Notice2026-04227
Agency Information Collection Activities; Submission for OMB Review; Comment Request; Extension: Exchange Act Rule 3a71-3
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 4, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 42 (Wednesday, March 4, 2026)</title>
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[Federal Register Volume 91, Number 42 (Wednesday, March 4, 2026)]
[Notices]
[Pages 10661-10663]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-04227]
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SECURITIES AND EXCHANGE COMMISSION
[OMB Control No. 3235-0717]
Agency Information Collection Activities; Submission for OMB
Review; Comment Request; Extension: Exchange Act Rule 3a71-3
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 (44 U.S.C. Sec. 3501 et seq.), the Securities and Exchange
Commission (SEC or ``Commission'') is submitting to the Office of
Management and Budget (OMB) this request for an extension of the
proposed collection of information.
The representations contemplated by Rule 3a71-3 will be relied upon
by counterparties to determine whether such transaction is a
``transaction conducted through a foreign branch'' of a U.S. bank
counterparty, as defined in Rule 3a71-3(a)(3)(i), as well as to verify
whether a security-based swap counterparty is a ``U.S. person.''
Counterparties to security-based swap transactions may voluntarily give
such representations to one another to reduce operational costs and
allow each party to ascertain whether such transaction is subject to
certain Title VII requirements. Because any representations provided to
counterparties under Rule 3a71-3 will constitute voluntary third-party
disclosures, the Commission will not typically receive these
disclosures.
The Commission believes that the representations contemplated by
Rule 3a71-3 will, in most cases, be made through representation letters
or amendments to the parties' existing trading documentation (e.g., the
schedule to a master agreement). The Commission believes that, because
trading relationship documentation is established between two
counterparties, whether a counterparty is able to represent that it is
entering into a ``transaction conducted through a foreign branch'' or
that it does not meet the criteria of the ``U.S. person'' definition
will not change with each transaction and, therefore, such
representations generally need only be made once per relationship, as
opposed to on a transaction-by-transaction basis.. The Commission
anticipates that counterparties may elect to develop and incorporate
these representations in trading documentation following the effective
date of the Commission's security-based swap regulations or prior to
entering into in-scope transactions. In either case, the regulatorily-
compliant language would be incorporated on a relationship basis, as
opposed to on a transactional basis. In 2022, the Commission
anticipated that standardized language would be developed by individual
respondents or through a combination of trade associations and industry
working groups and that it would be applied across all of an entity's
security-based swap trading relationships.\1\
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\1\ It is the Commission's understanding that the ISDA U.S.
Self-Disclosure Letter is one such example of the anticipated
standardized language that the industry has developed. However, the
Commission lacks information regarding the scope of reliance upon
this representation letter and thus hesitates to presume that
standardization has been fully achieved.
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a. Representations regarding a ``transaction conducted through a
foreign branch'':
Pursuant to Rule 3a71-3, parties to security-based swaps are
permitted to rely on certain representations from their counterparties
when determining whether a transaction falls within the
[[Page 10662]]
definition of a ``transaction conducted through a foreign branch.''
Based on its understanding of the current state of the security-based
swap market, the Commission staff estimates that nine entities will
incur burdens under this collection of information, whether solely in
connection with the business conduct requirements or also in connection
with the application of the de minimis exception.
In 2022, the Commission estimated the one-time third-party
disclosure burden associated with developing representations under this
collection of information to be, for each U.S. bank counterparty that
would make such representations, no more than five hours, and up to
$2,000 for the services of outside professionals. Across the nine
respondents, this amounted to approximately 45 hours, or 15 hours per
year when annualized over three years.
The number of U.S. banks that are registered as security-based swap
dealers has not changed since 2022. The Commission believes that the
majority of the burden associated with the new disclosure requirements
was experienced during the first year as language was being developed
and trading documentation was being amended.
For PRA purposes, in 2022, the Commission assumed that all nine
respondents would seek outside counsel to assist in developing the
representations contemplated by Rule 3a71-3 and that they would, on
average, consult with outside counsel for up to five hours. The
Commission further assumed that the services of outside counsel would
be sought for the first year only and that none of the nine respondents
would seek outside legal services for year two or year three. In 2022,
the Commission estimated the cost for each respondent who incurred this
initial burden to be up to $2,000. Over the three-year period, this
amounted to $18,000, or $6,000 per year when annualized over three
years.
The Commission believes that this initial burden is no longer
applicable to these entities. However, the Commission believes that
there is an ongoing third-party disclosure burden associated with these
requirements. The Commission further believes that the ongoing burden
associated with this requirement will be 10 hours per U.S. bank
counterparty for verifying representations with existing
counterparties, for a total of approximately 90 hours across the nine
respondents.\2\
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\2\ The Commission staff estimates that this burden will consist
of 10 hours of in-house counsel time for each security-based swap
market participant that will make such representations. See Business
Conduct Adopting Release, 81 FR 30097 n.1581.
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b. Representations regarding U.S.-person status:
Pursuant to Rule 3a71-3(a)(4)(iv), persons may rely on
representations from a counterparty that the counterparty does not
satisfy the criteria defining U.S. person set forth in Rule 3a71-
3(a)(4)(i), unless such person knows or has reason to know that the
representation is not accurate. Commission staff estimates, based on
current security-based swap data repository (``SBSDR'') reporting \3\
and its understanding of OTC derivatives markets, including the
domiciles of counterparties that are active in the market, that
approximately 4,200 entities will provide representations that they do
not meet the criteria necessary to be U.S. persons.
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\3\ The estimate is as of December 31, 2024 and is based upon
security-based swap position data derived by each SBSDR from the
transaction reports made to the SBSDR.
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In 2022, the Commission estimated that 3,000 non-U.S. persons were
active in the security-based swap market. As with representations
regarding whether a transaction is conducted through a foreign branch,
the Commission estimated the maximum total third-party disclosure
burden associated with developing new representations to be, for each
counterparty that will make such representations, no more than five
hours and up to $2,000 for the services of outside professionals.
Across the 3,000 respondents, this amounted to a maximum of
approximately 15,000 hours, or 5,000 hours per year when annualized
over three years.
The Commission's current estimate of the number of persons who
would be making non-U.S. person status disclosures is 4,200 persons,
which is 1,200 more than the estimate in 2022. The Commission lacks
visibility into exactly how many of the 4,200 persons are new entrant
counterparties into the security-based swap market (and thus likely to
incur the initial burden associated with compliance) versus
counterparties who were present in the market in 2022 and already
incurred the burden. Thus, the Commission will assume that all of the
4,200 non-U.S. persons will incur the initial disclosure burden.
The Commission continues to believe that the maximum total third-
party disclosure burden will be no more than five hours. The current
cost of employing the services of outside professionals is estimated to
be approximately $2,715 (five hours at $543 per hour).\4\ As the
Commission's current estimate of non-U.S. persons who would be making
such representations is 4,200 persons, the approximate number of hours
would total approximately 21,000 hours (five hours for each) or 7,000
hours per year when annualized over three years. This estimate assumes
little or no reliance on standardized disclosure language.
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\4\ See Business Conduct Adopting Release, 81 FR 30096 n.1577
(estimating a cost of $400 per hour for outside legal services). The
Commission's current estimated hourly rate for outside legal
services, reflecting adjustments for inflation, is $543.
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The Commission expects that most of the burden associated with the
disclosure requirements will be experienced during the first year as
language is developed and trading documentation is amended. After the
new representations are developed and incorporated into trading
documentation, the Commission believes that the annual third-party
disclosure burden associated with this requirement will be no more than
approximately 10 hours per counterparty for verifying representations
with existing counterparties and onboarding new counterparties. In
2022, across the 3,000 respondents, this amounted to a maximum of
approximately 30,000 hours. The Commission's current estimate, across
4,200 counterparties, is 42,000 hours.
The Commission believes that some of the entities that comply with
Rule 3a71-3 will seek outside counsel to help them develop new
representations. For PRA purposes, the Commission assumes that all
4,200 respondents will seek outside legal services for the first year
only and will, on average, consult with outside counsel for up to five
hours. The Commission also assumes that none of those 4,200 respondents
will seek outside legal services for year two or year three. In 2022,
the Commission estimated the aggregate cost for 3,000 respondents over
the three-year period to be $6 million, or $2 million per year when
annualized over three years; the total labor cost per respondent was
estimated to be approximately $666.67 when annualized over three years.
The Commission's current estimate of the annualized labor cost per
respondent is $905 ($2,715 spread across three years). The Commission's
current estimate for the 4,200 respondents is $11.4 million or $3.8
million per year when annualized over three years.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information
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unless it displays a currently valid OMB Control Number.
The public may view and comment on this information collection
request at: <a href="https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202512-3235-003">https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202512-3235-003</a> or email comment to
<a href="/cdn-cgi/l/email-protection#074a455f29484a4529484e554629544244586362746c586861616e64627547686a652962687729606871"><span class="__cf_email__" data-cfemail="89c4cbd1a7c6c4cba7c6c0dbc8a7dacccad6edecfae2d6e6efefe0eaecfbc9e6e4eba7ece6f9a7eee6ff">[email protected]</span></a> within 30 days of the day
after publication of this notice, by April 6, 2026.
Dated: February 27, 2026.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-04227 Filed 3-3-26; 8:45 am]
BILLING CODE 8011-01-P
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