Federal Register / Vol. 75, No. 118 / Monday, June 21, 2010 / Notices 34983 

1Petitioners are Aerolite Extrusion Company, 

Alexandria Extrusion Company, Benada Aluminum 

of Florida, Inc., William L. Bonnell Company, Inc., 

Frontier Aluminum Corporation, Futura Industries 

Corporation, Hydro Aluminum North America, Inc., 

Kaiser Aluminum Corporation, Profile Extrusion 

Company, Sapa Extrusions, Inc., and Western 

Extrusions Corporation. 

1 7 U.S.C. 6(c). 

2 7 U.S.C. 6d. 

3A copy of the petition is available on the 

Commission’s Web site at http://www.cftc.gov/. 

4 17 CFR part 35 (Commission regulations are 

hereinafter cited as ‘‘Reg. § __’’). 

5 Jurisdiction is retained for, among other things, 

provisions of the Act proscribing fraud and 

manipulation. See Reg. § 35.2. 

6See 58 FR 5587 (Jan. 22, 1993). Section 4(c) of 

the Act was added by section 502(a) of the Futures 

Trading Practices Act of 1992, Public Law 102–546, 

106 Stat. 3590 (1992). 

7Pub. L. 106–554, 114 Stat. 2763 (2000). 

8See, e.g., sections 2(d), (g) and (h) of the Act, 7 

U.S.C. 2(d), (g), and (h). 

9Reg. § 35.2(b). 

FOR FURTHER INFORMATION CONTACT: John 

Conniff, AD/CVD Operations, Office 3, 

Import Administration, International 

Trade Administration, U.S. Department 

of Commerce, 14th Street and 

Constitution Avenue, NW, Washington, 

DC 20230; telephone 202–482–1009. 

SUPPLEMENTARY INFORMATION: 

Background 

On April 27, 2010, the Department of 

Commerce (the Department) published 

in the Federal Register a notice of 

initiation of the countervailing duty 

investigation of aluminum extrusions 

from the People’s Republic of China. 

See Aluminum Extrusions From the 

People’s Republic of China: Initiation of 

Countervailing Duty Investigation, 75 FR 

22114 (April 27, 2010). On May 11, 

2010, petitioners requested, in 

accordance with section 703(c)(1)(A) of 

the Tariff Act of 1930, as amended (the 

Act), and 19 CFR 351 205(b)(2), a 65-day 

postponement of the preliminary 

determination.1

Postponement of Due Date for 

Preliminary Determination 

Section 703(b)(1) of the Act requires 

the Department to issue the preliminary 

determination in a countervailing duty 

investigation within 65 days after the 

date on which the Department initiated 

the investigation. However, the 

Department may postpone, at 

petitioners’ timely request, making the 

preliminary determination until no later 

than 130 days after the date on which 

the administering authority initiated the 

investigation. See section 703(c)(1)(A) of 

the Act. 

Petitioners’ request for a 65-day 

postponement of the preliminary 

determination was made 25 days before 

the scheduled date of the preliminary 

determination, pursuant to 19 CFR 

351.205(e). Therefore, in accordance 

with section 703(c)(1)(A) of the Act and 

19 CFR 351.205(b)(2), we are fully 

extending the due date for the 

preliminary determination to no later 

than 130 days after the day on which 

the investigation was initiated. The 

deadline for completion of the 

preliminary determination is now 

August 28, 2010. Because that date falls 

on a weekend, the deadline for 

completion of this preliminary 

determination is the next business day, 

i.e., August 30, 2010. 

This notice is issued and published 

pursuant to section 703(c)(2) of the Act. 

Dated: June 15, 2010. 

Paul Piquado, 

Acting Deputy Assistant Secretary for Import 

Administration. 

[FR Doc. 2010–15099 Filed 6–17–10; 4:15 pm] 

BILLING CODE 3510–DS–S 

COMMODITY FUTURES TRADING 

COMMISSION 

Order (1) Pursuant to Section 4(c) of 

the Commodity Exchange Act, 

Permitting the Kansas City Board of 

Trade Clearing Corporation To Clear 

Over-the-Counter Wheat Calendar 

Swaps and (2) Pursuant to Section 4d 

of the Commodity Exchange Act, 

Permitting Customer Positions in Such 

Cleared-Only Swaps and Associated 

Funds To Be Commingled With Other 

Positions and Funds Held in Customer 

Segregated Accounts 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Order. 

SUMMARY: By petition dated May 26, 

2009 (Petition), the Kansas City Board of 

Trade (KCBT), a designated contract 

market, and its wholly-owned 

subsidiary corporation, the Kansas City 

Board of Trade Clearing Corporation 

(KCBTCC), a registered derivatives 

clearing organization (DCO), requested 

permission to clear over-the-counter 

(OTC) swap agreements (swaps) in 

wheat. Authority for granting this 

request is found in section 4(c) of the 

Commodity Exchange Act (Act).1 The 

Petition also requested permission 

pursuant to section 4d of the Act 2 to 

allow KCBTCC and futures commission 

merchants (FCMs) to commingle 

positions in those cleared-only OTC 

swaps and funds associated with those 

positions with positions and funds 

otherwise required to be held in a 

customer segregated account. The 

Commodity Futures Trading 

Commission (Commission) has 

reviewed public comments and the 

entire record in this matter and it has 

determined to issue an order granting 

the requested permission, subject to 

certain terms and conditions. 

DATES: Effective Date: June 15, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Phyllis P. Dietz, Associate Director, 

202–418–5449, pdietz@cftc.gov, or 

Eileen A. Donovan, Special Counsel, 

202–418–5096, edonovan@cftc.gov, 

Division of Clearing and Intermediary 

Oversight, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. The KCBT/KCBTCC Petition 

KCBT and KCBTCC (‘‘Petitioners’’) 

jointly submitted a Petition requesting 

that the Commission issue an exemptive 

order under section 4(c) of the Act.3 The 

order would grant KCBTCC approval to 

clear OTC wheat calendar swaps, and it 

would permit KCBT to list those 

products for ‘‘clearing-only’’ (‘‘clearedonly wheat swaps’’). The contract size 

for the cleared-only wheat swaps would 

be the same as that for wheat futures— 

5,000 bushels. The proposed clearedonly wheat swaps would be cash 

settled, in contrast to the futures 

contracts which are physically settled. 

Part 35 of the Commission’s 

regulations 4 exempts, subject to 

conditions, swap agreements and 

eligible persons entering into such 

agreements from most provisions of the 

Act.5 Part 35 was promulgated pursuant 

to authority conferred upon the 

Commission in section 4(c) of the Act to 

exempt certain transactions in order to 

explicitly permit certain off-exchange 

derivatives transactions and thus 

promote innovation and competition.6

A number of exemptions and exclusions 

for off-exchange derivatives transactions 

were subsequently added to the Act by 

the Commodity Futures Modernization 

Act of 2000,7 but none apply to 

agricultural contracts.8 Accordingly, 

swaps involving agricultural 

commodities continue to rely upon the 

exemption in part 35. 

Part 35 requires, among other things, 

that a swap agreement not be part of a 

fungible class of agreements that are 

standardized as to their material 

economic terms,9 and that the 

creditworthiness of any party having an 

interest under the agreement be a 

material consideration in entering into 

or negotiating the terms of the 


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10Reg. § 35.2(c). 

11The contracts that KCBT proposes to list for 

clearing only would, however, meet the 

requirements of Reg. §§ 35.2(a) and (d) in that they 

would be entered into solely between eligible swap 

participants and executed OTC, respectively. 

12Reg. § 35.2(d). 

13House Conf. Report No. 102–978, 1992 

U.S.C.C.A.N. 3179, 3213. 

14Section 4(c)(1) of the Act, 7 U.S.C. 6(c)(1), 

provides in full as follows: 

In order to promote responsible economic or 

financial innovation and fair competition, the 

Commission by rule, regulation, or order, after 

notice and opportunity for hearing, may (on its own 

initiative or on application of any person, including 

any board of trade designated or registered as a 

contract market or derivatives transaction execution 

facility for transactions for future delivery in any 

commodity under section 7 of this title) exempt any 

agreement, contract, or transaction (or class thereof) 

that is otherwise subject to subsection (a) of this 

section (including any person or class of persons 

offering, entering into, rendering advice or 

rendering other services with respect to, the 

agreement, contract, or transaction), either 

unconditionally or on stated terms or conditions or 

for stated periods and either retroactively or 

prospectively, or both, from any of the requirements 

of subsection (a) of this section, or from any other 

provision of this chapter (except subparagraphs 

(c)(ii) and (D) of section 2(a)(1) of this title, except 

that the Commission and the Securities and 

Exchange Commission may by rule, regulation, or 

order jointly exclude any agreement, contract, or 

transaction from section 2(a)(1)(D) of this title), if 

the Commission determines that the exemption 

would be consistent with the public interest. 

15Section 4(c)(2) of the Act, 7 U.S.C. 6(c)(2), 

provides in full as follows: 

The Commission shall not grant any exemption 

under paragraph (1) from any of the requirements 

of subsection (a) of this section unless the 

Commission determines that— 

(A) the requirement should not be applied to the 

agreement, contract, or transaction for which the 

exemption is sought and that the exemption would 

be consistent with the public interest and the 

purposes of this Act; and 

(B) the agreement, contract, or transaction— 

(i) will be entered into solely between appropriate 

persons; and 

(ii) will not have a material adverse effect on the 

ability of the Commission or any contract market or 

derivatives transaction execution facility to 

discharge its regulatory or self-regulatory duties 

under this Act. 

16Under Reg. § 1.3(gg), the term ‘‘customer funds’’ 

is defined to include all money, securities, and 

property received by an FCM or by a DCO from, for, 

or on behalf of, customers or option customers to 

margin, guarantee or secure exchange-traded futures 

contracts or options on futures, and all money 

accruing to such customers as the result of such 

contracts. The term ‘‘funds’’ is similarly used herein 

to refer to cash as well as securities and other 

property associated with futures contracts or 

cleared-only contracts. 

17See 74 FR 58608 (Nov. 13, 2009). 

18Letters were submitted by Louis Dreyfus 

Commodities, International Assets Holding 

Company, and the Futures Industry Association. 

agreement.10 Under the arrangement 

proposed by Petitioners, a cleared-only 

wheat swap could be offset by another 

cleared-only wheat swap with 

equivalent terms. In addition, due to the 

introduction of a clearing guarantee, the 

creditworthiness of the counterparty 

would no longer be a consideration. 

Accordingly, the OTC swaps KCBTCC 

would clear would not satisfy all of the 

conditions of part 35.11

Part 35 permits ‘‘any person [to] apply 

to the Commission for exemption from 

any of the provisions of the Act * * * 

for other arrangements or facilities.’’ 12

Petitioners have requested that the 

Commission issue an order under 

section 4(c) of the Act that would 

exempt cleared-only wheat swaps to the 

same extent as contracts that are exempt 

pursuant to part 35 of the Commission’s 

regulations. 

In addition, Petitioners also requested 

an order under section 4d of the Act so 

that KCBTCC and FCMs could hold 

customer positions in the cleared-only 

wheat swaps and associated funds in 

the customer segregated account along 

with positions in exchange-traded 

futures and customer funds, resulting in 

improved collateral management and 

other benefits. 

II. Sections 4(c) and 4d of the Act 

A. Permitting the OTC Swaps To Be 

Cleared 

In enacting section 4(c) of the Act, 

Congress noted that the goal of the 

provision ‘‘is to give the Commission a 

means of providing certainty and 

stability to existing and emerging 

markets so that financial innovation and 

market development can proceed in an 

effective and competitive manner.’’ 13

Section 4(c)(1) of the Act empowers the 

Commission to ‘‘promote responsible 

economic or financial innovation and 

fair competition’’ by exempting any 

transaction or class of transactions from 

any of the provisions of the Act (subject 

to exceptions not relevant here) where 

the Commission determines that the 

exemption would be consistent with the 

public interest.14 The Commission may 

grant such an exemption by rule, 

regulation, or order, after notice and 

opportunity for hearing, and may do so 

on application of any person or on its 

own initiative. 

Section 4(c)(2) of the Act provides 

that the Commission may grant 

exemptions from section 4(a) of the Act 

only when the Commission determines 

that the requirements for which an 

exemption is being provided should not 

be applied to the agreements, contracts, 

or transactions at issue, and the 

exemption is consistent with the public 

interest and the purposes of the Act; 

that the agreements, contracts, or 

transactions will be entered into solely 

between appropriate persons; and that 

the exemption will not have a material 

adverse effect on the ability of the 

Commission or any contract market or 

derivatives transaction execution 

facility to discharge its regulatory or 

self-regulatory responsibilities under the 

Act.15

The Commission requested comment 

on whether it should grant an 

exemption from the requirements of the 

Act, thereby permitting cleared-only 

wheat swaps to be cleared through 

KCBTCC. It also requested comment on 

whether such an exemption would 

affect its ability to discharge its 

regulatory responsibilities under the Act 

or the self-regulatory duties of any 

contract market. 

B. Permitting Funds To Be Commingled 

Section 4d(a)(2) of the Act prohibits 

commingling positions executed on a 

contract market and customer funds 

associated with such positions together 

with any funds not required to be so 

segregated.16 Section 4d(a)(2) provides 

that the Commission may grant 

exceptions to this prohibition by order. 

In this case, the cleared-only wheat 

swaps are not executed on a contract 

market and, thus, holding positions in 

those contracts and associated funds in 

an account together with positions and 

customer funds required to be 

segregated would, absent a Commission 

order, violate Section 4d. Having 

analyzed the risks and benefits 

associated with commingling such 

positions and funds in a customer 

segregated account, the Commission has 

determined that the benefits of the 

proposal outweigh the risks and that the 

proposal, along with conditions set forth 

by the Commission in its order, will 

provide sufficient safeguards to address 

the risks adequately. 

III. Comment Letters 

The Commission published a request 

for comments regarding the 4(c) 

exemption in the Federal Register on 

November 13, 2009.17 At the same time, 

it posted the Petition on the 

Commission’s Web site, providing the 

opportunity for the public to comment 

on any aspect of the Petition, including 

the request for an order under section 

4d of the Act. 

The Commission received three 

comment letters.18 All three letters 

expressly supported the issuance of an 

exemptive order to permit clearing of 

the OTC wheat calendar swaps, citing 

such benefits as increased transparency 

and liquidity in the OTC markets and 

enhanced risk management for market 

participants. Of those letters, two 

specifically commented on the 4d order 

request. Both of those letters supported 

the issuance of an order to permit the 

commingling of positions in clearedonly wheat swaps and associated funds 


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19Section 3(b) of the Act, 7 U.S.C. 5(b). 

20Section 4(c)(1) of the Act, 7 U.S.C. 6(c)(1). 

21See Reg. § 35.1(b)(2) (defining the term ‘‘eligible 

swap participant’’). 

22 44 U.S.C. 3507(d). 

23 7 U.S.C. 19(a). 

with positions and customer funds 

otherwise required to be held in a 

customer segregated account. 

IV. Findings and Conclusions 

After considering the complete record 

in this matter, including the comments 

received, the Commission finds that the 

requirements of section 4(c) of the Act 

have been met with respect to the 

request for an order permitting the 

clearing of OTC wheat calendar swaps. 

First, permitting the clearing of these 

transactions, subject to the terms and 

conditions of the order, is consistent 

with the public interest and with the 

purposes of the Act. The purposes of the 

Act include ‘‘promot[ing] responsible 

innovation and fair competition among 

boards of trade, other markets, and 

market participants.’’ 19 The purpose of 

an exemption is ‘‘to promote economic 

or financial innovation and fair 

competition.’’ 20 Permitting the clearing 

of OTC wheat calendar swaps by 

KCBTCC would appear to foster both 

financial innovation and competition. It 

could benefit the marketplace by 

providing eligible swap participants the 

ability to bring together flexible 

negotiation with central counterparty 

guarantees and capital efficiencies. 

Clearing also may increase the liquidity 

of the OTC markets and thereby foster 

competition in those markets. Moreover, 

in furtherance of the public interest, the 

order requires that the cleared-only 

wheat swaps be executed pursuant to 

the requirements of part 35 of the 

Commission’s regulations. Part 35, 

among other things, provides for the 

Commission’s continuing authority to 

enforce provisions of the Act and 

Regulations that prohibit fraud and 

manipulation. 

Second, the cleared-only wheat swaps 

would be entered into solely between 

appropriate persons. Those would be 

limited to persons qualifying as eligible 

swap participants under part 35 of the 

Commission’s regulations.21

Third, the exemption would not have 

a material adverse effect on the ability 

of the Commission or any designated 

contract market to carry out its 

regulatory or self-regulatory 

responsibilities under the Act. Clearing 

of OTC wheat swaps will actually 

enhance the Commission’s ability to 

carry out its regulatory responsibilities 

by, for example, facilitating the 

collection of large trader reports for 

cleared-only wheat swaps. KCBTCC will 

use the same systems, procedures, 

personnel, and processes to clear the 

cleared-only wheat swaps as it currently 

employs with respect to all of the other 

transactions it clears for KCBT. 

The Commission has concluded that 

permitting the clearing of OTC wheat 

swaps, subject to the terms and 

conditions of the order, furthers the 

goals of market transparency and 

liquidity, and financial risk 

management. It also enhances the 

Commission’s ability to obtain market 

information and conduct oversight once 

OTC transactions are cleared by a 

registered DCO. 

With respect to the Petitioners’ 

request for an order pursuant to section 

4d permitting KCBTCC and FCMs, 

including non-clearing and non-member 

FCMs, to commingle cleared-only 

contract positions and associated funds 

with positions and customer funds 

required to be held in a customer 

segregated account, the Commission 

recognizes that there is additional risk 

to customer funds as a result of the 

possibility of default involving 

commingled cleared-only positions. The 

Commission has considered whether 

such additional risk to customers can be 

adequately addressed and mitigated by 

KCBTCC and participating FCMs. 

Each carrying FCM should have 

adequate means to address a default by 

a customer holding cleared-only 

contracts. In the event of a customer 

default on a position in the cleared-only 

wheat swaps, the FCM could offset its 

risk by liquidating the customer 

position through a broker or dealer in 

the OTC swap market or by taking an 

economically equivalent position in the 

KCBT wheat futures contract. 

The order requires that KCBTCC 

review the FCMs’ risk management 

capabilities to verify that all FCMs 

carrying the cleared-only wheat swaps 

maintain sufficient operational 

capability to manage a default in a 

cleared-only contract. In the event of an 

FCM default, KCBTCC would have 

available the same means for managing 

the default as the FCM would have in 

the first instance. 

The order further requires that all 

FCMs subject to the order, regardless of 

whether an FCM is a member of KCBT 

or KCBTCC, to execute a participation 

agreement that provides, among other 

things, that the FCM agrees to be bound 

by all KCBT rules pertaining to the 

cleared-only wheat swaps and to 

cooperate with, promptly respond to 

any inquiries or requests for information 

from, and make available its books and 

records for inspection to KCBT. 

The order also requires that KCBT: (1) 

Maintain a coordinated market 

surveillance program that encompasses 

the cleared-only wheat swaps and the 

corresponding wheat futures contracts, 

and (2) adopt speculative position limits 

for the cleared-only wheat swaps that 

are the same as the limits applicable to 

the corresponding wheat futures 

contracts. These measures should 

mitigate market risk. 

Accordingly, the Commission has 

determined that KCBTCC will be able to 

employ reasonable safeguards to protect 

customer funds, and that it will be able 

to measure, monitor, manage, and 

account for risks associated with 

transactions and open interest in the 

cleared-only wheat swaps in the same 

manner as it does for other contracts it 

clears. The Commission believes that 

KCBTCC has sufficiently demonstrated 

that it will continue to comply with the 

DCO core principles set forth in section 

5b of the Act in connection with 

holding customer positions in clearedonly wheat swaps and associated funds 

with positions and customer funds 

required to be held in a customer 

segregated account pursuant to section 

4d of the Act. 

V. Related Matters 

A. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(PRA) 22 imposes certain requirements 

on Federal agencies (including the 

Commission) in connection with their 

conducting or sponsoring any collection 

of information as defined by the PRA. 

The Commission’s order will not require 

a new collection of information from 

any entities that would be subject to the 

order. 

B. Cost-Benefit Analysis 

Section 15(a) of the Act 23 requires the 

Commission to consider the costs and 

benefits of its action before issuing an 

order under the Act. By its terms, 

section 15(a) does not require the 

Commission to quantify the costs and 

benefits of an order or to determine 

whether the benefits of the order 

outweigh its costs. Rather, section 15(a) 

simply requires the Commission to 

‘‘consider the costs and benefits’’ of its 

action. 

Section 15(a) of the Act further 

specifies that costs and benefits shall be 

evaluated in light of five broad areas of 

market and public concern: Protection 

of market participants and the public; 

efficiency, competitiveness, and 

financial integrity of futures markets; 

price discovery; sound risk management 

practices; and other public interest 

considerations. Accordingly, the 

Commission could in its discretion give 


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greater weight to any one of the five 

enumerated areas and could in its 

discretion determine that, 

notwithstanding its costs, a particular 

order was necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or to 

accomplish any of the purposes of the 

Act. 

The Commission has considered the 

costs and benefits of this order in light 

of the specific provisions of section 

15(a) of the Act, as follows: 

1. Protection of market participants 

and the public. The cleared-only wheat 

swaps will be entered into only by 

persons who are ‘‘appropriate persons’’ 

as set forth in section 4(c) of the Act. 

Only eligible swap participants will 

enter into the wheat calendar swaps that 

will be cleared pursuant to the 

Commission’s order. Allowing the 

commingling of positions in clearedonly contracts and associated funds 

with positions and customer funds 

required to be segregated under section 

4d of the Act will benefit market 

participants by facilitating clearing and 

the reduction of credit risk for contracts 

that meet market participants’ specific 

risk management requirements. 

Customers holding positions in clearedonly wheat swaps also will benefit from 

having those positions and associated 

funds held in a customer segregated 

account in the event of the insolvency 

of an FCM. Futures customers will be 

protected from risks associated with the 

commingling of funds by a number of 

existing risk management and other 

safeguards, including KCBTCC’s 

financial surveillance and oversight of 

clearing members and non-clearing 

member and non-member FCMs 

pursuant to the participation agreement, 

and its financial resources package, as 

supplemented by conditions imposed 

by the order. Bringing OTC contracts 

into a regulated clearing venue also 

protects market participants by 

eliminating bilateral counterparty risk 

through the clearing process. 

2. Efficiency and competition. 

Allowing the OTC wheat calendar 

swaps to be cleared appears likely to 

promote liquidity and transparency in 

the markets for OTC derivatives as well 

as futures on those commodities. The 

commingling of positions in clearedonly contracts and associated funds 

with positions and customer funds 

required to be held in a customer 

segregated account should result in 

improved, more efficient, collateral 

management and lower administrative 

costs given that risk-reducing positions 

will be held together in the same 

account rendering a more precise 

estimation of the risk posed by the 

account. The availability of cleared-only 

wheat swaps also provides another risk 

management tool that can compete with 

other OTC products. 

3. Financial integrity of futures 

markets and price discovery. Price 

discovery is likely to be enhanced by 

bringing greater transparency to the 

OTC market for wheat. The section 4(c) 

exemption also may promote financial 

integrity by providing the benefits of 

clearing to the OTC wheat market. As 

discussed above, the Commission 

believes that the risks associated with 

the commingling of funds in the 

customer segregated account can be 

appropriately mitigated. 

4. Sound risk management practices. 

Clearing of the cleared-only wheat 

swaps is likely to improve risk 

management by the participant 

counterparties. KCBTCC’s risk 

management practices in clearing these 

transactions are subject to the 

Commission’s supervision and 

oversight, and the requirements of the 

participation agreement expressly 

supplement the FCMs’ responsibilities 

to adequately manage risk. 

5. Other public interest 

considerations. The action taken by the 

Commission under sections 4(c) and 4d 

of the Act is likely to encourage market 

competition in agricultural derivatives 

products. It will also further the 

Commission’s overall goals in 

supporting greater market transparency, 

credit risk management, and regulatory 

oversight by encouraging the clearing of 

OTC products. 

The Commission requested comment 

on its application of these factors in the 

proposing release. No comments were 

received. 

VI. Order 

After considering the above factors 

and the comment letters received in 

response to its request for comments, 

the Commission has determined to issue 

the following: 

Order 

(1) The Commission, pursuant to its 

authority under section 4(c) of the 

Commodity Exchange Act (‘‘Act’’) and 

subject to the conditions below, hereby 

permits eligible swap participants to 

submit for clearing, and FCMs and 

KCBTCC to clear, OTC wheat calendar 

swaps (eligible products). 

(2) The Commission, pursuant to its 

authority under section 4d of the Act 

and subject to the conditions below, 

hereby permits: 

(a) KCBTCC; 

(b) registered FCMs that are clearing 

members of KCBT; 

(c) registered FCMs that are nonclearing members of KCBT; and 

(d) registered FCMs that are nonmembers of KCBT, 

acting on behalf of customers pursuant 

to this order, to hold money, securities, 

and other property, used to margin, 

guarantee, or secure cleared-only 

transactions in eligible products 

(cleared-only contracts), and belonging 

to customers that are eligible swap 

participants, with other customer funds 

used to margin, guarantee, or secure 

trades or positions in commodity 

futures or commodity option contracts 

executed on or subject to the rules of a 

contract market designated pursuant to 

section 5 of the Act, in a customer 

segregated account or accounts 

maintained in accordance with section 

4d of the Act (including any orders 

issued pursuant to section 4d(a)(2) of 

the Act) and the Commission’s 

regulations thereunder, and all such 

customer funds shall be accounted for 

and treated and dealt with as belonging 

to the customers of the registered FCM, 

consistent with section 4d of the Act 

and the regulations thereunder. 

(3) This order is subject to the 

following conditions: 

(a) The contracts, agreements, or 

transactions subject to this order shall 

be executed pursuant to the 

requirements of part 35 of the 

Commission’s regulations, as modified 

herein, and shall be limited to the 

eligible products identified in this 

order. 

(b) All eligible products that are 

submitted for clearing shall be 

submitted pursuant to KCBT and 

KCBTCC rules. 

(c) Each registered FCM subject to this 

order shall take appropriate measures 

to: 

(i) Ensure that any customer 

submitting eligible products for clearing 

qualifies as an eligible swap participant; 

and 

(ii) identify, measure, and monitor 

financial risk associated with carrying 

the cleared-only contracts in the 

customer segregated account and 

implement risk management procedures 

to address those financial risks. 

(d) KCBT shall require each registered 

FCM subject to this order, regardless of 

whether such FCM is a member of 

KCBT or KCBTCC, to execute an 

agreement that provides, among other 

things, that the FCM agrees to be bound 

by all KCBT rules pertaining to the 

cleared-only contracts and to cooperate 

with, promptly respond to any inquiries 

or requests for information from, and 

make available its books and records for 

inspection to KCBT. 


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(e) KCBTCC shall apply appropriate 

risk management procedures with 

respect to transactions and open interest 

in the cleared-only contracts. KCBTCC 

shall conduct financial surveillance and 

oversight of each registered FCM subject 

to this order, regardless of whether such 

FCM is a member of KCBT or KCBTCC, 

and it shall conduct oversight sufficient 

to assure KCBTCC that each such FCM 

has the appropriate operational 

capabilities necessary to manage 

defaults in such contracts. KCBTCC and 

each FCM subject to this order shall take 

all other steps necessary and 

appropriate to manage risk related to 

clearing eligible products. 

(f) Each cleared-only contract shall be 

marked to market on a daily basis, and 

final settlement prices shall be 

established in accordance with KCBT 

rules. 

(g) KCBTCC shall apply its margining 

system and calculate performance bond 

rates for each cleared-only contract in 

accordance with its normal and 

customary practices; 

(h) KCBT shall make available open 

interest and settlement price 

information for the cleared-only 

contracts on a daily basis in the same 

manner as for contracts listed on KCBT. 

(i) KCBT shall establish and maintain 

a coordinated market surveillance 

program that encompasses the clearedonly contracts and the corresponding 

futures contracts listed by KCBT on its 

designated contract market. 

(j) KCBT shall adopt speculative 

position limits for the cleared-only 

contracts that are the same as the limits 

applicable to the corresponding futures 

contracts pursuant to Commission 

regulation § 150.2. 

(k) The cleared-only contracts shall 

not be treated as fungible with any 

contract listed for trading on KCBT. 

(l) Each FCM acting pursuant to this 

order shall keep the types of 

information and records that are 

described in section 4g of the Act and 

Commission regulations thereunder, 

including but not limited to 

Commission regulation § 1.35, with 

respect to all cleared-only contracts. 

Such information and records shall be 

produced for inspection in accordance 

with the requirements of Commission 

regulation § 1.31. 

(m) KCBT shall provide to the 

Commission the types of information 

described in part 16 of the 

Commission’s regulations in the manner 

described in parts 15 and 16 of the 

Commission’s regulations with respect 

to all cleared-only contracts. 

(n) KCBT shall apply large trader 

reporting requirements to cleared-only 

contracts in accordance with its rules, 

and each FCM acting pursuant to this 

order shall provide to the Commission 

the types of information described in 

part 17 of the Commission’s regulations 

in the manner described in parts 15 and 

17 of the Commission’s regulations with 

respect to all cleared-only contracts in 

which it participates. 

(o) KCBT and KCBTCC shall at all 

times fulfill all representations made in 

their requests for Commission action 

under sections 4(c) and 4d of the Act 

and all supporting materials thereto. 

Based upon the representations made 

and supporting material provided to the 

Commission by KCBT and KCBTCC in 

connection with the Petition, the 

Commission finds that KCBT and 

KCBTCC, subject to the terms and 

conditions specified herein, have 

demonstrated their ability to comply 

with the requirements of the Act and 

Commission regulations, as applicable 

to the clearing of the OTC contracts 

subject to this order and the carrying of 

related customer funds in a customer 

segregated account. 

Any material change or omission in 

the facts and circumstances pursuant to 

which this order is granted might 

require the Commission to reconsider its 

finding that the actions taken herein are 

appropriate. Further, in its discretion, 

the Commission may condition, 

suspend, terminate, or otherwise modify 

this order, as appropriate, on its own 

motion. 

Issued in Washington, DC, on June 15, 

2010, by the Commission. 

Sauntia S. Warfield, 

Assistant Secretary of the Commission. 

[FR Doc. 2010–14974 Filed 6–18–10; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

Federal Advisory Committee; Defense 

Business Board (DBB) 

AGENCY: Department of Defense (DoD). 

ACTION: Meeting notice. 

SUMMARY: Under the provisions of the 

Federal Advisory Committee Act of 

1972 (5 U.S.C., Appendix, as amended), 

the Government in the Sunshine Act of 

1976 (5 U.S.C. 552b, as amended), and 

41 CFR 102–3.150, the Department of 

Defense announces that the Defense 

Business Board (hereafter, ‘‘DBB’’ or 

‘‘Board’’) will meet on July 22, 2010, at 

the Pentagon Conference Center. Subject 

to the availability of space, the meeting 

is open to the public. 

DATES: The meeting will be held on 

Thursday, July 22, 2010, from 9 a.m. to 

9:45 a.m. 

ADDRESSES: The meeting will be held at 

the Pentagon Conference Center, Room 

B–6, Washington, DC (escort required, 

see below). 

FOR FURTHER INFORMATION CONTACT: For 

meeting information please contact Ms. 

Debora Duffy, Defense Business Board, 

1155 Defense Pentagon, Room 5B– 

1088A, Washington, DC 20301–1155, 

Debora.Duffy@osd.mil, (703) 697–2168. 

The Board’s Designated Federal Officer 

(DFO) is Ms. Phyllis Ferguson, Defense 

Business Board, 1155 Defense Pentagon, 

Room 5B–1088A, Washington, DC 

20301–1155, Phyllis.Ferguson@osd.mil, 

(703) 695–7563. 

SUPPLEMENTARY INFORMATION: 

Background 

At this meeting, the Board will 

deliberate partial findings and draft 

recommendations from the ‘‘Reducing 

Overhead Improving Business 

Operations’’ Task Group. The mission of 

the Board is to advise the Secretary of 

Defense on effective strategies for 

implementation of best business 

practices of interest to the Department 

of Defense. 

Availability of Materials for the 

Meeting 

A copy of the draft agenda for the July 

22, 2010, meeting and the terms of 

reference for the Task Group may be 

obtained from the Board’s Web site at 

http://dbb.defense.gov/meetings.html 

under ‘‘Upcoming Meetings: 22 July 

2010.’’ 

Public’s Accessibility to the Meeting 

Pursuant to 5 U.S.C. 552b and 41 CFR 

102–3.140 through 102–3.165, and the 

availability of space, this meeting is 

open to the public. Seating is on a firstcome basis. All members of the public 

who wish to attend the meeting must 

contact Ms. Duffy (see FOR FURTHER

INFORMATION CONTACT) no later than 

noon on Wednesday, July 14th to 

register and make arrangements for a 

Pentagon escort, if necessary. Public 

attendees requiring escort should arrive 

at the Pentagon Metro Entrance in time 

to complete security screening by no 

later than 8:30 a.m. To complete 

security screening, please come 

prepared to present two forms of 

identification: (1) A government-issued 

photo I.D., and (2) any type of secondary 

I.D. which verifies the individual’s 

name (i.e. debit card, credit card, work 

badge, social security card). 

Special Accommodations: Individuals 

requiring special accommodations to 


sroberts on DSKD5P82C1PROD with NOTICES