[Federal Register Volume 76, Number 53 (Friday, March 18, 2011)]
[Proposed Rules]
[Pages 14826-14827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-6399]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Chapter I

RIN 3038-AD26


Antidisruptive Practices Authority

AGENCY: Commodity Futures Trading Commission.

ACTION: Advance notice of proposed rulemaking; notice of termination.

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SUMMARY: On November 2, 2010, the Commodity Futures Trading Commission 
(``Commission'') issued in the Federal Register an advance notice of 
proposed rulemaking (``ANPR''). In this ANPR, the Commission requested 
public comment to assist it with promulgating rules and regulations to 
implement the disruptive practices set forth in section 4c(a) of the 
Commodity Exchange Act (``CEA''), as amended by section 747 of the 
Dodd-Frank Wall Street Reform and Consumer Protection Act (``Dodd-Frank 
Act''). After considering the comments that were submitted in response 
to the ANPR, the Commission decided not to issue any regulations at 
this time relating to new section 4c(a). Instead, the Commission is 
publishing today elsewhere in the Federal Register a proposed order 
interpreting new section 4c(a)(5). The Commission is also terminating 
the ANPR issued on November 2, 2010.

DATES: Effective March 18, 2011.

FOR FURTHER INFORMATION CONTACT: Robert Pease, Counsel to the Director 
of Enforcement, 202-418-5863, <a href="/cdn-cgi/l/email-protection#ff8d8f9a9e8c9abf9c998b9cd1989089"><span class="__cf_email__" data-cfemail="5d2f2d383c2e381d3e3b293e733a322b">[email protected]</span></a>; Steven E. Seitz, 
Attorney, Office of the General Counsel, 202-418-5615, <a href="/cdn-cgi/l/email-protection#1063637579646a50737664733e777f66"><span class="__cf_email__" data-cfemail="740707111d000e34171200175a131b02">[email protected]</span></a>; 
or Mark D. Higgins, Counsel to the Director of Enforcement, 202-418-
5864, <a href="/cdn-cgi/l/email-protection#274a4f4e40404e4954674441534409404851"><span class="__cf_email__" data-cfemail="7f121716181816110c3f1c190b1c51181009">[email protected]</span></a>, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1151 21st Street, NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: On July 21, 2010, President Obama signed the 
Dodd-Frank Act.\1\ Title VII of the Dodd-Frank Act \2\ amended the 
Commodity Exchange Act (``CEA'') \3\ to establish a comprehensive new 
regulatory framework for swaps and security-based swaps. The 
legislation was enacted to reduce risk, increase transparency, and 
promote market integrity within the financial system by, among other 
things: (1) Providing for the registration and comprehensive regulation 
of swap dealers and major swap participants; (2) imposing clearing and 
trade execution requirements on standardized derivative products; (3) 
creating robust recordkeeping and real-time reporting regimes; and (4) 
enhancing the Commission's rulemaking and enforcement authorities with 
respect to, among others, all registered entities and intermediaries 
subject to the Commission's oversight. Section 747 of the Dodd-Frank 
Act amends section 4c(a) of the CEA to add a new section entitled 
``Disruptive Practices.''
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    \1\ See Dodd-Frank Wall Street Reform and Consumer Protection 
Act, Public Law 111-203, 124 Stat. 1376 (2010). The text of the 
Dodd-Frank Act may be accessed at http://www.cftc.gov./
LawRegulation/OTCDERIVATIVES/index.htm.
    \2\ Pursuant to Section 701 of the Dodd-Frank Act, Title VII may 
be cited as the ``Wall Street Transparency and Accountability Act of 
2010.''
    \3\ 7 U.S.C. 1 et seq. (2006).

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[[Page 14827]]

    New section 4c(a) expressly prohibits certain trading practices 
that are disruptive of fair and equitable trading. New section 4c(a) of 
the CEA makes it unlawful for any person to engage in any trading, 
practice, or conduct on or subject to the rules of a registered entity 
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that--

(A) Violates bids or offers;
(B) Demonstrates intentional or reckless disregard for the orderly 
execution of transactions during the closing period; or
(C) Is, is of the character of, or is commonly known to the trade 
as, ``spoofing'' (bidding or offering with the intent to cancel the 
bid or offer before execution).

    Section 747 of the Dodd-Frank Act also amended section 4c(a) by 
granting the Commission authority to promulgate such ``rules and 
regulations as, in the judgment of the Commission, are reasonably 
necessary to prohibit the trading practices'' enumerated in section 747 
``and any other trading practice that is disruptive of fair and 
equitable trading.'' The prohibition on the disruptive practices 
specified in new section 4c(a) will become effective 360 days after the 
enactment of the Dodd-Frank Act.
    On November 2, 2010, the Commission issued an ANPR inviting public 
comment on all aspects of section 747 of the Dodd-Frank Act.\4\ After 
reviewing the ANPR comments that were submitted, the Commission 
determined that it should address the disruptive practices by issuing a 
proposed order interpreting new CEA section 4c(a). Accordingly, this 
document terminates the ANPR issued on November 2, 2010. The proposed 
interpretive order referenced above, which incorporates the ANPR 
comments, is being published today elsewhere in the notice section of 
the Federal Register.
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    \4\ Anti-Disruptive Trading Practices Authority Contained in the 
Dodd-Frank Wall Street Reform and Consumer Protection Act, 75 FR 
211, Nov. 2, 2010.
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    This proposed interpretive order will provide market participants 
and the public with guidance on the scope of the three statutory 
disruptive practices set forth in new CEA section 4c(a).

    Issued in Washington, DC, on March 14, 2011, by the Commission.
David A. Stawick,
Secretary of the Commission.
[FR Doc. 2011-6399 Filed 3-17-11; 8:45 am]
BILLING CODE 6351-01-P


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