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2011 OCC Comment Letters

CPSS and IOSCO, July 29, 2011
Principles for Financial Market Infrastructures Consultative Report March 2011
OCC submitted this letter in response to the Committee on Payment and Settlement Systems of the Bank for International Settlements and the Technical Committee of the International Organization of Securities Commissions (CPSS-IOSCO) of a consultative report entitled "Principles for Financial Market Infrastructures" in March 2011.  CPSS-IOSCO is proposing, among other things, standards for central counterparties (CCPs) that would replace CPSS-IOSCO's current Recommendations for Central Counterparties, published in November 2004.  OCC's comments primarily focus on areas in which we believe the report could be improved to account for OCC's unique structure.  The new report is less flexible than the 2004 Report, which will not provide sufficient flexibility and force CCPs such as OCC to expend resources on formal checklist items that have little connection to actual risk management and may actually increase systemic risk. View Agency Release.

CFTC, June 2, 2011
Reopening and Extension of Comments Period
OCC submitted this letter in response to the CFTC re-opening the comment periods on a number of proposed rules implementing the provisions of Dodd-Frank that establish a comprehensive new framework for the regulation of swaps. OCC commented on seven of the proposed rules that were re-opened. OCC urges the Commission to redouble its efforts to coordinate the substantive requirements of and its schedule for adopting final rules affective DCOs with the SEC. OCC encourages the Commission, as well as the SEC, to provide reasonable phase-in periods for each of the final regulations to minimize the disruption of the derivatives markets. View Agency Release.

FSOC, May 27, 2011
RIN 4030-AA01 Authority to Designate Financial Market Utilities as Systemically Important
OCC submitted this letter in response to the release published by the Financial Stability Oversight Council (FSOC) requesting comment on proposed rules relating to its authority to designate FMUs as systemically important. OCC has two comments to the proposed rules, one of which is purely technical. We believe eliminating information submission requirements for clearing organizations that voluntarily consent to designation as systemically important would promote regulatory efficiency. Overall, OCC generally supports the FSOC's proposed rules intended to carry out the statutory mandate of Title VIII of Dodd-Frank. View Agency Release.

FDIC, May 19, 2011
RIN 3064-AD73, Notice of Proposed Rulemaking Regarding Orderly Liquidation Authority of FDIC
OCC submitted this letter in response to the publication by the FDIC of a notice of proposed rulemaking to implement certain provisions of the FDIC's authority to resolve covered financial companies under Title II of Dodd-Frank. Among other things, the proposed rules would outline the process for making and adjudicating claims in the orderly liquidation of a covered entity, including claims priorities. OCC respectfully requests that the FDIC clarify in its final rule that the proposed rules are subject to the exceptions and limitations applicable to qualified financial contracts to the extent provided in Dodd-Frank. View Agency Release.

SEC, April 29, 2011
S7-08-11 Clearing Agency Standards for Operations and Governance
OCC submitted this letter in response to the SEC's request for comment on proposed rules regarding registration of clearing agencies and standards for the operation and governance of clearing agencies, as mandated by Dodd-Frank. The SEC states that the proposed rules are "designed to enhance the regulatory framework for the supervision of clearing agencies." OCC supports adoption of the proposed rules, which we believe are generally well reasoned and, in most respects, wisely avoid being overly prescriptive. View Agency Release.

SEC, April 26, 2011
S7-27-10 Ownership Limitations and Governance Requirements for Security-based Swap Clearing Agencies, Security-Based Swap Execution Facilities, and National Securities Exchanges with Respect to Security-based Swaps under Regulation MC
OCC submitted this letter in response to the SEC's recent release reopening the comment period on its previous release requesting comment on the proposed rules mitigating conflicts of interest at the registered securities clearing agencies that clear security-based swaps, security-based swap execution facilities and national securities exchanges that list security-based swaps for trading. The SEC reopened the comment period on the proposed Regulation MC Rules to allow interested parties to comment in light of a subsequent proposal on "clearing agency standards for operations and governance." The proposed clearing agency standards also include provisions designed to address conflicts of interest at security-based swap clearing agencies. View Agency Release.

CFTC, April 11, 2011
RIN 3038-AC98 Requirements for Processing, Clearing and Transfer of Customer Positions
OCC submitted this letter in response to the CFTC's request for comment on proposed rules that would: (i) establish timeframes for swap dealers, major swap participants, futures commission merchants, swap execution facilities and designated contract markets to process and submit contracts, agreements or transactions to a DCO for clearing; (ii) establish certain product standards and a time frame for a DCO to clear such contracts, agreements and transactions; and (iii) facilitate a DCO's transfer of open positions from a carrying clearing member to another clearing member without unwinding and re-booking the positions. View Agency Release.

CFTC, March 21, 2011
RIN 3038-AC98 Risk Management Requirements for Derivatives Clearing Organizations
OCC submitted this letter in response to the CFTC's request for comment on proposed rules establishing regulatory standards for compliance with DCO Core Principles C (participant and product eligibility), D (risk management), E (settlement procedures), F (treatment of funds), G (default rules and procedures), and I (system safeguards); imposing heightened standards in the area of system safeguards supporting business continuity and disaster recovery for systemically important DCOs; and implementing the commission's special enforcement authority over systemically important DCOs. OCC considers the proposed rules to be among the most important rules proposed by the CFTC that are applicable to DCOs. We find many aspects of the proposed rules to be seriously flawed and in need of reconsideration by the Commission. View Agency Release.

CFTC, March 7, 2011
RIN 3038-AD01 Governance Requirements for Derivatives Clearing Organizations, Designated Contract Markets, and Swap Execution Facilities; Additional Requirements Regarding the Mitigation of Conflicts of Interest
OCC submitted this letter in response to the CFTC's request for comment on its proposed rules imposing substantive requirements on the resolution of conflicts of interest by DCOs. The proposed governance rules further implement DCO core principles added to the CEA by Dodd-Frank. The proposed governance rules build on proposed structural governance requirements and limits on voting proposed by the CFTC in the fall of 2010. OCC believes that the CFTC must be cognizant of the regulatory burdens being imposed on DCOs relative to the benefits expected to be realized through its proposed regulations. We believe the CFTC's proposals impose too great a burden relative to their potential benefits and are unnecessarily bureaucratic and will result in compliance by DCOs being tedious and expensive. View Agency Release.

SEC, February 14, 2011
S7-44-10 Process for Submissions for Review of Security-based Swaps for Mandatory Clearing and Notice Filing Requirements for Clearing Agencies; Technical Amendments to Rule 19b-4 Applicable to All Self-Regulatory Organizations
OCC submitted this letter in response to the SEC's request for comment on proposed rules implementing a new process by which a registered clearing agency may submit for review a security-based swap that the clearing agency plans to accept for clearing as mandated by Title VII of Dodd-Frank. The proposed rules address requirements for the notice the clearing agency must provide to its members and the procedure by which the Commission may stay the mandatory clearing requirement. OCC supports the adoption of the proposed rules. View Agency Release.

CFTC, February 10, 2011
RIN 3038-AC98 Information Management Requirements for Derivatives Clearing Organizations
OCC submitted this letter in response to the CFTC's request for comment on its proposed rules to implement certain core principles for DCOs as amended by Title VII of Dodd-Frank. The proposed rules would establish standards for compliance with DCO core principles J (reporting), K (recordkeeping), L (public information) and M (information sharing). OCC's comments are focused on the proposed related to core principle J, reporting.

CFTC, February 10, 2011
RIN 3038-AC98 General Regulations and Derivatives Clearing Organizations
OCC submitted this letter in response to the CFTC's request for comment on its proposed rules implementing provisions of Title VII of Dodd-Frank. The proposed rules establish regulatory standards for compliance with several core principles for DCOs as well as requirements for DCO chief compliance officers. Among other things, the proposed rules would also add requirements for the approval of DCO rules establishing a portfolio margining program for customer accounts carried by an FCM that is also registered as a securities broker-dealer. OCC's comment letter focuses on portions of the proposed rules that address customer portfolio margining, requirements for chief compliance officers, the scope of Part 39 and transfer of a DCO registration. OCC generally supports the proposed rules. View Agency Release.

CFTC, January 3, 2011
RIN 3038-AD07 Provisions Common to Registered Entities
OCC submitted this letter in response to the CFTC's request for comment on its proposed rules implementing the new statutory framework for the certification and approval for new products, new rules and rule amendments submitted to the Commission by registered entities, as mandated by Title VII of Dodd-Frank. View Agency Release.