69510 Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 

1 7 U.S.C. 24.

2 11 U.S.C. 761(17).

Authority: 5 U.S.C. 301; 15 U.S.C. 4908; 22 

U.S.C. 3101–3108; E.O. 11961, 3 CFR, 1977 

Comp., p. 86, as amended by E.O. 12318, 3 

CFR, 1981 Comp. p. 173, and E.O. 12518, 3 

CFR, 1985 Comp. p. 348.

■ 2. Section 801.11(b) and (c) are revised 

to read as follows:

§ 801.11 Rules and regulations for the BE–

80, Benchmark Survey of Financial Services 

Transactions Between U.S. Financial 

Services Providers and Unaffiliated Foreign 

Persons.

* * * * *

(b) BE–80 definition of financial 

services provider. The definition of 

financial services provider used for this 

survey is identical in coverage to Sector 

52—Finance and Insurance, and holding 

companies that own or influence, and 

are principally engaged in making 

management decisions for these firms 

(part of Sector 55—Management of 

Companies and Enterprises, of the North 

American Industry Classification 

System, United States, 2002). For 

example, companies and/or subsidiaries 

and other separable parts of companies 

in the following industries are defined 

as financial services providers: 

Depository credit intermediation and 

related activities (including commercial 

banking, savings institutions, credit 

unions, and other depository credit 

intermediation); nondepository credit 

intermediation (including credit card 

issuing, sales financing, and other 

nondepository credit intermediation); 

activities related to credit 

intermediation (including mortgage and 

nonmortgage loan brokers, financial 

transactions processing, reserve, and 

clearinghouse activities, and other 

activities related to credit 

intermediation); securities and 

commodity contracts intermediation 

and brokerage (including investment 

banking and securities dealing, 

securities brokerage, commodity 

contracts dealing, and commodity 

contracts brokerage); securities and 

commodity exchanges; other financial 

investment activities (including 

miscellaneous intermediation, portfolio 

management, investment advice, and all 

other financial investment activities); 

insurance carriers; insurance agencies, 

brokerages, and other insurance related 

activities; insurance and employee 

benefit funds (including pension funds, 

health and welfare funds, and other 

insurance funds); other investment 

pools and funds (including open-end 

investment funds, trusts, estates, and 

agency accounts, real estate investment 

trusts, and other financial vehicles); and 

holding companies that own, or 

influence the management decisions of, 

firms principally engaged in the 

aforementioned activities. 

(c) Covered types of services. The BE–

80 survey covers the following types of 

financial services transactions 

(purchases and/or sales) between U.S. 

financial services providers and 

unaffiliated foreign persons: Brokerage 

services related to equities transactions; 

other brokerage services; underwriting 

and private placement services; 

financial management services; creditrelated services, except credit card 

services; credit card services; financial 

advisory and custody services; 

securities lending services; electronic 

funds transfer services; and other 

financial services. The BE–80 also 

covers total receipts and total payments 

for the above-listed types of financial 

services transactions with affiliated 

foreign parties (foreign affiliates and 

foreign parents).

* * * * *

[FR Doc. 04–26367 Filed 11–29–04; 8:45 am] 

BILLING CODE 3510–06–P

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 190

Interpretative Statement Regarding 

Funds Determined To Be Held in the 

Futures Account Type of Customer 

Account Class

AGENCY: Commodity Futures Trading 

Commission.

ACTION: Interpretative statement.

SUMMARY: This interpretation by the 

Commodity Futures Trading 

Commission is issued to clarify the 

appropriate means by which to allocate 

customer funds held by an insolvent 

Futures Commission Merchant (FCM) to 

account classes (as such term is defined 

in section 190.01(a) of the Commission’s 

Regulations (17 CFR 190.01(a)) in cases 

where money, securities or other 

property margining, guaranteeing or 

securing futures contracts traded on 

non-domestic boards of trade has been 

deposited, pursuant to a Commission 

Order, in a segregated account 

established pursuant to Regulation 1.20 

(17 CFR 1.20).

FOR FURTHER INFORMATION CONTACT:

Robert B. Wasserman, Associate 

Director, Division of Clearing and 

Intermediary Oversight, Commodity 

Futures Trading Commission, Three 

Lafayette Centre, 1155 21st Street, NW., 

Washington, DC 20581. Telephone: 

(202) 418–5092; e-mail 

rwasserman@cftc.gov.

* * * * *

Section 20 of the Commodity 

Exchange Act 1 empowers the 

Commission to provide by rule or 

regulation how the net equity of a 

customer is to be determined:

‘‘* * * the Commission may provide, with 

respect to a commodity broker that is a 

debtor under chapter 7 of title 11 of the 

United States Code, by rule or regulation—

(1) that certain cash, securities, other 

property, or commodity contracts are to be 

included in or excluded from customer 

property or member property; * * * and (5) 

how the net equity of a customer is to be 

determined.’’

Subchapter IV of the Bankruptcy Code 

(concerning Commodity Brokers) has 

the same effect, explicitly subjecting its 

definition of ‘‘net equity’’ to ‘‘such rules 

and regulations as the Commission 

promulgates under the [Commodity 

Exchange ] Act.’’ 2

The Commission has exercised this 

power in promulgating Part 190. In 

particular, Net Equity is defined in 

Regulation 190.07. This definition 

includes the concept of ‘‘account 

classes.’’ For example, § 190.07(b)(2) 

directs that one of the steps in 

calculating a customer’s net equity is to 

‘‘[a]ggregate the credit and debit equity 

balances of all accounts of the same 

class held by a customer in the same 

capacity.’’ Similarly, § 190.07(c) defines 

the ‘‘funded balance’’ as ‘‘a customer’s 

pro rata share of the customer estate 

account class available as of the primary 

liquidation date for distribution to 

customers of the same class.’’

Commission Regulation 190.01(a) 

defines account class as follows:

each of the following types of customer 

accounts which must be recognized as a 

separate class of account by the trustee: 

futures accounts, foreign futures accounts, 

leverage accounts, commodity option 

accounts, and delivery accounts as defined in 

§ 190.05(a)(2): Provided, however, That to the 

extent that the equity balance, as defined in 

§ 190.07, of a customer in a commodity 

option, as defined in § 1.3(hh) of this chapter, 

may be commingled with the equity balance 

of such customer in any domestic commodity 

futures contract pursuant to regulations 

under the Act, the aggregate shall be treated 

for purposes of this part as being held in a 

futures account.

There is a potential ambiguity in how 

this provision should be applied in two 

related contexts. First, where a customer 

account holds foreign futures contracts, 

and/or property margining, 

guaranteeing, or securing such 

contracts, but where the collateral has, 

pursuant to a Commission order, been 

segregated in accordance with 

Commission Regulation 1.20 in the 

Federal Register / Vol. 69, No. 229 / Tuesday, November 30, 2004 / Rules and Regulations 69511

manner of a domestic futures account, 

the appropriate ‘‘type of account’’ is 

ambiguous. One can distinguish 

between a ‘‘foreign future’’ which is 

characterized by the place in which it is 

executed, and a ‘‘foreign futures 

account’’ which may be characterized 

by the calculation of the applicable 

segregation requirements. A ‘‘futures 

account’’ is also characterized by the 

calculation of the applicable segregation 

requirement. If the Commission grants 

Section 4d relief to permit funds 

supporting foreign futures to be 

deposited in a ‘‘futures account’’

calculated pursuant to Section 4d and 

Commission Regulation 1.20, then it 

would appear apposite to treat claims 

on those funds as belonging to the 

futures account class of accounts. 

Second, where a customer account 

contains both foreign futures contracts 

and domestic futures contracts, with 

those positions margined on a portfolio 

basis, such that the same property 

margins, guarantees, or secures both 

types of contracts in one account, the 

appropriate allocation of claims on the 

collateral between ‘‘futures contracts’’

and ‘‘foreign futures contracts’’ is, again, 

ambiguous. 

As the Commission noted in the 

proposing release for Commission 

Regulation 190.01,

‘‘The allocation provisions are intended to 

prefer customers for which segregation is 

undertaken over * * * customers holding 

accounts of a class for which segregation is 

not required * * * The reason for identifying 

classes of customer accounts is to permit the 

implementation of the principle of pro rata 

distribution so that the differing segregation 

requirements with respect to different classes 

of accounts benefit customer claimants based 

on the class of account for which they were 

imposed.’’ 46 FR 57535, 57536 (November 

24, 1981).

Thus, the Commission intended the 

customers who contribute to a 

segregated pool to benefit from that 

pool. Later in that release the 

Commission explained that the 

distinction in treatment between 

account classes sprang from the contrast 

in segregation requirements:

all property segregated on behalf of a 

particular class would be allocated to the 

class on behalf of which it is segregated. This 

approach is consistent with the fact that 

differing segregation requirements exist for 

different classes of accounts. Obviously, 

much of the benefit of segregation would be 

lost if property segregated on behalf of a 

particular account class could be allocated to 

pay the claims of customers of a different 

account for which less stringent segregation 

provisions were in effect. 46 FR at 57554.

Again, the Commission contemplated 

that customers would benefit from the 

stringency of the segregation regime to 

which their funds were subject. To the 

extent that, subject to a Commission 

order, customer margin supporting nondomestic trades is subject to the full 

stringency of segregation under 

Commission Regulation 1.20 rather than 

the less stringent Commission 

Regulation 30.7 secured amount 

calculation, it is consistent with the 

Commission’s intentions in adopting the 

Part 190 scheme that the property in the 

accounts of these customers be treated 

as futures accounts. Conversely, it 

would be inconsistent with the 

Commission’s intentions to deny 

customers who had contributed 

property that was, in accordance with 

Commission Orders, deposited into 

accounts segregated pursuant to 

Commission Regulation 1.20, any 

participation in those accounts based on 

those contributions. 

Thus, the Commission intended that 

the customers who contribute to a 

segregated pool benefit from that pool. 

If customers do not contribute to a pool, 

they should not benefit from that pool. 

The Commission’s intent to tie 

distribution of funds to the contribution 

of those funds, and the ambiguity of 

how to allocate claims on collateral that 

supports both futures and foreign 

futures positions placed in domestic 

segregation, both support the 

interpretation that, in the event of an 

insolvency, collateral supporting foreign 

futures placed in domestic segregation 

pursuant to Commission Order should 

be treated as in a futures account, not 

a foreign futures account, for purposes 

of Part 190. Thus, in a situation where 

by Commission order or direction, 

customers are required or allowed to 

contribute to a Commission Regulation 

1.20 segregated account, those 

customers also should benefit from the 

distribution of that account 

proportionately to their contributions in 

the event of an insolvency. Such claims 

should be treated as encompassed 

within the futures account class as 

opposed to the foreign futures account 

class or an other account class.

* * * * *

Issued in Washington, DC, on October 21, 

2004, by the Commodity Futures Trading 

Commission. 

Jean A. Webb, 

Secretary of the Commission.

[FR Doc. 04–26386 Filed 11–29–04; 8:45 am] 

BILLING CODE 6351–01–M

DEPARTMENT OF HOMELAND 

SECURITY 

Bureau of Customs and Border 

Protection 

DEPARTMENT OF THE TREASURY 

19 CFR Parts 10 and 163 

[CBP Dec. 04–40] 

RIN 1505–AB42 

Preferential Treatment of Brassieres 

Under the Caribbean Basin Economic 

Recovery Act

AGENCY: Customs and Border Protection, 

Department of Homeland Security.

ACTION: Final rule.

SUMMARY: This document adopts as a 

final rule amendments to the Customs 

and Border Protection (CBP) Regulations 

to implement the standards for 

preferential treatment for brassieres 

imported from Caribbean Basin 

countries. This rule was initially 

published as an interim regulation in 

the Federal Register on October 4, 2001, 

as T.D. 01–74, and later amended by 

T.D. 03–29 published in the Federal 

Register on September 30, 2003. 

T.D. 01–74 set forth interim 

amendments to the CBP Regulations to 

implement those provisions within the 

United States-Caribbean Basin Trade 

Partnership Act (CBTPA) which 

established the standards for 

preferential treatment for brassieres 

imported from CBTPA beneficiary 

countries. T.D. 03–29 amended the 

brassieres provision set forth in T.D. 01–

74 to reflect the amendments to section 

213(b) of the Caribbean Basin Economic 

Recovery Act (the CBERA) that were 

made by section 3107 of the Trade Act 

of 2002. T.D. 03–29 also included a 

number of other changes to the CBERA 

implementing regulations for brassieres 

to clarify a number of issues that arose 

after their original publication.

EFFECTIVE DATES: Final rule effective on 

December 30, 2004.

FOR FURTHER INFORMATION CONTACT: 

Operational issues: Robert Abels, 

Office of Field Operations ((202) 344–

1959). 

Legal issues: Cynthia Reese, Office of 

Regulations and Rulings ((202) 572–

8790).

SUPPLEMENTARY INFORMATION:

Background 

Textile and Apparel Articles Under the 

Caribbean Basin Economic Recovery Act 

The Caribbean Basin Economic 

Recovery Act (the CBERA, also referred