77588 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Proposed Rules 

submit its annual report in accordance 

with § 39.19(c)(3) of this part. 

(5) Recordkeeping. (i) The derivatives 

clearing organization shall maintain: 

(A) A copy of the compliance policies 

and procedures, as defined in § 39.1(b), 

and all other policies and procedures 

adopted in furtherance of compliance 

with the Act and Commission 

regulations; 

(B) Copies of materials, including 

written reports provided to the board of 

directors or the senior officer in 

connection with the review of the 

annual report under paragraph (c)(4)(i) 

of this section; and 

(C) Any records relevant to the annual 

report, including, but not limited to, 

work papers and other documents that 

form the basis of the report, and 

memoranda, correspondence, other 

documents, and records that are created, 

sent, or received in connection with the 

annual report and contain conclusions, 

opinions, analyses, or financial data 

related to the annual report. 

(ii) The derivatives clearing 

organization shall maintain records in 

accordance with § 1.31 of this chapter 

and § 39.20 of this part. 

8. Add § 39.17 to read as follows: 

§ 39.17 Rule enforcement requirements. 

(a) In general. Each derivatives 

clearing organization shall: (1) Maintain 

adequate arrangements and resources 

for the effective monitoring and 

enforcement of compliance with the 

rules of the derivatives clearing 

organization and the resolution of 

disputes; 

(2) Have the authority and ability to 

discipline, limit, suspend, or terminate 

the activities of a clearing member due 

to a violation by the clearing member of 

any rule of the derivatives clearing 

organization; and 

(3) Report to the Commission 

regarding rule enforcement activities 

and sanctions imposed against clearing 

members as provided in paragraph (a) 

(2) of this section, in accordance with 

§ 39.19(c)(4)(xiii) of this part. 

(b) Authority to enforce rules. The 

board of directors of the derivatives 

clearing organization may delegate 

responsibility for compliance with the 

requirements of paragraph (a) of this 

section to the Risk Management 

Committee, unless the responsibilities 

are otherwise required to be carried out 

by the chief compliance officer pursuant 

to the Act or this part. 

9. Add § 39.23 to read as follows: 

§ 39.23 Antitrust considerations. 

Unless necessary or appropriate to 

achieve the purposes of the Act, a 

derivatives clearing organization shall 

not adopt any rule or take any action 

that results in any unreasonable 

restraint of trade, or impose any 

material anticompetitive burden. 

10. Add § 39.27 to read as follows: 

§ 39.27 Legal risk considerations. 

(a) Legal Authorization. A derivatives 

clearing organization shall be duly 

organized, legally authorized to conduct 

business, and remain in good standing 

at all times in the relevant jurisdictions. 

If the derivatives clearing organization 

provides clearing services outside the 

United States, it shall be duly organized 

to conduct business and remain in good 

standing at all times in the relevant 

jurisdictions, and be authorized by the 

appropriate foreign licensing authority. 

(b) Legal framework. A derivatives 

clearing organization shall operate 

pursuant to a well-founded, transparent, 

and enforceable legal framework that 

addresses each aspect of the activities of 

the derivatives clearing organization. As 

applicable, the framework shall provide 

for: 

(1) The derivatives clearing 

organization to act as a counterparty, 

including novation; 

(2) Netting arrangements; 

(3) The derivatives clearing 

organization’s interest in collateral; 

(4) The steps that a derivatives 

clearing organization would take to 

address a default of a clearing member, 

including but not limited to, the 

unimpeded ability to liquidate collateral 

and close out or transfer positions in a 

timely manner; 

(5) Finality of settlement and funds 

transfers that are irrevocable and 

unconditional when effected (when a 

derivatives clearing organization’s 

accounts are debited and credited); and 

(6) Other significant aspects of the 

derivatives clearing organization’s 

operations, risk management 

procedures, and related requirements. 

(c) Conflict of Laws. If a derivatives 

clearing organization provides clearing 

services outside the United States: 

(1) The derivatives clearing 

organization shall identify and address 

any conflict of law issues. The 

derivatives clearing organization’s 

contractual agreements shall specify a 

choice of law. 

(2) The derivatives clearing 

organization shall be able to 

demonstrate the enforceability of its 

choice of law in relevant jurisdictions 

and that its rules, procedures, and 

contracts are enforceable in all relevant 

jurisdictions. 

Issued in Washington, DC, on December 1, 

2010 by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

Appendices to General Regulations and 

Derivatives Clearing Organizations— 

Commission Voting Summary and 

Statement of Chairman Gary Gensler 

Note: The following appendices will not 

appear in the Code of Federal Regulations. 

Appendix 1—Commission Voting 

Summary 

On this matter, Chairman Gensler and 

Commissioners Dunn, Sommers, Chilton and 

O’Malia voted in the affirmative. No 

Commissioner voted in the negative. 

Appendix 2—Statement of Chairman 

Gary Gensler 

I support the proposed rule on legal and 

compliance matters for clearinghouses, 

which would revise procedures for 

derivatives clearing organization (DCO) 

applications, clarify procedures for the 

transfer of a DCO registration and add 

requirements for approval of DCO rules for 

portfolio margining of futures and securities 

in a futures account. 

The rule is intended to ensure that 

sufficient resources are devoted to 

compliance with laws and regulations, which 

is a core component of sound risk 

management practices. It would fulfill the 

Dodd-Frank Act’s requirement that each DCO 

have a chief compliance officer who is 

responsible for establishing and 

administering compliance policies, as well as 

resolving certain conflicts of interest. 

Finally, the proposed rulemaking would 

implement DCO Core Principles for 

compliance, rule enforcement, antitrust 

consideration and legal risk, which would 

promote compliance with the CEA and 

would enhance the integrity of the clearing 

and settlement process. 

[FR Doc. 2010–31029 Filed 12–10–10; 8:45 am] 

BILLING CODE 6351–01–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 30 

RIN 3038–AC54 

Foreign Futures and Options Contracts 

on a Non-Narrow-Based Security 

Index; Commission Certification 

Procedures 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: Currently, a security index 

futures contract traded on, or subject to 

the rules of, a foreign board of trade may 

be offered or sold to persons located 

within the United States pursuant to a 


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Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Proposed Rules 77589 

1Such a contract also is referred to herein as 

‘‘non-narrow-based security index futures contract’’ 

or ‘‘broad-based security index futures contract.’’ 

The proposed rule does not apply to foreign 

exchange-traded security futures products, 

including futures or futures options on narrowbased security indices, as defined in Section 1a(25) 

of the CEA. 

2See 7 U.S.C. 2(a)(1)(C)(ii); 63 FR 38537 (July 17, 

1998). However, the Commission shares jurisdiction 

with the Securities and Exchange Commission over 

security futures products. Securities futures 

products are defined as a security future or any put, 

call, straddle, option, or privilege on any security 

future. See Section 1a(32). A security future is 

defined as a contract of sale for future delivery of 

a single security or of a narrow-based security 

index, including any interest therein or based on 

the value thereof, with certain exceptions. See 

Section 1a(31) of the CEA. 

3 7 U.S.C 2(a)(1)(C)(iv). By its terms, Section 

2(a)(1)(C)(iv) applies to security index futures 

contracts traded on both domestic and foreign 

boards of trade. 

4 7 U.S.C. 2(a)(1)(D) (governs the offer and sale of 

security futures products). Foreign security futures 

contracts generally may not be offered or sold to 

customers located in the U.S. until the Commission 

and the U.S. Securities and Exchange Commission 

adopt rules governing the offer and sale of such 

products. See 7 U.S.C. 2(a)(1)(E) and 2(a)(1)(F). The 

SEC has issued an order permitting certain U.S. 

persons, consisting primarily of qualified 

institutional buyers as defined in Rule 144A under 

the Securities Act of 1933, to purchase and sell 

foreign security futures contracts, subject to certain 

conditions. See 74 FR 32200 (July 7, 2009). 

5The first two criteria under CEA Section 

2(a)(1)(C)(ii) were unchanged by the Commodity 

Futures Modernization Act of 2000. With regard to 

the third criterion, an index is a ‘‘narrow-based 

security index’’ under both the CEA and the 

Securities Exchange Act of 1934 (‘‘Exchange Act’’), 

15 U.S.C. 78a et seq., if it has any one of the 

following four characteristics: (1) It has nine or 

fewer component securities; (2) any one of its 

component securities comprises more than 30% of 

its weighting; (3) the five highest weighted 

component securities in the aggregate comprise 

more than 60% of the index’s weighting; or (4) the 

lowest weighted component securities comprising, 

in the aggregate, 25% of the index’s weighting, have 

an aggregate dollar value of average daily trading 

volume of less than $50 million (or in the case of 

an index with 15 or more component securities, $30 

million). See CEA Section 1a(25)(A)(i)–(iv); 

Exchange Act Section 3(a)(55)(B)(i)–(iv). Thus, an 

index is not a narrow-based security index for 

purposes of CEA Section 2(a)(1)(C)(ii) unless it has 

one of these elements. See also CEA Section 

1a(25)(B); Exchange Act Section 3(a)(55)(C). 

6The Futures Trading Act of 1982 added Section 

2(a)(1)(B) and Section 4(b) to the Act (Section 

2(a)(1)(B), as amended in 2000, is now Section 

2(a)(1)(C)). See Pub. L. 97–444, 96 Stat. 2294. 7H.R. Rep. No. 565, Part 1, 97th Cong., 2d Sess. 

(1982) (‘‘House Report’’). 

staff no-action letter confirming that the 

contract satisfies the requirements 

enumerated in Section 2(a)(1)(C)(ii) of 

the Commodity Exchange Act (the 

‘‘CEA’’ or ‘‘Act’’). The Commodity 

Futures Trading Commission 

(‘‘Commission’’) is hereby proposing 

new requirements which would 

establish a Commission certification 

procedure applicable to the offer or sale, 

to persons in the U.S., of a security 

index futures contract traded on a 

foreign board of trade; the new 

certification procedure will replace the 

existing staff no-action process. 

Additionally, this proposed rule 

would establish a procedure for a 

foreign board of trade to request and 

receive a Commission certification on 

an expedited basis. Under this 

expedited procedure, a security index 

futures contract of qualifying foreign 

boards of trade could be offered or sold 

in the U.S. forty-five (45) days after 

submission of such request, absent a 

contrary action (or an extension of time) 

by the Commission. 

DATES: Comments must be received on 

or before January 12, 2011. 

ADDRESSES: You may submit comments, 

identified by RIN number, by any of the 

following methods: 

• Agency Web site, via its Comments 

Online process: http:// 

comments.cftc.gov. Follow the 

instructions for submitting comments 

through the Web site. 

• Mail: David A. Stawick, Secretary of 

the Commission, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

mail above. 

• Federal eRulemaking Portal: http:// 

www.Regulations.gov. Follow the 

instructions for submitting comments. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. Comments will be 

posted as received to http:// 

www.cftc.gov. You should submit only 

information that you wish to make 

available publicly. If you wish the 

Commission to consider information 

that you believe is exempt from 

disclosure under the Freedom of 

Information Act, a petition for 

confidential treatment of the exempt 

information may be submitted according 

to the established in § 145.9 of the 

Commission’s regulations, 7 CFR 145.9. 

The Commission reserves the right, 

but shall have no obligation, to review, 

pre-screen, filter, redact, refuse or 

remove any or all of your submission 

from http://www.cftc.gov that it may 

deem to be inappropriate for 

publication, such as obscene language. 

All submissions that have been redacted 

or removed that contain comments on 

the merits of the rulemaking will be 

retained in the public comment file and 

will be considered as required under the 

Administrative Procedure Act and other 

applicable laws, and may be accessible 

under the Freedom of Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Harold L. Hardman, Deputy General 

Counsel (Regulation), (202) 418–5120, 

hhardman@cftc.gov; Carlene S. Kim, 

Assistant General Counsel, (202) 418– 

5613, ckim@cftc.gov, Office of the 

General Counsel, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Commission has exclusive 

jurisdiction with respect to the offer or 

sale in the U.S. of futures contracts 

based on a certain group or index of 

securities,1 including those contracts 

traded on or subject to the rules of a 

foreign board of trade.2 Such offer or 

sale must comply with Section 

2(a)(1)(C)(iv) of the Act,3 which 

prohibits the offer or sale of a security 

index contract, except as permitted 

under Section 2(a)(1)(C)(ii) or Section 

2(a)(1)(D).4

Section 2(a)(1)(C)(ii) sets forth three 

criteria that govern the trading of a 

security index futures contract on a 

designated contract market (‘‘DCM’’) and 

a registered derivatives transaction 

execution facility (‘‘DTEF’’) under the 

Commission’s exclusive jurisdiction. 

Specifically, Section 2(a)(1)(C)(ii) 

provides that no DCM or DTEF may 

trade a security index futures contract 

unless it demonstrates that: (i) The 

contract provides for cash settlement; 

(ii) the contract is not readily 

susceptible to manipulation or to being 

used to manipulate any underlying 

security; and (iii) the group or index of 

securities is not a ‘‘narrow-based 

security index,’’ as defined in the Act.5

While Section 2(a)(1)(C)(ii) provides 

that no security index futures contract 

may trade on a U.S. exchange unless it 

meets the three criteria noted above, it 

does not explicitly address the 

standards to be applied to a security 

index futures contract that is traded on 

a foreign board of trade. CFTC staff, 

however, has applied those same three 

criteria in evaluating requests by a 

foreign board of trade with regard to the 

offer or sale of their security index 

futures contract within the U.S. when 

the foreign board of trade does not seek 

designation as a contract market or 

registration as a DTEF to trade those 

contracts. In adopting this approach, the 

staff has been guided by the legislative 

history relating to Section 2(a)(1)(C)(ii) 

and Section 4(b).6 Of particular 

relevance are statements by the House 

Committee on Agriculture addressing 

the listing criteria of new Section 

2(a)(1)(C) and their application to a 

security index futures contract traded 

on a foreign board of trade.7

As the House Committee explained, 

new Section 4(b) expressly empowers 


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77590 Federal Register / Vol. 75, No. 238 / Monday, December 13, 2010 / Proposed Rules 

8 Id. 

9 Id. 

10 Id. Specifically, the House Committee stated 

that a foreign board of trade may seek certification 

from the Commission that a futures contract offered 

by it that is based upon a group or index of 

American securities meets the minimum 

requirements specified in subparagraphs (a) through 

(c) of section 2(a)(1)(B)(ii) [now known as section 

2(a)(1)(C)(ii)] of the Act, without seeking or 

obtaining designation by the Commission as a 

contract market. With regard to a futures contract 

on an index comprised of foreign securities only, 

the House Committee stated that such contract 

‘‘could be certified by the Commission under such 

criteria as the Commission may deem appropriate.’’ 

Thus, the Committee made a distinction between 

contracts on indexes on U.S. securities from 

indexes on foreign securities. 

11A no-action letter is a written statement issued 

by the staff of a Division of the Commission or of 

OGC that it will not recommend enforcement action 

to the Commission for failure to comply with a 

specific provision of the Act or of a Commission 

rule, regulation or order if a proposed transaction 

or activity is conducted. A no-action letter binds 

only the issuing division or OGC, as applicable, not 

the Commission or other Commission staff. See 17 

CFR 140.99. 

12 In general, OGC staff has requested that the 

foreign board of trade provide a copy of the 

surveillance agreements between the board of trade 

and the exchange(s) on which the underlying 

securities are traded; assurances that the board of 

trade will share information with the Commission, 

directly or indirectly; and when applicable, 

information regarding foreign blocking statutes and 

their impact on the ability of United States 

government agencies to obtain information 

regarding the trading of such contracts. The staff 

reviews this information to ensure that the 

requesting foreign board of trade (and/or its 

regulator) has the ability and willingness to access 

adequate surveillance data necessary to detect and 

deter manipulation in the futures contracts and 

underlying security, as well as share such data with 

the Commission. 

To date, OGC has issued 114 no-action letters 

involving 25 foreign boards of trade. A complete list 

of these no-action letters can be found on the 

Commission Web site: http://services.cftc.gov/SIRT/ 

SIRT.aspx?Topic=Foreign

OrganizationProducts&implicit=

true&type=DCM&status=No-Action%20

Letter%20Issued&Custom

ColumnDisplay=TTTTTTTT. 

13The no-action letter does not affect or alter the 

application of Part 30 of the Commission 

regulations, which governs the offer and sale by 

financial intermediaries of foreign futures and 

foreign option contracts to persons located in the 

United States. 

14See, e.g., CFTC Staff Letter No. 06–22 [2005– 

2007 Transfer Binder] Comm. Fut. L. Rep. (CCH) 

¶ 30,366 (Sept. 26, 2006) (no-action relief granted 

with respect to futures contracts based on the Hang 

Seng Index and the Hang Seng China Enterprises 

Index, both of which are indices comprised wholly 

of foreign securities); CFTC Staff Letter No. 02–81 

[2002–2003 Transfer Binder] Comm. Fut. L. Rep. 

(CCH) ¶ 29,094 (June 28, 2002) (no-action relief 

granted with respect to futures contracts based on 

the Dow Jones Global Titan Index, which is an 

index comprised partially of U.S. securities). See 

also House Report, supra note 10. 

15Appendix D to Part 30 will be amended in 

connection with the adoption of Rule 30.13. 

Specifically, Appendix D will be revised to retain 

only the information requirements currently set 

forth in paragraph G of Appendix D. 

16Accordingly, the information required to be 

submitted would include: a copy of the contract’s 

terms and conditions; relevant rules that may have 

an effect on trading of the contract such as circuit 

breakers or position limits or other controls on 

trading; information and data relating to the index, 

including the design, computation and maintenance 

thereof. In addition, the foreign board of trade 

would be required to provide a copy of the 

surveillance agreement(s) between the foreign board 

of trade and the exchange on which the underlying 

securities are traded and provide assurance of its 

ability and willingness to share information with 

the Commission. 

the Commission to protect U.S. persons 

against fraudulent or other harmful 

practices in the offer or sale of foreign 

futures contracts. It does not, however, 

authorize the Commission to ‘‘regulate 

the internal affairs of a foreign board of 

trade * * * or require Commission 

approval of any action of any such 

market * * *’’ 8 Nevertheless, where the 

Act establishes minimum requirements 

for a contract, the Committee stated that 

‘‘nothing in the provisions prevents a 

foreign board of trade from applying to 

the Commission that its contract 

conforms with the requirements of this 

Act.’’ 9 Thus, Congress understood that a 

foreign exchange might lawfully offer or 

sell futures contracts on security 

indexes within the United States, 

without having to become designated as 

a DCM or registered as a DTEF. In doing 

so, the foreign board of trade may seek 

assurance from the Commission that its 

futures contract meets the statutory 

criteria enumerated in Section 

2(a)(1)(C)(ii).10

The Commission did not adopt a 

certification procedure for either 

domestic- or foreign-based security 

index contracts offered on a foreign 

board of trade. Instead, foreign boards of 

trade have been granted confirmation 

with respect to their broad-based 

security index futures contracts 

pursuant to a no-action process, under 

which the Commission staff has applied 

the same criteria to evaluate a security 

index futures contract.11

The factors that are considered by the 

staff in evaluating a request for a noaction letter by a foreign board of trade 

with respect to its security index futures 

contract, and the information that the 

board should submit in its request, are 

set forth in Appendix D to Part 30 of the 

Commission’s regulations. Among other 

things, the staff considers the design 

and maintenance of the index, the 

method of index calculation, the nature 

of the component security prices used to 

calculate the index, the breadth and 

frequency of index dissemination, and 

other relevant factors. Another factor 

that the staff considers with respect to 

the issue of whether a foreign futures 

contract based on a security index is not 

readily susceptible to manipulation or 

being used to manipulate any 

underlying security, one preliminary 

consideration is the requesting board’s 

ability to access and share information 

regarding the securities underlying the 

index.12

The scope of the no-action relief is 

product-specific, is restricted to the 

subject futures contracts, is based upon 

the facts and representation thereto, and 

requires the foreign board of trade to 

notify OGC staff if the facts underlying 

the request materially change.13

Accordingly, a foreign board of trade 

with prior no-action relief with respect 

to a particular foreign non-narrow-based 

security index futures contract must file 

a new request for no-action relief for 

each new non-narrow-based security 

index futures contract it seeks to offer or 

sell in the United States. 

II. Proposed Rule 30.13: Commission 

Certification Procedure 

The proposed § 30.13 would establish 

a Commission certification process for 

confirming that the security index 

futures contract traded on a foreign 

board of trade meets the requirements of 

the Act and therefore, may lawfully be 

offered or sold within the U.S. In this 

respect, the new certification process 

would be consistent with the original 

congressional guidance on this topic. In 

addition, a Commission certification 

would provide a greater degree of 

assurance to foreign boards of trade 

seeking to make available their security 

index futures contracts offered or sold 

in the U.S., in comparison to a staff noaction letter, which only represents the 

views of the issuing staff. 

Specifically, § 30.13 would set forth a 

procedure whereby a foreign board of 

trade may apply to the Commission for 

certification that a security index 

futures contract traded on that board 

conforms to the criteria enumerated in 

Section 2(a)(1)(C)(ii) of the Act. The 

Commission certification procedure 

would be available to futures contracts 

based on an index of foreign or U.S. 

securities.14 Under the proposed 

procedure, the foreign board of trade 

must file with the Commission a written 

submission requesting certification with 

respect to their security index futures 

contract(s). Such submission must 

include data, information, facts, and 

statements complying with the form and 

content requirements set forth in 

Appendix D to Part 30, as amended.15

Such data, information, facts, and 

statements will be the same as that 

specified in current Appendix D to Part 

30. In addition to the information, 

statements and data specified in 

Appendix D,16 the foreign board of trade 

also would be required to provide a 

written certification that the subject 


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17While an index product may meet the statutory 

standard and is therefore eligible to be offered or 

sold in the U.S., U.S. customers’ access to such 

product may be restricted due to legal restrictions 

in the subject foreign jurisdiction. 

18Additionally, once the Commission has 

certified the subject futures contracts, no further 

action is required by the Commission or staff in 

order for options on such futures contract to be 

offered and sold in the United States. See 61 FR 

10891 (March 18, 1996). 

19The Commission staff previously determined 

that such non-narrow-based foreign index contracts 

conformed to Section 2(a)(1)(C)(ii) of the Act. Given 

that the substance of the review under the proposed 

Commission certification process would remain 

unchanged, the Commission believes it would be 

appropriate to ‘‘grandfather’’ these contracts. 

20See Letter from Paul M. Architzel, Alston & 

Bird, LLP, to David Stawick, Secretary, Commodity 

Futures Trading Commission (March 28, 2008). A 

copy of the petition (hereinafter referred to as 

‘‘Eurex Petition’’) is available through the 

Commission’s Office of the Secretariat. To inquire 

with the Office of the Secretariat send an e-mail to 

secretary@cftc.gov. 

21Under this expedited process, a FBOT would 

be required to submit information that is 

substantively similar to that required under the full, 

non-expedited process, including a description of 

the manner in which U.S. persons may trade the 

subject products on the board. 

22Prospectively, following the adoption of new 

Rule 30.13, a foreign board of trade that has 

previously been granted Commission certification 

with respect to a foreign security index futures 

contract would also be eligible for a fast-track 

review. 

23Since 1996, the Commission staff has issued 

no-action letters to foreign boards of trade stating, 

subject to compliance with certain conditions, that 

it will not recommend that the Commission take 

enforcement action if the foreign board of trade 

provides its members or participants in the U.S. 

access to its electronic trading system without 

seeking designation as a DCM or registration as a 

DTEF (‘‘Foreign Trading System No-Action 

Letters’’). 

contract conforms to Section 

2(a)(1)(C)(ii) of the Act. Finally, the 

foreign board of trade would be required 

to describe the manner in which U.S. 

persons legally may access these 

products on that board of trade (e.g., 

access through omnibus accounts, 

through an intermediary, which is 

registered in the U.S. and also is an 

authorized member of the foreign board 

of trade, or through an entity that has 

relief from registration under part 30).17

The substantive review would remain 

the same under the new § 30.13 as it is 

under the current no-action process. 

Further, consistent with the existing 

staff no-action review process, the 

Commission’s review of the subject 

contract would not be subject to any 

specific time frame, except as noted 

below. If a contract is determined to 

conform to the applicable requirements 

of the Act, the Commission will so 

notify the foreign board of trade.18

Finally, OGC no-action letters 

respecting foreign non-narrow-based 

security index futures contracts issued 

prior to the effective date of new § 30.13 

would be grandfathered, provided that 

underlying conditions continue to be 

met.19 Accordingly, a foreign board of 

trade that has received from 

Commission staff such a no-action letter 

would not be required to obtain 

Commission relief (for the contract that 

is the subject of that letter) under this 

proposed rule, if adopted. 

III. Expedited Review for Qualifying 

Foreign Boards of Trade 

A. Eurex’s Petition for Expedited 

Review 

Eurex Deutschland (‘‘Eurex’’) 

petitioned the Commission to establish 

a fast-track procedure for Commission 

review of requests by a foreign board of 

trade to offer or sell foreign security 

index futures contracts traded on that 

board to persons located in the United 

States.20 Specifically, Eurex seeks a new 

rule, or in the alternative, an 

amendment to Appendix D to Part 30, 

which would establish an expedited 

procedure for the consideration of 

whether a foreign security index futures 

contract that a foreign board of trade 

lists for trading, or plans to list for 

trading, meets the requirements 

enumerated in Section 2(a)(1)(C)(ii) of 

the Act. Eurex proposes that the 

expedited review be available to a 

foreign board of trade that has received 

either: (i) A prior OGC no-action letter 

with respect to the offer or sale of a 

foreign futures contract on a security 

index or (ii) a prior DMO no-action 

letter permitting the foreign board of 

trade to provide direct electronic access 

to persons in the U.S. This expedited 

procedure requested would be an 

alternative, or an addition, to the 

existing staff no-action procedure, 

which has no explicit time-frame. 

B. Under Eurex’s proposal, a foreign 

security index futures contract would be 

deemed to conform to Section 

2(a)(1)(C)(ii) of the Act, and therefore 

may be offered or sold to persons 

located in the U.S., forty-five (45) days 

after filing with the Commission, unless 

the Commission determines that an 

additional forty-five day extension is 

necessary to address complex or novel 

issues. The information that a foreign 

board of trade must submit under the 

expedited procedure would be identical 

to the information required under the 

current no-action process as prescribed 

in Appendix D to Part 30. 

Proposed Expedited Review 

In light of the Eurex Petition and the 

staff’s experience with the process 

governing the offer and sale in the U.S. 

of foreign non-narrow based security 

index futures contracts traded on a 

foreign board of trade, the Commission 

is proposing to establish an expedited 

review procedure available to qualifying 

foreign boards of trade.21 As further 

described below, the proposed 

expedited review process generally 

conforms to the Commission’s process 

for prior-approval review of contracts to 

be listed and traded on domestic 

contract markets. This expedited 

procedure would be an alternative to the 

regular review procedure described in 

Section II herein. 

The expedited review would be 

available to a foreign board of trade that 

has previously been granted no-action 

relief by OGC, or Commission 

certification, with respect to a nonnarrow-based security index futures 

contract traded on that board.22 In 

connection with the grant of such prior 

relief or certification, the staff will have 

worked closely with the foreign board of 

trade and its regulators, and as a result 

of having obtained prior relief or 

certification, both the board and the 

regulators will be familiar with the 

substantive and procedural 

requirements that must be met to obtain 

Commission certification, as they are 

the same as what is required for 

obtaining an OGC no-action letter. 

Moreover, in connection with prior 

relief or certification, the board of trade 

will have confirmed that it is willing 

and able to share with the Commission 

information concerning the subject 

contract and the securities underlying 

the index. Under these circumstances, 

and provided that the board of trade has 

been in compliance with the terms and 

conditions of the prior no-action 

letter(s), the Commission believes that 

subsequent requests for certification 

from such foreign boards of trade with 

regard to the offer or sale of new broadbased foreign security index futures 

contracts in the U.S. should be 

considered on an expedited basis. 

The expedited review also would be 

available to a foreign board of trade that 

has received, and is compliant with the 

requirements of, DMO’s Foreign Trading 

System No-Action Letter.23 The 

Commission believes that an expedited 

review is appropriate for such boards in 

light of the fact that the Commission 

staff will have already had conducted a 

comprehensive review of the foreign 

board of trade. Pursuant to such review, 

the staff will have determined that the 

foreign board of trade is a bona fide 

board of trade subject to a bona fide 

regulatory regime, including appropriate 

mechanisms for market oversight and 

customer protection, and that enabling 


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24 In the foreign direct access no-action context, 

the Commission staff reviews information and 

representations provided by the foreign board of 

trade that relate to, among other things, the rules 

and structure of the applicant (with an emphasis on 

the exchange’s financial integrity, market 

surveillance, trade practice and rule enforcement 

regime), various system integrity protections that 

govern the foreign board of trade’s electronic 

trading system, the system’s related clearing and 

customer default protections, and information 

concerning the regulatory structure in the 

applicant’s jurisdiction, with a specific emphasis on 

market regulation. See 71 FR 64443 (Nov. 2, 2006) 

(describing the staff review in connection with the 

issuance of foreign direct access no-action letters). 

25 Dodd-Frank Wall Street Reform and Consumer 

Protection Act, Public Law 111–203, 124 Stat. 1376 

(2010). 

26Requests for staff no-action letters respecting 

foreign security index futures contracts that are 

currently pending or submitted prior to adoption of 

a final rule would be considered as a request for 

Commission certification following the adoption of 

§ 30.13. Any foreign board of trade eligible for 

expedited review under any final rule adopted by 

the Commission would have to submit a request for 

such treatment. 

U.S. persons to have direct trading 

access to that board would not be 

contrary to the public interest.24 In 

connection with such relief, the staff 

also will have considered the existence 

of adequate information-sharing 

mechanism to ensure the Commission’s 

ability to carry out its surveillance 

responsibilities. Under these 

circumstances, the Commission believes 

that such foreign board of trade will 

have demonstrated its ability to comply 

with the substantive and procedural 

requirements for Commission 

certification. Accordingly, the 

Commission believes that a foreign 

board of trade that is the subject of an 

existing Foreign Trading System NoAction Letter should be eligible for an 

expedited review, provided that the 

board of trade remains in full 

compliance with the terms and 

conditions of the letter. The 

Commission also notes that the recentlyenacted Dodd-Frank Wall Street Reform 

and Consumer Protection Act authorizes 

the Commission to register foreign 

boards of trade that provide U.S, 

persons with ‘‘direct access’’ to their 

trading systems.25 The Commission 

anticipates that at such time as the 

Commission may promulgate such 

registration requirements, the expedited 

review procedure would be extended to 

recipients of an FBOT registration 

license. 

Under the proposed expedited review 

procedure, a qualifying foreign board of 

trade may request that the Commission 

make its certification as to whether a 

futures contract on a security index that 

it lists for trading or plans to list for 

trading on that board satisfies the 

requirements enumerated in Section 

2(a)(1)(C)(ii) of the Act within 45 days 

after the submission of such request. As 

proposed, the review period could be 

extended by the Commission for an 

additional 45 days if the foreign security 

index futures contract raises novel or 

complex issues that require additional 

time for review, or if the foreign board 

of trade requests an extension of time. 

If the foreign board of trade’s request 

to the Commission for expedited 

consideration does not comply in form 

or content with the requirements of 

proposed Rule 30.13, the Commission 

may notify the requesting foreign board 

of trade and treat the request for 

expedited review as withdrawn. 

However, the foreign board of trade 

would not be precluded from filing a 

new expedited request, provided that 

such submission satisfies the content 

and form requirements applicable to 

such process specified in § 30.13. 

Unless the Commission notifies the 

foreign board of trade that the request 

has been deemed withdrawn, the 

subject contract will be deemed to be in 

conformance with the requirements of 

Section 2(a)(1)(C)(ii) and, therefore may 

be offered or sold within the U.S., at the 

expiration of the applicable review 

period. In contrast to the regular, nonexpedited review, the Commission will 

not issue a certification letter to the 

foreign board of trade upon completion 

of its review. 

If the Commission will not, or is 

unable to, deem that the foreign security 

index futures contract or the underlying 

security index conforms to the 

requirements of the Act, it would so 

notify the foreign board of trade within 

the 45 day time period or such extended 

time frame, with a brief statement of the 

reasons therefore. Upon such 

notification, the foreign board of trade’s 

request for Commission certification 

will be treated as having been 

withdrawn. The foreign board of trade, 

however, would not be precluded from 

filing a new submission, provided that 

such submission sufficiently addresses 

the deficiencies or issues identified in 

the Commission notification.26 The new 

streamlined process is intended to 

reduce the time frame within which a 

foreign board of trade can request, and 

obtain, Commission certification with 

respect to the qualification of its broadbased security index futures contracts 

prior to the offer or sale to persons 

located in the U.S. In addition, by 

affixing a definite timeline to the review 

process, it would provide foreign boards 

of trade with greater certainty 

concerning the time necessary to obtain 

regulatory clearance in order to market 

its broad-based security index products 

within the U.S. Further, because the 

substantive review would remain the 

same under the expedited procedure as 

is under the regular procedure, the new 

expedited review process would not 

curtail, or in any way compromise, the 

regulatory safeguards protecting the 

public and market users. 

IV. Related Matters 

A. Cost Benefit Analysis 

Section 15(a) of the Act requires the 

Commission to consider the costs and 

benefits of its actions before issuing new 

regulations under the Act. Section 15(a) 

does not require the Commission to 

quantify the costs and benefits of new 

regulations or to determine whether the 

benefits of adopted regulations 

outweigh their costs. Rather, Section 

15(a) requires the Commission to 

consider the cost and benefits of the 

subject regulations. Section 15(a) further 

specifies that the costs and benefits of 

new regulations shall be evaluated in 

light of five broad areas of market and 

public concern: (1) Protection of market 

participants and the public; (2) 

efficiency, competitiveness, and 

financial integrity of the market for 

listed derivatives; (3) price discovery; 

(4) sound risk management practices; 

and (5) other public interest 

considerations. The Commission may, 

in its discretion, give greater weight to 

any one of the five enumerated areas of 

concern and may, in its discretion, 

determine that, notwithstanding its 

costs, a particular regulation is 

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 determined that 

there are no apparent costs associated 

with proposed § 30.13. The proposed 

rule would codify and streamline the 

current review process, without 

substantive changes to the review 

standards and information required to 

be filed with respect to a broad-based 

security index. Accordingly, the 

Commission believes that the proposed 

review procedures would not 

compromise customer protection 

safeguards provided by the Act or in any 

way be contrary to the public interest. 

Additionally, foreign boards of trade 

and U.S. market participants will 

benefit from proposed § 30.13. The 

certification process being proposed 

will provide a foreign board of trade 

with greater certainty with respect to the 

contracts it offers in the U.S., which 

until now have only been subject to staff 

no-action relief that is not binding on 

the Commission. Moreover, the 


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27See 47 FR 18618 (April 30, 1982). 

28See 5 U.S.C. 601(6) (defining ‘‘small entity’’ to 

have the same term as the term ‘‘small business’’ as 

used under section 3 of the Small Business Act, 13 

CFR 121.201). 

proposed expedited review process 

would enhance market efficiency by 

providing foreign boards of trade with 

greater certainty concerning the time 

necessary to obtain regulatory clearance 

in order to market broad-based security 

index products within the United 

States. Finally, streamlining the review 

process would make additional hedging 

instruments available to U.S. persons 

without unnecessary delay, and in turn, 

may foster price discovery in the futures 

market. 

B. The Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’), 5 U.S.C. 601 et seq., requires 

that agencies consider the impact of 

their regulations on small businesses. 

The Commission has previously 

determined that designated contract 

markets are not small entities for 

purposes of the RFA.27 The 

Commission’s determination was based 

on considerations relating to the central 

role played by contract markets in the 

futures market, as well as the high 

volume of transactions conducted on 

such markets. 

To the extent that the RFA may apply 

to the action proposed to be taken 

herein, the Commission does not believe 

that a foreign board of trade falls within 

the definition of ‘‘small entity’’ for 

purposes of the RFA. Rather, the 

Commission is of the view that the 

rationale that guided its finding with 

respect to U.S. contract markets apply 

equally to foreign boards of trade. 

Moreover, with regard to foreign firms, 

the RFA defines a ‘‘small entity’’ as a 

‘‘business entity organized for profit, 

with a place of business located in the 

United States, and which operates 

primarily within the United States or 

which makes a significant contribution 

to the U.S. economy through payment of 

taxes or uses American products, 

materials or labor.’’ 28 A foreign board of 

trade that may seek Commission 

certification pursuant to the proposed 

rule is not likely to meet such criteria. 

The Commission is soliciting comments 

on this matter. 

C. Paperwork Reduction Act 

When publicizing proposed 

regulations, the Paperwork Reduction 

Act (‘‘PRA’’) of 1995 (44 U.S.C. 3501 et 

seq.) 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 information collection requirements 

associated with the proposed 

regulations are administered under 

Office of Management and Budget 

control numbers 3038–0022 and 3038– 

0054. These proposed amendments to 

parts 30 of the Commission’s regulations 

would not impose any new or 

additional recordkeeping or information 

collection requirement that would 

require the approval of the Office of 

Management and Budget under 44 

U.S.C. 3501, et seq. Accordingly, the 

PRA is inapplicable. 

List of Subjects in 17 CFR Part 30 

Foreign board of trade, Foreign 

security index futures, Designated 

contract market, Derivatives transaction 

execution facility, Advertising, Noaction letter, Fast-track, Non-narrow 

foreign security index future, Reporting 

and recordkeeping requirements. 

For the reasons set forth in the 

Preamble, the Commission hereby 

proposes to amend Chapter I of Title 17 

of the Code of Federal Regulations as 

follows: 

PART 30—FOREIGN FUTURES AND 

FOREIGN OPTIONS TRANSACTIONS 

1. The authority citation for part 30 

continues to read as follows: 

Authority: 17 U.S.C. 1a, 2, 4, 6, 6c and 12a, 

unless otherwise noted. 

2. Section 30.13 is added to read as 

follows: 

§ 30.13 Commission certification. 

With respect to foreign futures and 

options contracts on a non-narrowbased security index: 

(a) Request for Certification. A foreign 

board of trade may request that the 

Commission certify that a futures 

contract on a non-narrow-based security 

index that trades, or is proposed to be 

traded thereon, conforms to the 

requirements of Section 2(a)(1)(C)(ii) of 

this Act and therefore, that futures 

contract may be offered or sold to 

persons located within the United States 

in accordance with Section 2(a)(1)(C)(iv) 

of this Act. A submission requesting 

such certification must: 

(1) Be filed electronically with the 

Secretary of the Commission; 

(2) Include a copy of the submission 

cover sheet in accordance with the 

instructions in appendix D to part 30 of 

this chapter; 

(3) Include the following information 

in English: 

(i) The terms and conditions of the 

contract and all other relevant rules of 

the exchange and, if applicable, of the 

foreign board of trade on which the 

underlying securities are traded, which 

have an effect on the over-all trading of 

the contract, including circuit breakers, 

price limits, position limits or other 

controls on trading; 

(ii) Surveillance agreements between 

the foreign board of trade and the 

exchange(s) on which the underlying 

securities are traded; 

(iii) Assurances from the foreign 

board of trade of its ability and 

willingness to share information with 

the Commission, either directly or 

indirectly; 

(iv) When applicable, information 

regarding foreign blocking statutes and 

their impact on the ability of United 

States Government agencies to obtain 

information concerning the trading of 

such contracts; 

(v) Information and data denoted in 

U.S. dollars where appropriate (and the 

conversion date and rate used) relating 

to: 

(A) The method of computation, 

availability, and timeliness of the index; 

(B) The total capitalization, number of 

stocks (including the number of 

unaffiliated issuers if different from the 

number of stocks), and weighting of the 

stocks by capitalization and, if 

applicable, by price in the index as well 

as the combined weighting of the five 

highest-weighted stocks in the index; 

(C) Procedures and criteria for 

selection of individual securities for 

inclusion in, or removal from, the index, 

how often the index is regularly 

reviewed, and any procedures for 

changes in the index between regularly 

scheduled reviews; 

(D) Method of calculation of the cashsettlement price and the timing of its 

public release; 

(E) Average daily volume of trading, 

measured by share turnover and dollar 

value, in each of the underlying 

securities for a six-month period of time 

and, separately, the dollar value of the 

average daily trading volume of the 

securities comprising the lowest 

weighted 25% of the index for the past 

six calendar months, calculated 

pursuant to § 41.11 of this chapter; and 

(vi) A written statement that the 

contract conforms to the criteria 

enumerated in Section 2(a)(1)(c)((ii) of 

the Act, including: 

(A) A statement that the contract is 

cash-settled; 

(B) An explanation of why the 

contract is not readily subject to 

manipulation or to be used to 

manipulate the underlying security; 

(C) A statement that the index is not 

a narrow-based security index as 

defined in Section 1a(25) of the Act and 

the analysis supporting that statement; 

(vii) A written representation that the 

foreign board of trade will notify the 


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Commission of any material changes in 

any of the above information; 

(viii) When applicable, a request to 

make the futures contract available for 

trading in accordance with the terms 

and conditions of, and through the 

electronic trading devices identified in, 

a Commission staff no-action letter 

stating, subject to compliance with 

certain conditions, that it will not 

recommend that the Commission take 

enforcement action if the foreign board 

of trade provides its members or 

participants in the U.S. access to its 

electronic trading system without 

seeking designation as a designated 

contract market or registration as a 

derivatives transaction execution 

facility (‘‘Foreign Trading System NoAction Letter’’) and a certification from 

the foreign board of trade that it is in 

compliance with the terms and 

conditions of that no-action letter; and 

(xii) An explanation of the means by 

which U.S. persons may access these 

products on the foreign board of trade. 

(b) Termination of Review. The 

Commission, at any time during its 

review, may notify the requesting 

foreign board of trade that it is 

terminating its review under this section 

if it appears to the Commission that the 

submission is materially incomplete or 

fails in form or content to meet the 

requirements of this section. 

(1) Such termination shall not 

prejudice the foreign board of trade from 

resubmitting a revised version of the 

contract, which addresses the 

deficiencies or issues identified by the 

Commission. 

(2) The Commission shall also 

terminate review under this section if 

requested in writing to do so by the 

foreign board of trade. 

(c) Notice of Denial of Certification. 

The Commission, at any time during its 

review under paragraph (a) of this 

section, may notify the requesting 

foreign board of trade that it has 

determined that the security index 

futures contract or underlying index 

does not conform with the requirements 

of Section 2(a)(1)(C)(ii) of the Act. 

(1) This notification will briefly 

specify the nature of the issues raised 

and the specific requirement of 

Subsections 2(a)(1)(C)(ii)(I)–(III) of the 

Act with which the security index 

futures contract does not conform or to 

which it appears not to conform or the 

conformance to which cannot be 

ascertained from the submission. 

(2) Such notification shall not 

prejudice the foreign board of trade from 

resubmitting a revised version of the 

contract, which addresses the 

deficiencies or issues identified by the 

Commission. 

(d) Notice of Certification. Upon 

review, if the Commission determines 

that the futures contract and the 

underlying index meet the requirements 

enumerated in Section 2(a)(1)(C)(ii), the 

Commission will issue a letter to the 

foreign board of trade certifying that the 

security index contract traded on that 

board conforms to the requirements of 

Section 2(a)(1)(C)(ii) of the Act and 

therefore, that futures contract may be 

offered or sold to persons located within 

the U.S. in accordance with Section 

2(a)(1)(C)(iv) of the Act and, if 

applicable, may be made available for 

trading in accordance with the terms 

and conditions of, and through the 

electronic trading devices identified in, 

the Foreign Trading System No-Action 

Letter. 

(e) Expedited Review. A foreign board 

of trade may request an expedited 

Commission review and determination 

of whether a futures contract on a 

security index that trades, or is 

proposed to be traded thereon, conforms 

to the requirements of Section 

2(a)(1)(C)(ii) of the Act and therefore, 

may be offered or sold to persons in the 

U.S. under Section 2(a)(1)(C)(iv) of the 

Act. A submission requesting such 

expedited consideration should be filed 

in English with the Commission and 

should include: Information, statements 

and data complying with the form and 

content requirements in paragraph (a) of 

this section. 

(f) Eligibility for Expedited Review. In 

order to qualify for expedited review 

under paragraph (e) of this section, the 

foreign board of trade must either: 

(1) Have previously requested, and 

received, at least one no-action letter 

from the Office of General Counsel or 

Commission certification regarding a 

non-narrow based security index futures 

contract traded on that foreign board of 

trade offered and sold to persons located 

in the United States and remains fully 

compliant with the terms and 

conditions of such letter or certification; 

or 

(2) Have received a Foreign Trading 

System No-Action Letter from the 

Division of Market Oversight and 

remains fully compliant with the terms 

and conditions of such letter. 

(g) Deemed To Be in Conformance. 

Unless notified pursuant to paragraph 

(h) or (i) of this section, any nonnarrow-based foreign security index 

futures contract submitted for expedited 

review under paragraph (e) of this 

section shall be deemed to be in 

conformance with the requirements of 

Section 2(a)(1)(C)(ii) of the Act and 

therefore, such futures contract may be 

offered or sold to persons located in the 

U.S. in accordance with Section 

2(a)(1)(C)(iv) forty-five days after receipt 

by the Commission, or at the conclusion 

of such extended period as described 

under paragraph (h) of this section, 

provided that the foreign board of trade 

does not amend the terms or conditions 

of the contract or supplement the 

request for expedited consideration, 

except as requested by the Commission 

or for correction of typographical errors. 

Any voluntary substantive amendment 

by the foreign board of trade will be 

treated as a new submission under this 

section. 

(h) Extension of Review. The 

Commission may extend the forty-five 

day review period set forth in paragraph 

(g) of this section for: 

(1) An additional period up to fortyfive days, if the request raises novel or 

complex issues that require additional 

time for review, in which case, the 

Commission will notify the foreign 

board of trade within the initial fortyfive day review period and will briefly 

describe the nature of the specific issues 

for which additional time for review 

will be required; or 

(2) Such extended period as the 

requesting foreign board of trade 

requests of the Commission in writing. 

(i) Termination of Review. The 

Commission, at any time during its 

review under paragraph (e) of this 

section or extension thereof as described 

under paragraph (h) of this section, may 

notify the requesting foreign board of 

trade that it is terminating its review 

under paragraph (e) of this section if it 

appears to the Commission that the 

submission is materially incomplete or 

fails in form or substance to meet the 

requirements of this section. 

(1) Such termination shall not 

prejudice the foreign board of trade from 

resubmitting a revised version of the 

contract, which addresses the 

deficiencies or issues identified by the 

Commission. 

(2) The Commission shall also 

terminate review under this section if 

requested in writing to do so by the 

foreign board of trade. 

(j) Notice of Denial of Certification. 

The Commission, at any time during its 

review, may notify the requesting 

foreign board of trade that it has 

determined that the security index 

futures contracts or underlying index 

does not conform with the requirements 

of Section 2(a)(1)(C)(ii) of the Act. 

(1) This notification will briefly 

specify the nature of the issues raised 

and the specific requirement of 

subsections 2(a)(1)(C)(ii)(I)–(III) of the 

Act with which the security index 

futures contract does not conform or to 

which it appears not to conform or the 


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conformance to which cannot be 

ascertained from the submission. 

(2) Such notification shall not 

prejudice the foreign board of trade from 

resubmitting a revised version of the 

contract, which addresses the 

deficiencies or issues identified by the 

Commission. 

(k) Foreign Trading Systems. A 

foreign board of trade, who is a recipient 

of a Foreign Trading System No-Action 

Letter (and is compliant with the 

requirements of such letter) and is 

requesting Commission certification of 

its non-narrow-based security index 

futures contract, may request that such 

contract submitted under paragraph (e) 

of this section be made available for 

trading under that Letter upon 

expiration of the applicable review 

period provided for under either 

paragraph (g) or (h) of this section. 

Absent Commission notification to the 

contrary, the foreign board of trade may 

make that contract available for trading 

on the Foreign Trading System upon 

expiration of the review period 

provided under paragraph (g) or (h) of 

this section. 

(l) Changes in Facts and 

Circumstances. Any certification of a 

non-narrow based security index futures 

contract submitted under paragraph (a) 

or (e) of this section shall be considered 

to be based on the facts and 

representations contained in the foreign 

board of trade’s submissions to the 

Commission. Accordingly, the foreign 

board of trade shall promptly notify the 

Commission of any changes in material 

facts or representations. 

(m) Grandfathered No-Action Letters. 

Any non-narrow-based security index 

futures contract that is the subject of an 

existing no-action letter issued by the 

Office of General Counsel, as of the date 

of the adoption of Rule 30.13, shall be 

deemed to be in conformance with the 

criteria of Section 2(a)(1)(C)(ii) of the 

Act, provided that the contract remains 

fully compliant with the requirements 

of such letter. 

* * * * * 

3. Appendix D to Part 30 is revised to 

read as follows: 

Appendix D to Part 30—Commission 

Certification With Respect to Foreign 

Futures and Options Contracts on a 

Non-Narrow-Based Security Index 

In its analysis of a request for certification 

by a foreign board of trade relating to a 

security index futures contract traded on that 

foreign board of trade pursuant to Regulation 

30.13, the Commission will evaluate the 

contract to ensure that it complies with the 

three criteria of Section 2(a)(1)(C)(ii) of the 

Act. 

(1) Because security index futures contracts 

are cash settled, the Commission also 

evaluates the contract terms and conditions 

relating to cash settlement. In that regard, the 

Commission examines, among other things, 

whether the cash price series is reliable, 

acceptable, publicly available and timely; 

that the cash settlement price is reflective of 

the underlying cash market; and that the cash 

settlement price is not readily susceptible to 

manipulation. In making its determination, 

the Commission considers the design and 

maintenance of the index, the method of 

index calculation, the nature of the 

component security prices used to calculate 

the index, the breadth and frequency of index 

dissemination, and any other relevant factors. 

(2) In considering the susceptibility of an 

index to manipulation, the Commission 

examines several factors, including the 

structure of the primary and secondary 

markets for the component equities, the 

liquidity of the component stocks, the 

method of index calculation, the total 

capitalization of stocks underlying the index, 

the number, weighting and capitalization of 

individual stocks in the index, and the 

existence of surveillance sharing agreements 

between the board of trade and the securities 

exchange(s) on which the underlying 

securities are traded. 

(3) To verify that the index is not narrowbased, the Commission considers the number 

and weighting of the component securities 

and the aggregate value of average daily 

trading volume of the lowest weighted 

quartile of securities. Under the Act, a 

security index is narrow-based if it meets any 

one of the following criteria: 

(i) The index is composed of fewer than 10 

securities; 

(ii) Any single security comprises more 

than 30% of the total index weight; 

(iii) The five largest securities comprise 

more than 60% of the total index weight; or 

(iv) The lowest-weighted securities that 

together account for 25% of the total weight 

of the index have an aggregate dollar value 

of average daily trading volume of less than 

US$30 million (or US$50 million if the index 

includes fewer than 15 securities). 

Issued in Washington, DC, on November 

30, 2010 by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. 2010–31014 Filed 12–10–10; 8:45 am] 

BILLING CODE 6351–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R04–OAR–2010–0798–201048; FRL– 

9237–7] 

Approval and Promulgation of 

Implementation Plans and 

Designations of Areas for Air Quality 

Planning Purposes; Georgia: Rome; 

Determination of Attaining Data for the 

1997 Annual Fine Particulate 

Standards 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: EPA is proposing to 

determine that the Rome, Georgia, fine 

particulate (PM2.5) nonattainment area 

(hereafter referred to as ‘‘the Rome 

Area’’) has attained the 1997 annual 

average PM2.5 National Ambient Air 

Quality Standards (NAAQS). The Rome 

Area is comprised of Floyd County in its 

entirety. This proposed clean data 

determination is based upon complete, 

quality-assured and certified ambient air 

monitoring data for the 2007—2009 

period showing that the Area has 

monitored attainment of the 1997 

annual PM2.5 NAAQS. If EPA finalizes 

this proposed clean data determination, 

the requirements for the Area to submit 

an attainment demonstration and 

associated reasonably available control 

measures (RACM), a reasonable further 

progress (RFP) plan, contingency 

measures, and other planning State 

Implementation Plan (SIP) revisions 

related to attainment of the standard 

shall be suspended so long as the Area 

continues to attain the annual PM2.5

NAAQS. 

DATES: Comments must be received on 

or before January 12, 2011. 

ADDRESSES: Submit your comments, 

identified by Docket ID No. EPA–R04– 

OAR–2010–0798, by one of the 

following methods: 

1. http://www.regulations.gov: Follow 

the on-line instructions for submitting 

comments. 

2. E-mail: benjamin.lynorae@epa.gov. 

3. Fax: (404) 562–9040. 

4. Mail: EPA–R04–OAR–2010–0798, 

Regulatory Development Section, Air 

Planning Branch, Air, Pesticides and 

Toxics Management Division, U.S. 

Environmental Protection Agency, 

Region 4, 61 Forsyth Street, SW., 

Atlanta, Georgia 30303–8960. 

5. Hand Delivery: Lynorae Benjamin, 

Chief, Regulatory Development Section, 

Air Planning Branch, Air, Pesticides and 

Toxics Management Division, U.S. 

Environmental Protection Agency, 

Region 4, 61 Forsyth Street, SW., 

Atlanta, Georgia 30303–8960. Such 

deliveries are only accepted during the 

Regional Office normal hours of 

operation, and special arrangements 

should be made for deliveries of boxed 

information. The Regional Office official 

hours of business are Monday through 

Friday, 8:30 a.m. to 4:30 p.m., excluding 

Federal holidays. 

Instructions: Direct your comments to 

Docket ID No. EPA–R04–OAR–2010– 

0798. EPA’s policy is that all comments 

received will be included in the public 

docket without change and may be 

made available online at http:// 


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