly, a market participant that
met the definition of “major security-based swap participant” as a result of its security-based
swap activities in its quarter ending September 30, 2021 had to register with the Commission by
December 1, 2021. Since the Registration Compliance Date, the Commission has received
applications for registration as a security-based swap dealer from 53 entities, 4 all of which
entities had to file the applicable associated Forms described below. The Commission has
received no applications for registration as a major security-based swap participant.
Registration
Rule 15Fb2-1(a) 5 requires a firm to file an application for registration as an SBS Entity with
the Commission on Form SBSE, 6 Form SBSE-A, 7 or Form SBSE-BD, 8 as applicable. These
Forms were designed to elicit information concerning, among other things, the nature of an SBS
Entity’s business, the identity of its principals and controlling persons, and whether it has been
sanctioned for investment-related violations. Paragraphs (a) and (b) of Rule 15Fb2-1 also require
that each SBS Entity provide the Commission with a certification on Form SBSE-C to facilitate the
Commission’s review of each firm’s application for ongoing registration. 9 Rule 15Fb2-3 10 requires
a registered SBS Entity to promptly update its Form SBSE, SBSE-A, or SBSE- BD, as applicable,
when information contained in those Forms changes or becomes materially inaccurate. Rule
15Fb2-4 11 requires nonresident SBS Entities to (1) file an additional schedule (Schedule F) to Form
SBSE, Form SBSE-A, or Form SBSE-BD, as appropriate, to inform the Commission of the identity
3
See id.
4
See List of Security-Based Swap Dealers and Major Security-Based Swap Participants (June 21, 2024),
available at https://www.sec.gov/tm/List-of-SBS-Dealers-and-Major-SBS-Participants (“List of SBS
Entities”).
5
17 CFR 240.15Fb2-1(a).
6
17 C.F.R. 249.1600. The rules require SBS Entities that are not already registered as broker-dealers or
registered or registering with the CFTC as a swap dealer or major swap participant to use Form SBSE to
register with the Commission. Form SBSE elicits all the information the Commission needs to evaluate the
applicant’s request for registration.
7
17 C.F.R. 249.1600a. The rules allow SBS Entities that are registered or registering with the CFTC as a
swap dealer or major swap participant to use Form SBSE-A instead of Form SBSE to register with the
Commission to register with the Commission. Form SBSE-A is shorter than Form SBSE and was
designed to elicit information the staff needs to evaluate an SBS Entity’s registration that is not already
elicited through the CFTC registration form, which these firms would also be required to provide to the
Commission.
8
17 C.F.R. 249.1600b. The rules allow SBS Entities that are also registered broker-dealers to use Form
SBSE-BD instead of Form SBSE to register with the Commission. Form SBSE-BD is a shorter form in
recognition of the fact that the Commission already has, through Form BD, much of the information elicited
through Form SBSE that the staff would need to evaluate the applicant’s request for registration.
9
17 CFR 240.15Fb2-1(b).
10
17 CFR 240.15Fb2-3.
11
17 CFR 240.15Fb2-4.
2
and location of its U.S. agent for service of process and to certify that it can, as a matter of law, and
will provide the Commission with access to its books and records and submit to onsite inspection
and examination by the Commission, and (2) obtain an opinion of counsel stating that the
nonresident SBS Entity can, as a matter of law, provide the Commission with access to its books
and records and submit to onsite inspection and examination by the Commission. Rule 15Fb6-2 12
requires SBS Entities to certify, on Form SBSE-C, that it neither knows, nor in the exercise of
reasonable care should have known, that any person associated with it who effects or is involved in
effecting security-based swaps on its behalf is subject to a statutory disqualification, unless otherwise
specifically provided by rule, regulation or order of the Commission. That rule also requires that, to
support this certification, an SBS Entity’s CCO (or his or her designee) must review and sign the
questionnaire or application for employment obtained in compliance with other rules 13 executed by
each associated person who is a natural person and who effects or is involved in effecting
security-based swaps on the SBS Entity’s behalf. As these Forms are filed electronically, Rule
15Fb1-1 14 requires that an SBS Entity retain a copy of manually signed signature pages to assure
that they are available for review by examiners.
The collections of information included in these rules and forms are necessary to allow
the Commission to effectively determine whether the applicant meets the statutory requirements
to engage in the security-based swap business. In addition, these collections of information are
necessary to allow the Commission to adequately supervise the activities of these SBS Entities
on an ongoing basis.
Withdrawal
Rule 15Fb3-2 15 allows a registered SBS Entity to withdraw from registration with the
Commission by filing Form SBSE-W. 16 The collection of information included in Rule 15Fb3-2
and Form SBSE-W is necessary to allow the Commission to determine whether it is in the public
interest to allow the SBS Entity to withdraw from registration.
2.
Information Collection Purpose and Use
Registration
The Commission uses the information disclosed by applicants through the SBS Entity
registration rules and forms, including the re-proposed forms to: (1) determine whether an
12
17 CFR 240.15Fb6-2. Exchange Act Section 15F(b)(6) specifically prohibits SBS Entities from permitting any
of their associated persons who are subject to a “statutory disqualification” (as described in paragraphs (A)
through (F) of Exchange Act Section 3(a)(39)) to effect or be involved in effecting security-based swaps on
behalf of the SBS Entity if the SBS Entity knew, or in the exercise of reasonable care should have known, of
the statutory disqualification.
13
See, e.g., Exchange Act Rule 17a-3(a)(12)(i), 17 CFR 240.17a-3(a)(12)(i), and Rule 18a-5(a)(10)(i), 17
CFR 240.18a-5(a)(10)(i)
14
17 CFR 240.15Fb1-1.
15
17 CFR 240.15Fb3-2.
16
17 CFR 249.1601.
3
applicant meets the standards for registration set forth in the provisions of the Exchange Act; and
(2) develop an information resource regarding SBS Entities where members of the public may
obtain relevant, up-to-date information about SBS Entities, and where the Commission may
obtain information for examination and enforcement purposes. Without the information
provided through these SBS Entity registration rules and forms, the Commission could not
effectively determine whether the applicant meets the standards for registration or implement
policy objectives of the Exchange Act.
Withdrawal
The information collected pursuant to Rule 15Fb3-2 and Form SBSE-W allows the
Commission to determine whether it is appropriate to allow an SBS Entity to withdraw from
registration and to facilitate that withdrawal. Without this information, the Commission would
be unable to effectively determine whether it was appropriate to allow an SBS Entity to
withdraw. In addition, it would be more difficult for the Commission to properly regulate SBS
Entities if it were unable to quickly identify those that have withdrawn from the security-based
swap business.
3.
Consideration Given to Information Technology
SBS Entity applicants must file Form SBSE, Form SBSE-A, or Form SBSE-BD, as
appropriate, and attachments thereto (including the appropriate Schedules, opinions of counsel,
and Form SBSE-C) electronically. The Commission believes that this method of collecting
information reduces the regulatory burden upon SBS Entities.
4.
Duplication
This is the only registration requirement for SBS Entities. While an SBS Entity may
otherwise be registered because it engages in other types of business (e.g., as a swap dealer or
major swap participant or as a broker-dealer), these rules and Forms reduce the possibility of
duplication by requiring that SBS Entities otherwise registered because of other lines of business
may file a shorter Form (e.g., Form SBSE-A or Form SBSE-BD).
5.
Effect on Small Entities
Based on the Commission’s existing information about the security-based swap market,
the Commission believes that no entities that will qualify as SBS Entities will be “small entities.”
6.
Consequences of Not Conducting Collection
Paragraphs (a) and (b) of Rule 15Fb2-1 require that an SBS Entity file Form SBSE, Form
SBSE-A, or Form SBSE-BD (including the additional schedules required to comply with Rules
15Fb2-4), as applicable, and Form SBSE-C only once to register. Rule 15Fb2-3 would require
an SBS Entity to file amendments to Forms SBSE, SBSE-A, and SBSE-BD, as applicable, only
when information contained therein becomes inaccurate. Less frequent collection of
information pursuant to these rules and forms would impair the accuracy of the information
4
available to the Commission, which could impede its decision-making regarding, and oversight
of, these entities.
Rule 15Fb3-2 requires that an SBS Entity file Form SBSE-W to withdraw from
registration only once. Less frequent collection of this information would limit the
Commission’s understanding of whether registered SBS Entities continue to engage in business
and could result in a misallocation of Commission resources to oversee SBS Entities that are no
longer engaged in this business.
7.
Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
There are no special circumstances. This collection is consistent with the guidelines in 5
CFR 1320.5(d)(2).
8.
Consultations Outside the Agency
The required Federal Register notice with a 60-day comment period soliciting comments
on this collection of information was published. No public comments were received.
9.
Payment or Gift
Not applicable.
10.
Confidentiality
The Commission intends to make the information submitted to the Commission pursuant
to Rules 15Fb1-1 through 15Fb6-2 and Forms SBSE-C and SBSE-W, along with Forms SBSE,
SBSE-A, SBSE-BD, public. Information firms are required to create and maintain at their
offices pursuant to Rules 15Fb1-1 through 15Fb6-2 would generally only be accessed by the
Commission staff during examinations and, to the extent the Commission obtains copies of those
records, they will be kept confidential (subject to applicable law).
11.
Sensitive Questions
The information collection collects personally identifiable information (“PII”) that may
include taxpayer ID number, name, criminal/civil history, occupation, job title, work address,
telephone number, email address, certificate/license number, and business associates. However,
the agency has determined that the information collection does not constitute a system of record
for purposes of the Privacy Act. Information is not retrieved by a personal identifier. In
accordance with Section 208 of the E-Government Act of 2002, the agency has conducted a
privacy impact assessment (“PIA”) of the EDGAR system, in connection with this collection of
information. The EDGAR PIA, published on February 5, 2020, covers this information
collection.
5
12.
Information Collection Burden
a.
Respondents:
Since the Registration Compliance Date, the Commission has received applications for
registration as a security-based swap dealer from 53 entities, 17 all of which had to file the
applicable associated Forms and required amendments thereto. The Commission has received no
applications for registration as a major security-based swap participant. Of the 53 entities
registered as security-based swap dealers, 27 are registered foreign security-based swap dealers
(collectively, “Nonresident SBS Entities”). 18 Seven of the 53 entities were registered broker
dealers and registered with the Commission as security-based swap dealers by filing on Form
SBSE-BD. Forty of the 53 entities were registered with the CFTC as swap dealers and registered
with the Commission by filing on Form SBSE-A. The remaining six entities registered as
security-based swap dealers by filing on Form SBSE because they were not already registered
with the CFTC or the Commission. 19 The staff estimates that few entities will register as major
security-based swap participants. However, solely for purposes of this PRA, the staff will
estimate that five entities may register as major security-based swap participants over the next
three years.
b.
Description of Burdens:
i.
Burden Associated with Filing Application Forms
Rule 15Fb2-1 requires that each SBS Entity register with the Commission by filing an
application. The Commission has attempted to reduce the burden associated with the application
process by providing multiple forms for SBS Entities to use to register (Form SBSE, Form
SBSE-A, or Form SBSE-BD). Each SBS Entity will only need to research, complete, and file
one form.
While it is likely that the time necessary to complete these forms will vary depending on
the nature and complexity of the entity’s business, the Commission staff estimated in the SBS
Entity Registration Proposing Release (based on its experience with Form BD) that the average
time necessary for an SBS Entity to research the questions, and complete and file proposed Form
SBSE (including the Schedules 20 and disclosure reporting pages (“DRPs”)) will be
17
See List of SBS Entities.
18
Id.
19
Based on an analysis of 2017 DTCC’s Trade Information Warehouse data, the Commission in 2021 had
estimated that 50 entities would file applications for registration as a security-based swap dealer and up to
five entities would file applications for registration as a major security-based swap participant.
Specifically, staff had estimated that 30 of those entities would be registered with the CFTC as swaps
dealers, 16 of those entities would be registered with the Commission as broker-dealers and nine would not
be otherwise registered with the Commission or the CFTC (four of which would seek to register as
security-based swap dealer and five as major security-based swap participants). The Commission estimated
that approximately 22 would be Nonresident SBS Entities.
20
Except Schedule F, which is dealt with separately below.
6
approximately 42 hours. As discussed above, the Commission estimates that approximately six
firms will register using Form SBSE. 21 Consequently, we estimate that the total burden
associated with filing Form SBSE is approximately 252 hours. 22
In summary, the Commission estimates that, over a three-year period, the total
reporting burden associated with filing Form SBSE will be approximately 252 hours, or 84
hours per year 23 when annualized over three years. The average estimated burden per
SBS Entity will be 42 hours, or 14 hours per year 24 when annualized over three years.
As Form SBSE-A is shorter than the Form SBSE, Commission staff estimates that it
should take an SBS Entity approximately 34 hours to research, complete, and file a Form SBSE
(including the Schedules and DRPs). The Commission estimates that approximately forty-five
firms (40 as security-based swap dealers and five as major security-based swap participants)
need to register using Form SBSE-A because they will also be registered with the CFTC and will
not otherwise be able to register using Form SBSE-BD. Consequently, we estimate the total
burden associated with filing Form SBSE-A to be approximately 1,530 hours. 25
In summary, the Commission estimates that, over a three-year period, the total
reporting burden associated with filing Form SBSE-A will be approximately 1,530 hours,
or 510 hours per year 26 when annualized over three years. The average estimated burden
per SBS Entity will be 34 hours, or 11.3333 hours per year 27 when annualized over three
years.
The Commission staff estimates that, as Form SBSE-BD is shorter than either Form
SBSE or Form SBSE-A and broker-dealers who will be filing Form SBSE-BD are familiar with
Commission terminology and forms, researching, completing, and filing a Form SBSE-BD
should take an SBS Entity approximately 10½ hours to research, complete, and file a Form SBSE
(including the Schedules). As discussed above, the Commission estimates that approximately
seven SBS Entities will need to register using Form SBSE-BD. Consequently, we estimate that
the total burden associated with filing Forms SBSE-BD is approximately 73.5 hours. 28
In summary, the Commission estimates that, over a three-year period, the total
reporting burden associated with filing Form SBSE-BD will be approximately 73.5 hours,
21
See footnote 21 and surrounding text.
22
42 hours x 6 SBS Entities = 252 hours.
23
252 hours ÷ 3 years = 84 hours per year.
24
252 hours ÷ 6 (estimated number of SBS Entities) = 42 hours per respondent ÷ 3 years = 14 hours per
respondent per year.
25
34 hours x 45 SBS Entities = 1,530 hours.
26
1,530 hours ÷ 3 years = 510 hours per year.
27
1,530 hours ÷ 45 (estimated number of SBS Entities) = 34 hours per respondent ÷ 3 years = 11.3333 hours
per respondent per year.
28
10.5 hours x 7 SBS Entities = 73.5 hours.
7
or 24.5 per year 29 when annualized over three years. The average estimated burden per
SBS Entity will be 10.5 hours, or 3.5 hours per year 30 when annualized over three years.
ii.
Burden Associated with Amending Application Forms
Rule 15Fb2-3 requires that each SBS Entity amend its Form SBSE, SBSE-A, or SBSEBD, as applicable, if it finds that the information contained therein has become inaccurate. While
Rule 15Fb2-3 require SBS Entities to update their Forms periodically, each firm only needs to
amend that aspect of the Form that has become inaccurate. Consequently, it likely will not take
a significant amount of time to make such changes. Based on the number of amendments the
Commission received annually on Forms SBSE, SBSE-BD and SBSE-A during the fiscal years
ended September 30, 2023 and 2022, 31 the Commission estimates that each SBS Entity will
file approximately two amendments annually, and that it likely will take an SBS Entity
approximately one hour to amend its application each time it files an amendment. 32
Consequently, the total burden associated with amending Forms SBSE, SBSE-A, and SBSE-BD,
as applicable, is approximately 116 hours. 33
In summary, the Commission estimates that, over a three-year period, the total
reporting burden associated with amending Forms SBSE, SBSE-A, or SBSE-BD, as
appropriate, will be approximately 348 hours, or 116 per year 34 when annualized over
three years. The average estimated burden per SBS Entity over a three-year period will be
6 hours, or 2 hours per year 35 when annualized over three years.
iii.
Burden Associated with Certifications
Paragraph (a) of Rule 15Fb2-1 requires that each SBS Entity file Form SBSE-C, which
includes two separate certifications, as part of its application to register as an SBS Entity. One of
the certifications, required by Rule 15Fb2-1(b), requires a senior officer of the applicant to
certify that, after due inquiry, the senior officer has reasonably determined that the applicant has
29
73.5 hours ÷ 3 years = 24.5 hours per year.
30
73.5 hours ÷ 7 (estimated number of SBS Entities) = 10.5 hours per respondent ÷ 3 years = 3.5 hours per
respondent per year.
31
On September 14, 2024 there were 53 security-based swap dealers with the Commission. See List of SBS
Entities. The Commission received 133 and 103 amended Forms during the fiscal years ending 9/30/2023
and 9/30/2023, respectively. ((133 + 103) ÷ 2 years) ÷ 53 security-based swap dealers = 2.23
amendments per security-based swap dealer per year.
32
The time necessary to file an amendment to Form SBSE, Form SBSE-A, or Form SBSE-BD, as applicable
may vary depending on the nature and complexity of the information to be amended.
33
1 hour x two amendments per year x 58 registered SBS Entities = 116 hours.
34
(116 hours Y1 burden for 58 SBS Entities to amend Forms SBSE, SBSE-A, or SBSE-BD) + (116 hours Y2
burden for 58 SBS Entities to amend Forms SBSE, SBSE-A, or SBSE-BD) + (116 hours Y3 burden for 58
SBS Entities to amend Forms SBSE, SBSE-A, or SBSE-BD) = 348 hours for all respondents ÷ 3 years = a
total of 116 hours per year for all respondents.
35
348 hours (total burden to amend Forms SBSE, SBSE-A, and SBSE-BD, collectively) ÷ 58 (estimated
number of SBS Entities) = 6 hours ÷ 3 = 2 hours per respondent per year.
8
developed and implemented written policies and procedures reasonably designed to prevent
violations of the federal securities laws and the rules thereunder. The other certification,
required by Rule 15Fb6-2, requires that the SBS Entity’s CCO certify that none of its associated
persons that effects or is involved in effecting security-based swaps on its behalf is subject to
statutory disqualification, unless otherwise specifically provided by rule, regulation or order of
the Commission. Each SBS Entity will need to file Form SBSE-C only once.
With respect to the burdens associated with the first certification, the Commission
estimates that it will take a senior officer approximately 20 hours to review an SBS Entity’s
written policies and procedures and take whatever other actions he or she deems necessary to
gain comfort to sign the Senior Officer Certification. We further estimate that the burden
associated with having a senior officer sign a certification likely will be approximately five
hours. Consequently, we estimate that the total burden associated with having a senior officer
review an SBS Entity’s written policies and procedures and or taking whatever other actions he
or she deems necessary to gain comfort necessary to sign the Senior Officer Certification and to
then sign the certification on Form SBSE-C will be approximately 1,450 hours in the aggregate
for all nine newly registered entities. 36
The Commission estimates that it will take a CCO approximately one hour each to certify
on Schedule G that no associated person that is a natural person who effects or is involved in
effecting security-based swaps on behalf of the SBS Entity is subject to a statutory
disqualification. 37 We further estimate that each SBS Entity may have, on average 10 associated
persons that are not natural persons effecting or involved in effecting security-based swaps on
their behalf, 38 and that it will likely take, on average, approximately five hours for a CCO to
collect information from its legal or other internal departments or its holding company to
determine whether each of its associated persons that is not a natural person is subject to
statutory disqualification. Thus, the Commission estimates that the total burden to all SBS
Entities to complete the CCO Certification Regarding Associated Persons on Form SBSE-C will
be approximately 2,958 hours. 39
36
(5 hours + 20 hours) x 58 SBS Entities = 1,450 hours.
37
Registration Proposing Release at 65811.
38
Rule 15Fb6-1 limits the scope of the prohibition in Exchange Act Section 15F(b)(6) so that unless
otherwise ordered by the Commission, an SBS Entity that files an application with the Commission to
register as an SBS Entity on or before 180 days after the Registration Compliance Date may permit a
person associated with it that is not a natural person and that is subject to statutory disqualification to effect
or be involved in effecting security-based swaps on its behalf, provided that the statutory
disqualification(s), described in Sections 3(a)(39)(A) through (F) of the Securities Exchange Act of 1934
(15 U.S.C. 78c(a)(39)(A) – (F)), occurred prior to the Registration Compliance Date. In addition, Rule
15Fb6-2(b) clarifies that an SBS Entity’s CCO is only required to review and sign questionnaires and
applications of natural persons, because those are the only types of persons that would generally submit
such a questionnaire or application. Based on the fact that the statutory prohibition is limited to persons
who effect or are involved in effecting security-based swaps on an SBS Entity’s behalf (and not all
associated persons), as well as staff experience and observations, we estimate that each SBS Entity could
have approximately 10 affected associated persons that are entities.
39
(10 associated persons that are not natural persons x 5 hours to gain comfort that the entity is not subject to
statutory disqualification x 58 SBS Entities) + (1 hour for CCO to sign certification x 58 SBS Entities) =
2,958 hours.
9
In summary, the Commission estimates that the total reporting burden associated
with filing Form SBSE-C will be approximately 4,408 hours, or 1,469.33 hours per year 40
when annualized over three years. The average estimated burden per SBS Entity over a
three-year period will be 76 hours, or 25.3333 hours per year 41 when annualized over three
years.
iv.
Burden Relating to Associated Persons
Rule 15Fb6-2 requires an SBS Entity’s CCO to certify, on Form SBSE-C, that no
associated person that effects or is involved in effecting security-based swaps on behalf of the
SBS Entity is subject to a statutory disqualification, except as otherwise provided by rule,
regulation, or order of the Commission.42 The rule further provides that to support this
certification the CCO, or his or her designee, must review and sign a questionnaire or application
for employment executed by each of its associated persons who is a natural person and who
effects or is involved in effecting security based swaps on the SBS Entity’s behalf. SBS Entities
will only need to fulfill these obligations for associated persons that effect or are involved in
effecting security-based swaps on behalf of the SBS Entity. 43 In addition, this is a one-time
certification provided as part of the registration process.
In the adopting release, the Commission estimated that each SBS Dealer will have 423
associated persons that are natural persons who effect or are involved in effecting security-based
swaps on their behalf. 44 The Commission further estimated that, as Major SBS Participants are
more likely to resemble hedge funds and investment advisors, each Major SBS Participant will
have 63 associated persons that are natural persons who effect or are involved in effecting
40
1,450 hours + 2,958 hours = 4,408 hours ÷ 3 years = 1,469.33 hours per year.
41
684 hours (total burden associated with Form SBSE-C) ÷ 9 (estimated number of SBS Entities) = 76 hours
per respondent ÷ 3 years = 25.3333 hours per respondent per year.
42
Rule 15Fb6-2 requires that an SBS Entity’s CCO, or his or her designee, review and sign the
questionnaire or application for employment obtained in compliance with the applicable recordkeeping
rule.
43
15 U.S.C. 78c(a)(70) generally defines the term “person associated with” an SBS Entity to include: (i) any
partner, officer, director, or branch manager of an SBS Entity (or any person occupying a similar status or
performing similar functions); (ii) any person directly or indirectly controlling, controlled by, or under
common control with an SBS Entity; or (iii) any employee of an SBS Entity. However, it generally
excludes persons whose functions are solely clerical or ministerial.
The Commission believes that associated persons “involved in effecting” security-based swaps would
include, but not be limited to, persons involved in drafting and negotiating master agreements and
confirmations, persons recommending security-based swap transactions to counterparties, persons involved
in executing security-based swap transactions, persons pricing security-based swap positions and managing
collateral for the SBS Entity, and persons directly supervising persons engaged in these activities. In short,
the term would encompass persons engaged in functions necessary to facilitate the SBS Entity’s securitybased swap business.
44
See 80 FR 48964 (Aug. 14, 2015), at 48993.
10
security-based swaps on their behalf. 45 The staff continues to believe these estimates are
appropriate.
The Commission estimates that it will take a CCO (or the CCO’s designee)
approximately one hour to review and sign a relevant employee’s employment record to
determine that associated persons who effect or are involved in effecting security-based swaps
on their behalf are not subject to statutory disqualification. 46 If the SBS Entity has not already
performed a background check of the employee, we estimate that it may take the CCO (or the
CCO’s designee) an additional hour to conduct whatever additional review may be necessary. 47
Consequently, the Commission estimates that the hourly burden for each SBS Dealer that is
registered or registering with the Commission or the CFTC will be 423 hours, 48 and the burden
for each other SBS Dealer will be 846 hours. 49 We have no basis to determine whether Major
SBS Participants will already be registered or registering with the Commission or the CFTC, but
we assume that all five will be dually-registered. Thus, the hourly burden for each Major SBS
Participant will be approximately 63 hours. 50 We therefore estimate that the total initial burden
to all SBS Entities to have their CCOs (or designees) review and sign the employment
application or questionnaire for each associated person who is a natural person and who effects
or is involved in effecting security-based swaps on their behalf and/or conduct whatever review
may be necessary to assure that each such associated person is not subject to statutory
disqualification will be approximately 25,272 hours. 51
In summary, the Commission estimates that the total recordkeeping burden for SBS
dealers that are registered or registering with the CFTC or the Commission associated with
the requirement in Rule 15Fb6-2 to review and sign employment questionnaires or
applications, will be approximately 19,881 hours, or 6,627 hours per year 52 when
45
Id.
46
Registration Proposing Release at 65810. We received no comments on this estimate and continue to
believe it is appropriate.
47
The Commission believes that SBS Entities that are registered with the Commission or the CFTC must
already conduct a review to determine if their associated persons are statutorily disqualified persons in the
CEA and the Exchange Act. See 15 U.S.C. 78f(c)(2), 78o-3(g)(2), and 78q(f)(2), and 7 U.S.C. 6k(5) and
12a(1).
48
423 associated persons x 1 hour = 423 hours.
49
423 associated persons x 2 hours = 846 hours.
50
63 associated persons x 1 hour = 63 hours.
51
(One hour x 423 associated persons that are natural persons x (40 SBS Dealers that are registered or
registering with the CFTC + 7 SBS Dealers that are registered or registering with the Commission as
broker-dealers)) = 19,881 hours for SBS Dealers already registered or registering with the Commission or
CFTC) + ((Two hours x 423 associated persons x 6 SBS dealers that are not otherwise registered or
registering with the Commission or the CFTC) = 5,076 hours) + ((One hour x 63 associated persons x 5
Major SBS Participants) = 315 hours for Major SBS Participants) = 25,272 hours.
52
One hour x 423 associated persons that are natural persons x (40 SBS Dealers that are registered or
registering with the CFTC + 7 SBS Dealers that are registered or registering with the Commission as
broker-dealers)) = 19,881 hours ÷ 3 = 6.627 hours per year.
11
annualized over three years. The average estimated burden per SBS Entity over a threeyear period will be 423 hours, or 141 hours per year 53 when annualized over three years.
In summary, the Commission estimates that the total recordkeeping burden for SBS
dealers that are not otherwise registered or registering with the Commission or the CFTC
associated with the requirement in Rule 15Fb6-2 to review and sign employment
questionnaires or applications, will be approximately 5,076 hours, or 1,692 hours per year 54
when annualized over three years. The average estimated burden per SBS Entity over a
three-year period will be 846 hours, or 282 hours per year 55 when annualized over three
years.
In summary, the Commission estimates that the total recordkeeping burden for
Major SBS Participants associated with the requirement in Rule 15Fb6-2 to review and
sign employment questionnaires or applications, will be approximately 315 hours, or 105
hours per year 56 when annualized over three years. The average estimated burden per
SBS Entity over a three-year period will be 63 hours, or 21 hours per year 57 when
annualized over three years.
v.
Burdens on Nonresident SBS Entities
As indicated previously, the Commission staff estimates that 27 entities will be
Nonresident SBS Entities. 58 Rule 15Fb2-4 requires that each Nonresident SBS Entity file an
additional schedule (Schedule F) with their Form SBSE, Form SBSE-A, or Form SBSE-BD, as
appropriate, to identify its U.S. agent for service of process and to certify that the firm can, as a
matter of law, and will provide the Commission with access to its books and records and can, as
a matter of law, and will submit to onsite inspection and examination by the Commission.
Commission staff estimates that the total burden for all Nonresident SBS Entities to
complete and file Schedule F will be approximately 40.5 hours. 59
In summary, the Commission estimates that the total reporting burden associated
with the requirements for Nonresident SBS Entities in Rule 15Fb2-4 to complete and file
Schedule F will be approximately 40.2 hours, or 13.5 hours per year 60 when annualized
over three years. The average estimated burden per Nonresident SBS Entity over a three53
19,881 hours ÷ 47 SBS Entities = 423 hours per respondent ÷ 3 = 141 hours annually per respondent.
54
Two hours x 423 associated persons x 6 SBS dealers that are not otherwise registered or registering with
the Commission or the CFTC = 5,076 hours ÷ 3 = 1,692 hours per year.
55
5,076 hours ÷ 6 SBS Entities = 846 hours per respondent ÷ 3 = 282 hours annually per respondent.
56
One hour x 63 associated persons x 5 Major SBS Participants = 315 hours ÷ 3 = 105 hours per year.
57
315 hours ÷ 5 SBS Entities = 63 hours per respondent ÷ 3 = 21 hours annually per respondent.
58
See footnote 21 and accompanying text.
59
1.5 hours x 27 Nonresident SBS Entities = 40.5 hours.
60
(Y1 initial burden 40.5 hours) + (Y2 initial burden 0 hours) + (Y3 initial burden 0 hours) = 40.5 hours ÷ 3
years = 13.5 hours per year.
12
year period will be 1.5 hours, or .5 hours (or 30 minutes) per year 61 when annualized over
three years.
Nonresident entities must also amend Schedule F to inform the Commission if they
replace their agent for service of process or if information regarding their existing agent for
service of process changes. We do not believe this will occur frequently, and therefore estimate
that, annually, ten percent of the nonresidents may need to amend their Schedule F to reflect
these types of changes annually.
Consequently, we estimate that the total annual burden for Nonresident SBS
Entities to amend Schedule F to reflect changes in information regarding their agent for
service of process will be approximately 4.5 hours annually. 62
A Nonresident SBS Entity must also re-certify on Schedule F of such Forms within 90days after any changes in the legal or regulatory framework that would impact the Nonresident
SBS Entity’s ability to provide, or manner in which it provides, the Commission with prompt
access to its books and records or that impacts the Commission’s ability to inspect and examine
the SBS Entity. We do not believe this will occur frequently, and therefore estimate that one
nonresident entity may need to recertify annually.
Consequently, we estimate the total ongoing burden associated with this
requirement will be approximately 1½ hours annually. 63
vi.
Burden Related to Retention of Manually Signed Signature Pages
Pursuant to Rule 15Fb1-1, SBS Entities must create manually signed signature pages and
retain them until at least three years after the form or certification has been replaced or is no
longer effective. It is likely that each SBS Entity will need to maintain at least two pages with
manually signed signatures (the execution page of Form SBSE, SBSE-A, or SBSE-BD, as
applicable, and the Form SBSE-C certifications). In addition, nonresident SBS Entities also will
need to retain a manually signed copy of Schedule F. As so few pages will need to be retained,
the staff believes the burden associated with retaining them will not be significant.
Thus, the Commission estimates that it will take each SBS Entity approximately 10
minutes annually to assure that these pages are retained, or a total of approximately 9.67
hours annually for all SBS Entities. 64
61
40.5 hours ÷ 27 Nonresident SBS Entities = 1.5 hours per respondent ÷ 3 = .5 hours annually per
respondent.
62
27 Nonresident SBS Entities x 10% = 2.7 or approximately 3 SBS Entities. 3 SBS Entities x 1.5 hours =
4.5 hours.
63
1 SBS Entity x 1.5 hours per response = 1.5 hours annually per respondent.
64
(10 minutes x 58 SBS Entities) ÷ 60 minutes = 9.67 hours.
13
vii.
Burden Associated with Filing Withdrawal Form
Given that the cost and effort to register as an SBS Entity will be significant, the
Commission believes that entities will not enter and exit this business regularly. As the Form
SBSE-W is only one page and consists of information readily available to SBS Entities, the staff
estimates that it likely will take an SBS Entity, on average, approximately one hour to complete
and file a Form SBSE-W. 65 While the Commission believes it is unlikely that any SBS Entity
will withdraw from registration often, 66 solely for purposes of this PRA the Commission
estimates that one SBS Entity may file Form SBSE-W to withdraw from registration annually
and the total burden associated with completing and filing Form SBSE-W will be approximately
one hour each year. 67
Thus, the Commission estimates that it will take one SBS Entity approximately one
hour to complete and file Form SBSE-W annually. 68
In sum, the Commission estimates the total annual industry burden (for all respondents
and all information collections) to be 10,660 burden hours which is an increase of 835 burden
hours primarily due to an increase in the estimated number of respondents (based on the
Commission’s experience with implementing the rules) than previously estimated. The hourly
burdens are summarized in the table below.
Summary of Hourly Burdens
Summary of Hourly Burdens
Name of
Information
Collection
Number
of
Entities
Impacted
(A)
Small
Business
Entities
Affected
(B)
Type of
Burden
Rule 15Fb2-1 and
Form SBSE:
Complete and File
Application Form
6
0
Reporting
Rule 15Fb2-1 and
Form SBSE-A:
Complete and File
Application Form
Rule 15Fb2-1 and
Form SBSE-BD:
Complete and File
Application Form
45
0
7
0
Reporting
Reporting
Ongoing
or Initial
Burden
Annual
Responses
per Entity
(C)
Burden
Hours per
Entity per
Response
(D)
Annual
Burden
Hours Per
Entity
(E)
(C)*(D)
Ongoing
N/A
N/A
N/A
Initial
One-Time
1
14
14
Ongoing
N/A
N/A
N/A
Initial
One-Time
1
11.3333
11.3333
Ongoing
N/A
N/A
N/A
Initial
One-Time
1
3.5
3.5
Annual
Industry
Burden
(F)
(A)*(E)
84
510
24.5
65
The Commission included this estimate in the Registration Proposing Release and received no comment
on it. Consequently, we continue to believe this is a good estimate.
66
From the Registration Compliance Date through September 14, 2024, only one SBSE Entity has filed Form
SBSE-W to withdraw from registration.
67
(1 hour x 1 SBS Entity) = 1 hour.
68
(1 hour x 1 SBS Entity) = 1 hour.
14
Rule 15Fb2-3:
Complete and File
Amendments to
Application
Forms
58
0
Reporting
Rule 15Fb2-1 and
Form SBSE-C:
Complete and File
Certifications
58
0
Reporting
Rule 15Fb6-2:
Review and Sign
Employment
Questionnaires SBS Dealers
registered or
registering with
the SEC or the
CFTC
Rule 15Fb6-2:
Review and Sign
Employment
Questionnaires SBS Dealers not
registered or
registering with
the SEC or the
CFTC
Rule 15Fb6-2:
Review and Sign
Employment
Questionnaires Major SBS
Participants
registered or
registering with
the SEC or the
CFTC
Rule 15Fb2-4 and
Schedule F:
Complete and File
by Nonresident
SBS Entities
Rule 15Fb2-4 and
Schedule F:
Amendments by
Nonresident
Entities to change
Agent for Service
of Process
Rule 15Fb2-4 and
Schedule F:
Amendments by
Nonresident
Entities for
changes to
Foreign Law
Rule 15Fb1-1:
Retain Manually
Signed Signature
Pages
15Fb3-2 and
Form SBSE-W:
Complete and File
Withdrawal Form
47
6
5
27
3
0
0
0
0
0
Recordkeeping
Recordkeeping
Recordkeeping
Reporting
Reporting
1
0
Reporting
58
1
Recordkeeping
1
0
Reporting
Ongoing
2
1
2
Initial
One-Time
N/A
N/A
N/A
Ongoing
N/A
N/A
N/A
Initial
One-Time
1
25.3333
25.3333
Ongoing
N/A
N/A
N/A
Initial
One-Time
423
.3333
141
Ongoing
N/A
N/A
N/A
Initial
One-Time
423
.6667
282
Ongoing
N/A
N/A
N/A
Initial
One-Time
63
.3333
21
Ongoing
N/A
N/A
N/A
Initial
One-Time
1
.5
.5
Ongoing
1
1.5
1.5
Initial
One-Time
N/A
N/A
N/A
Ongoing
1
1.5
1.5
Initial
One-Time
N/A
N/A
N/A
Ongoing
1
.1667
.1667
Initial
One-Time
N/A
N/A
N/A
Ongoing
1
1
1
Initial
One-Time
N/A
N/A
N/A
TOTAL ANNUAL INDUSTRY BURDEN
116
1,469.33
6,627
1,692
105
13.5
4.5
1.5
9.67
1
10,660
15
13.
Costs to Respondents
There may be some costs associated with these rules, including the cost to Nonresident
SBS Entities to establish and maintain a relationship with a U.S. agent for service of process, and
for nonresident SBS Entities to obtain an opinion of counsel indicating that it can, as a matter of
law, provide the Commission with access to its books and records and submit to Commission
examinations.
The Commission estimates, based on internet research, 69 that it will cost each
Nonresident SBS Entity approximately $211 annually to appoint and maintain a relationship with
a U.S. agent for service of process (an increase of $17 per year since 2021 attributable to an
increase in prices charged by the service providers). Consequently, the total cost for all
nonresident SBS Entities to appoint and maintain relationships with U.S. agents for service
of process is approximately $5,697 per year. 70
In summary, the Commission estimates that the total reporting cost associated with
the requirements for Nonresident SBS Entities in Rule 15Fb2-4 to establish a relationship
with an agent for service of process will be approximately $17,091 or $5,697 when
annualized over three years. 71 The average estimated cost per Nonresident SBS Entity
over a three-year period will be $633 or $211 per year. 72
Newly registered, Nonresident SBS Entities also will incur outside legal costs associated
with obtaining an opinion of counsel. The Commission estimates that each new Nonresident
SBS Entity will incur, on average, approximately $25,000 in outside legal costs to obtain the
necessary opinion of counsel, and that the total cost for all newly registered Nonresident SBS
Entities to obtain this opinion of counsel will be approximately $675,000. 73
In summary, the Commission estimates that the total reporting cost associated with
the requirements for newly registered Nonresident SBS Entities in Rule 15Fb2-4 to obtain
an opinion of counsel will be approximately $675,000 or $225,000 when annualized over
69
See, e.g., https://www.incorp.com/registered-agent-services/ (as of September 13, 2024, $129 per state per
year), https://www.wolterskluwer.com/en/solutions/ct-corporation/registered-agent-services-solutions (as of
September 13, 2024, $354 per year), and https://www.ailcorp.com/services/registered-agent (as of
September 13, 2024, $149 per year). The staff sought websites that provided pricing information and a
comprehensive description of their registered agent services. We calculated our estimate by averaging the
costs provided on these three websites – ($129 + $354 + $149) ÷ 3 = $211.
70
$211 per Nonresident SBS Entity x 27 Nonresident SBS Entities = $5,697.
71
(Y1 ongoing cost of $5,697) + (Y2 ongoing cost of $5,697) + (Y3 ongoing cost of $5,697) = $17,091 ÷ 3
years = $5,697 per year.
72
$17,091 ÷ 27 Nonresident SBS Entities = $633 ÷ 3 = $211 annually per respondent.
73
$25,000 x 27 Nonresident SBS Entities = $675,000.
16
three years. 74 The average estimated cost per newly registered Nonresident SBS Entity
over a three-year period will be $25,000 or $8,333 per year. 75 Combining the Nonresident
SBS Entity Rule 15Fb2-4 requirement to establish a relationship with an agent for service
of process (discussed above) with the opinion of counsel requirement, then the total
annualized cost estimate per Nonrespondent SBS Entity is $8,544.33 and the total
annualized cost for the industry is $230,697.76
A Nonresident SBS Entity must also re-certify on Schedule F of such Forms within 90days after any changes in the legal or regulatory framework that will impact the SBS Entity’s
ability to provide, or manner in which it provides, the Commission with prompt access to its
books and records or that impacts the Commission’s ability to inspect and examine the SBS
Entity. The SBS Entity’s re-certification must be accompanied by a revised opinion of counsel
regarding the new regulatory regime. We do not believe this will occur frequently, and therefore
estimate that one Nonresident SBS Entity may need to recertify annually. Thus, the total
ongoing cost associated with obtaining a revised opinion of counsel regarding the new regulatory
regime will be approximately $25,000 annually. 77
In summary, the Commission estimates that the total reporting cost associated with
the requirements for Nonresident SBS Entities in Rule 15Fb2-4 to re-certify on Schedule F
for changes to foreign law will be approximately $75,000 or $25,000 when annualized over
three years. 78 The average estimated cost per Nonresident SBS Entity over a three-year
period will be $75,000 or $25,000 per year. 79
In sum, the Commission estimates the total annual industry cost burden (for all
respondents and for all information collections) to be $255,697 which is an increase of $43,492
primarily due to an increase in the estimated number of respondents (summarized in the table
below).
74
$675,000 ÷ 3 years = $225,000 per year.
75
$675,000 ÷ 27 Nonresident SBS Entities = $25,000 ÷ 3 = $8,333 annually per respondent.
76
$8,333.33 + $211 = $8,544.33. $8,544.33 x 27 Nonresident SBS Entities = $230,697.
77
$25,000 x 1 Nonresident SBS Entity = $25,000.
78
(Y1 ongoing cost of $25,000) + (Y2 ongoing cost of $25,000) + (Y3 ongoing cost of $25,000) = $75,000 ÷
3 years = $25,000 per year.
79
$75,000 ÷ 1 Nonresident SBS Entity = $75,000 ÷ 3 = $25,000 annually per respondent.
17
Summary of Cost Burdens ($)
SBS Entity Registration Cost Burdens
Type of
Burden
Number of
Respondents
Number of
Responses Per
Year
Initial Cost Per
Response Per
Year Per
Respondent
Ongoing
Burden Per
Response Per
Year Per
Respondent
Annualized
Cost Estimate
Per
Respondent
Annualized
Hourly Cost
Estimate
Industry-Wide
Small Business
Entities
Affected
Rule 15Fb2-1 and Form SBSE: Complete and File Application
Form
Reporting
6
1
-
-
-
-
0
Rule 15Fb2-1 and Form SBSE-A: Complete and File
Application Form
Reporting
45
1
-
-
-
-
0
Rule 15Fb2-1 and Form SBSE-BD: Complete and File
Application Form
Reporting
7
1
-
-
-
-
0
ii. Rule 15Fb2-3: Complete and File Amendments to
Application Forms
Reporting
58
2
-
-
-
-
0
iii. Rule 15Fb2-1 and Form SBSE-C: Complete and File
Certifications
Reporting
58
1
-
-
-
-
0
Rule 15Fb6-2: Review and Sign Employment Questionnaires SBS Dealers registered or registering with the SEC or the
CFTC
Recordkeeping
47
423
-
-
-
-
0
Rule 15Fb6-2: Review and Sign Employment Questionnaires SBS Dealers not registered or registering with the SEC or the
CFTC
Recordkeeping
6
423
-
-
-
-
0
Rule 15Fb6-2: Review and Sign Employment Questionnaires Major SBS Participants registered or registering with the SEC
or the CFTC
Recordkeeping
5
63
-
-
-
-
0
Rule 15Fb2-4 and Schedule F: Complete and File by
Nonresident SBS Entities; includes hiring Agent for Service of
Process and obtaining Opinion of Counsel
Reporting
27
1
$25,211
$8,544.33
$230,697
0
Rule 15Fb2-4 and Schedule F: Amendments by Nonresident
Entities to change Agent for Service of Process
Reporting
3
1
-
-
-
-
0
Rule 15Fb2-4 and Schedule F: Amendments by Nonresident
Entities for changes to Foreign Law
Reporting
1
1
-
$25,000
$25,000
$25,000
0
vi. Rule 15Fb1-1: Retain Manually Signed Signature Pages
Recordkeeping
58
1
-
-
-
-
0
vii. 15Fb3-2 and Form SBSE-W: Complete and File Withdrawal
Form
Reporting
1
1
-
-
-
-
0
Nature of Information Collection Burden
i. Burden Associated with Filing Application Forms
iv. Burdens Relating to Associated Persons
v. Burdens on Non-Resident SBS Entities
$255,697
14.
Costs to the Federal Government
The federal government will not incur any costs for this collection beyond normal full-time
employee labor costs, nor does the rule require the Commission to hire any new employees or
reallocate existing employees to ensure compliance with the rule.
18
15.
Reason for Changes in Burden
While the annual burden per entity remains mostly unchanged,80 the Commission estimates
an increase in the total annual industry burden because the number of entities that we estimate will
be registering as security-based swap dealers or major security-based swap participants over the
next three years is more than the number of entities that we estimated would register during the
previous three years. The Commission initially estimated that 55 entities would register. As noted
previously, 53 entities have registered as security-based swap dealers during the period starting on
the Registration Compliance Date and ending on September 14, 2024. We estimate that an
additional five entities will register as SBS Entities over the next three years for a total of 58 SBS
Entities. While individual burden numbers have not changed, the aggregate industry burden has
increased due to the higher estimate of registrations.
16.
Information Collections Planned for Statistical Purposes
Not applicable. The information is not used for statistical purposes.
17.
Approval to Omit OMB Approval Date
We request authorization to continue to omit the expiration date on the electronic version
of the forms. Including the expiration date on the electronic version of the forms will result in
increased costs, because the need to make changes to the forms may not follow the application’s
scheduled version release dates. The OMB control number will be displayed.
18.
Exceptions to Certification for Paperwork Reduction Act Submissions
This collection of information complies with the requirements in 5 CFR 1320.9.
B.
COLLECTION OF INFORMATION EMPLOYING STATISTICAL METHODS
This collection does not involve statistical methods.
80
We increased the cost for each Nonresident SBS Entity to appoint and maintain a relationship with a U.S.
agent for service of process from $104 annually to $211 annually.
19
| File Type | application/pdf |
| File Title | SBS Entity Registration Supporting Statement |
| Author | Bonnie L. Gauch |
| File Modified | 2024-10-02 |
| File Created | 2024-10-02 |