21306 Federal Register / Vol. 65, No. 78 / Friday, April 21, 2000 / Rules and Regulations

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 71

[Airspace Docket No. 99–AAL–19]

Establishment of Class E Airspace;

Scammon Bay, AK

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final rule.

SUMMARY: This action establishes Class

E airspace at Scammon Bay, AK. The

establishment of Global Positioning

System (GPS) instrument approach

procedures at Scammon Bay Airport

made this action necessary. The

Scammon Bay Airport status changes

from Visual Flight Rules (VFR) to

Instrument Flight Rules (IFR). This rule

provides adequate controlled airspace

for aircraft flying IFR procedures at

Scammon Bay, AK.

EFFECTIVE DATE: 0901 UTC, June 15,

2000.

FOR FURTHER INFORMATION CONTACT: Bob

Durand, Operations Branch, Federal

Aviation Administration, 222 West 7th

Avenue, Box 14, Anchorage, AK 99513–

7587; telephone number (907) 271–

5898; fax: (907) 271–2850; email:

Bob.Durand@faa.gov. Internet address:

http://www.alaska.faa.gov/at or at

address http://162.58.28.41/at.

SUPPLEMENTARY INFORMATION:

History

On November 22, 1999, a proposal to

amend part 71 of the Federal Aviation

Regulations (14 CFR part 71) to establish

the Class E airspace at Scammon Bay,

AK, was published in the Federal

Register (64 FR 63765). The proposal

was necessary due to the establishment

of GPS instrument approach procedures

at Scammon Bay, AK. Interested parties

were invited to participate in this

rulemaking proceeding by submitting

written comments on the proposal to the

FAA. No public comments to the

proposal were received; thus, the rule is

adopted as written.

The area would be depicted on

aeronautical charts for pilot reference.

The coordinates for this airspace docket

are based on North American Datum 83.

The Class E airspace areas designated as

700/1200 foot transition areas are

published in paragraph 6005 in FAA

Order 7400.9G, Airspace Designations

and Reporting Points, dated September

1, 1999, and effective September 16,

1999, which is incorporated by

reference in 14 CFR 71.1. The Class E

airspace designations listed in this

document will be published

subsequently in the Order.

The Rule

This amendment to 14 CFR part 71

establishes the Class E airspace at

Scammon Bay, AK, through the

establishment of GPS instrument

approaches. The airport status changes

from VFR to IFR. The area will be

depicted on aeronautical charts for pilot

reference. The intended effect of this

rule is to provide controlled airspace for

IFR operations at Scammon Bay, AK.

The FAA has determined that this

regulation only involves an established

body of technical regulations for which

frequent and routine amendments are

necessary to keep them operationally

current. It, therefore—(1) Is not a

‘‘significant regulatory action’’ under

Executive Order 12866; (2) Is not a

‘‘significant rule’’ under DOT

Regulatory Policies and Procedures (44

FR 11034; February 26, 1979); and (3)

Does not warrant preparation of a

regulatory evaluation as the anticipated

impact is so minimal. Since this is a

routine matter that will only affect air

traffic procedures and air navigation, it

is certified that this rule will not have

a significant economic impact on a

substantial number of small entities

under the criteria of the Regulatory

Flexibility Act.

List of Subjects in 14 CFR Part 71

Airspace, Incorporation by reference,

Navigation (air).

Adoption of the Amendment

In consideration of the foregoing, the

Federal Aviation Administration

amends 14 CFR part 71 as follows:

PART 71— DESIGNATION OF CLASS

A, CLASS B, CLASS C, CLASS D, AND

CLASS E AIRSPACE AREAS;

AIRWAYS; ROUTES; AND REPORTING

POINTS

1. The authority citation for 14 CFR

part 71 continues to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389.

§ 71.1 [Amended]

2. The incorporation by reference in

14 CFR 71.1 of Federal Aviation

Administration Order 7400.9G,

Airspace Designations and Reporting

Points, dated September 1, 1999, and

effective September 16, 1999, is

amended as follows:

* * * * *

Paragraph 6005 Class E airspace extending

upward from 700 feet or more above the

surface of the earth.

* * * * *

AAL AK E5 Scammon Bay, AK [New]

Scammon Bay Airport

(Lat. 61°50′40′′ N., long. 165°34′26′′ W.)

Hooper Bay VOR

(lat. 61° 30′ 52′′ N., long. 166° 08′ 04′′ W.)

That airspace extending upward from 700

feet above the surface within 6.3-mile radius

of the Scammon Bay Airport and that

airspace extending upward from 1,200 feet

above the surface within a 42-mile radius of

the Hooper Bay VOR extending clockwise

between the 006° radial and 066° radial.

* * * * *

Issued in Anchorage, AK, on April 14,

2000.

Anthony M. Wylie,

Acting Manager, Air Traffic Division, Alaskan

Region.

[FR Doc. 00–10012 Filed 4–20–00; 8:45 am]

BILLING CODE 4910–13–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration

14 CFR Part 73

[Airspace Docket No. 95–ASW–6]

RIN 2120–AA66

Establishment of Restricted Areas R–

5117, R–5119, R–5121 and R–5123; NM

AGENCY: Federal Aviation

Administration (FAA), DOT.

ACTION: Final rule.

SUMMARY: This action establishes four

restricted areas in the West/Central New

Mexico area (Restricted Areas R–5117,

and R–5121, Fort Wingate, NM; R–5119,

Socorro, NM; and R–5123, Magdalena,

NM). The FAA is taking this action to

provide an area for the United States

Army (US Army), to conduct missile

and sensor tests associated with the

Theater Missile Defense (TMD) system.

EFFECTIVE DATE: 0901 UTC, June 15,

2000.

FOR FURTHER INFORMATION CONTACT: Bill

Nelson, Airspace and Rules Division,

ATA–400, Office of Air Traffic Airspace

Management, Federal Aviation

Administration, 800 Independence

Avenue, SW., Washington, DC 20591;

telephone: (202) 267–8783.

SUPPLEMENTARY INFORMATION:

History

On May 15, 1995, the US Army

requested that the FAA establish four

restricted areas in West/Central New

Mexico to support the US Army Tactical

Missile System projects.

Federal Register / Vol. 65, No. 78 / Friday, April 21, 2000 / Rules and Regulations 21307

On February 2, 1996, the FAA

published in the Federal Register a

notice proposing to establish four

restricted areas in West/Central, New

Mexico (61 FR 3884). Interested parties

were invited to participate in this

rulemaking effort by submitting written

comments on the proposal. In response

to the notice, the FAA received

comments from New Mexico Tech

(Langmuir Laboratory for Atmospheric

Research) and the Aircraft Owners and

Pilots Association (AOPA). Comments

received were considered before making

a determination on this final rule. An

analysis of the comments received and

the FAA’s responses are summarized

below.

Discussion of Comments

New Mexico Tech commented on

proposed R–5119. It stated that it

currently uses R–5113 for thunderstorm

research. Thus, it believes that R–5119

should not have an adverse effect on R–

5113 provided (1) the US Army

completes its test activity by 9:00 a.m.,

local time and (2) the designated

altitude of R–5119 does not extend

below FL 350.

The FAA finds that the restricted

airspace will not adversely effect New

Mexico Tech’s thunderstorm research in

R–5113. The operational limits of the

two restricted areas are as follows: R–

5113 is designated as the airspace from

the surface to 45,000 feet mean sea level

(MSL); and R–5119 is designated as the

airspace from FL 350 to unlimited

altitude. Due to the design of R–5119 a

portion of R–5113 geographically

overlaps R–5119’s upper northwestern

area. However, the high operational

altitude of the test missiles transiting R–

5119 make it unlikely that a trespass

will occur in the upper limit of R–5113

at 45,000 feet MSL as the test missiles

over-fly R–5113 in descent to the

adjacent White Sands Missile Range

(WSMR). After careful and thorough

consideration of the facts presented by

the US Army, the FAA believes this

final rule has little, if any, impact on the

research activities of New Mexico Tech.

The AOPA expressed concerns that

the TMD program poses a significant

hazard to general aviation (GA)

operations and that the proposed

restricted areas will require GA pilots to

circumnavigate the areas. AOPA

believes that increased restrictions on

airspace are not an efficient use of

airspace, will result in increased fuel

costs and will cause unnecessary

changes to planned routes of flight.

Additionally, as part of its comment,

AOPA asked what plan, if any, is in

place to protect nonparticipating aircraft

from missiles that malfunction and

deviate from the planned trajectory.

Further, AOPA believes that all

alternatives must be explored prior to

the establishment of Special Use

Airspace (SUA).

The US Army Space and Strategic

Defense Command and the WSMR

analyst have conducted extensive

research studying flight profiles of target

and defense missiles. An analysis of this

research data led to the development of

launch hazard areas (e.g. booster drop

zones, intercept debris impact zones)

and intact target vehicle and defensive

missile impact zones. Based on the

analysis, the four restricted areas were

identified to segregate these potentially

hazardous activities from

nonparticipating aircraft.

Prior to each test missile launch,

range personnel will conduct impact

area analysis based on detailed launch

planning and trajectory modeling. Test

missile launches will be conducted only

when the impact area analysis confirms

that flight vehicles and debris would be

contained within the predetermined

areas. However, to further reduce risk

and lessen any potential impact on civil

or GA aviation, the US Army has agreed

to (1) schedule testing to conclude by

9:00 a.m., local time, when the volume

of air traffic is normally low and, (2)

limit the number of tests per year

(estimated at 6 to 10 per year). Though

it is anticipated to remain limited, in the

interest of national security the test

program number, as published in the

notice, may be exceeded. Further, each

test from launch to impact is designed

to take less than 15 minutes.

It is important to note that, in the

past, the US Army has employed

successfully the boosters to be used on

the test missiles and the boosters are

considered highly reliable in the terms

of safety and predictability. Therefore,

the FAA finds that the chances of a test

missile flight failure during launch

through impact is considered remote.

However, the US Army has established

safety procedures in the event of such

a failure.

The US Army categorizes termination

into three potential mishap areas: (1) On

the launcher; (2) flight shortly after

liftoff; and (3) flight after exiting the

launch site. R–5117 and R–5121 are

designed to contain the first two

potential mishap categories. In the event

of an exceptional circumstance such as

a missile malfunction, the Range Safety

Officer determines the safest point to

initiate missile termination. This point

is determined by real time performance

data collected form a variety of

instruments (e.g. telemetry, radar,

computer, etc.). This data provides

information on missile location and the

point of debris impact at points along

the trajectory to the planned impact in

WSMR. Due to the high altitudes at

which the test missiles navigate, the

FAA has found that it is unlikely that

a missile malfunction and subsequent

termination outside of the designated

restricted area will make the airspace

underlying the missile flight path

unsafe.

The US Army identified the minimum

required airspace to contain the theater

missile defense test operations in the

national airspace system. Although the

US Army has attempted to mitigate the

impacts on civil operations by limiting

the number, time of day, and flight time

of the missile, some aircraft operations

may be effected when the restricted

areas are activated. However, during a

standard 12-hour flying day, the limits

and procedures established by the US

Army will allow flight through the

published restricted areas over 99

percent of the time. The FAA will

activate the restricted airspace through

a Notice to Airman (NOTAM) and will

provide 24 hours of notice prior to

activation. If a NOTAM is not

published, aircraft may navigate through

charted restricted areas, without

concern. Therefore, there should be

little, if any, impact on aircraft

operations.

Charting permanent restricted areas

on aeronautical charts provides users of

the navigable airspace important

information concerning potential flight

hazards. The legend on the aeronautical

chart reflects these areas as active ‘‘By

NOTAM, 24 Hours in Advance.’’

Charting of the restricted airspace

together with the use of the NOTAM

system to publicize the effective date

and activation times of restricted areas,

remain the most efficient means to

notify the flying public and segregate

these potentially hazardous activities

from GA operations.

The Rule

This amendment to 14 CFR part 73

establishes four restricted areas in West/

Central New Mexico. Specifically, this

action establishes four restricted areas:

R–5117 and R–5121, Fort Wingate, NM;

R–5119, Socorro, NM; and R–5123,

Magdalena, NM. These restricted areas

will provide an area for the US Army

and designated joint-use agencies, to

conduct tests to validate the TMD

system design and operational

effectiveness. Under the test program,

missile launches will be conducted from

Fort Wingate Army Depot, near Gallup,

NM, and will terminate in the existing

restricted area of the WSMR, NM. The

FAA is taking this action to provide the

21308 Federal Register / Vol. 65, No. 78 / Friday, April 21, 2000 / Rules and Regulations

US Army SUA in support of the TMD

testing program.

R–5117 is designated as the launch

site and is located at Fort Wingate Army

Depot, NM, southeast of Gallup, NM. R–

5117 extends from the surface to

unlimited altitude and contains the

missile launch area. It overlies

government-controlled land. R–5121 is

designated adjacent to R–5117, and

extends from FL 200 to unlimited

altitude and contains missile ascent

after the initial launch.

R–5123, located at Cibola National

Forest, Magdalena, NM, extends from

the surface to unlimited altitude and

provides a booster drop zone to contain

reentry and impact of missile boosters

after launch from R–5117. R–5123 also

overlies government-controlled land.

R–5119 is designated as a missile

reentry and planned termination area in

the existing R–5107 within the WSMR.

R–5119 extends from FL 350 to

unlimited altitude and is adjacent to the

existing WSMR.

When activated, the restricted areas

may impact visual flight rules (VFR)

and/or instrument flight rules (IFR)

aircraft operations, along the vicinity of

the Gallup (GUP), Socorro (ONM) and

Truth or Consequences (TCS)

navigational aids because of the

necessity to reroute planned flight

routes due to TMD testing. However, the

potential impact is significantly reduced

by the limited number of planned test

events (6 to 10 a year) anticipated, the

short duration of activity (15 minutes

total) and the notification and

coordination procedures in place.

Additionally, the US Army has agreed

to complete test activity prior to 9:00

a.m., local time, when the volume of air

traffic in the area is normally low.

Except for editorial changes, this

amendment is the same as that proposed

in the notice. Section 73.51 of part 73

was republished in FAA Order 7400.8G

dated September 1, 1999.

This regulation is limited to an

established body of technical

regulations for which frequent and

routine amendments are necessary to

keep them operationally current. It,

therefore—(1) is not a ‘‘significant

regulatory action’’ under Executive

Order 12866; (2) is not a ‘‘significant

rule’’ under DOT Regulatory Policies

and Procedures (44 FR 11034; February

26, 1979); and (3) does not warrant

preparation of a regulatory evaluation as

the anticipated impact is so minimal.

Since it has been determined that this

is a routine matter that will only affect

air traffic procedures and air navigation,

it is certified that this rule, when

promulgated, will not have a significant

economic impact on a substantial

number of small entities under the

criteria of the Regulatory Flexibility Act.

/

Environmental Review

The Department of Defense, Ballistic

Missile Defense Organization (BMDO),

issued the Theater Missile Defense

Extended Test Range Final

Environmental Impact Statement (EIS)

in November 1994. Cooperating

agencies for the EIS included the U.S.

Air Force, Navy, US Army, and the

FAA.

Initially, eleven candidate test range

areas were considered for TMD

extended-range testing. Seven of these

alternatives were eliminated from

further study due to inadequate features,

such as lack of required

instrumentation, absence of target

launch land sites, prohibitive cold

weather, unacceptable schedule delays,

and inadequate land area for interceptor

deployment. Four alternatives were

retained for further consideration.

Extended range testing was considered

at WSMR, NM, Eglin Air Force Base, FL,

Western Range, CA, and Kwajalein

Missile Range, Republic of the Marshall

Islands. The Western Range alternative

was rejected because of soil erosion

considerations and the costs of

preparing the impact area for analysis.

The Eglin Air Force Base and Kwajalein

alternatives were rejected because

testing would be limited to ocean

impacts. Additionally, testing at

Kwajalein posed technical difficulties

and additional costs. Thus, the US

Army has determined that extended

range testing at WSMR is the preferred

location as described in this rule

because there are no impacts to

wilderness study areas, recreation areas,

national monuments and nesting and

breading seasons of sensitive species.

The selection of WSMR included two

off-range missile launch alternatives;

Fort Wingate Army Depot, NM, and the

Green River Launch Complex, UT. The

US Army selected the Fort Wingate

Army Depot as the launch site.

The No Action Alternative would

consist of the continuation of ongoing

activities and operations at the four

locations considered. The development

of ground-based TMD missile and

sensor systems would continue, with

missile flight tests and target intercepts

being conducted utilizing existing test

ranges. No construction and operations

for missile launch programs at the

remote launch locations or use of sea

launch capabilities would be conducted

to support these types of ground-based

TMD system tests. Test and training area

restrictions, particularly on shorterrange missile flights conducted at

WSMR, prohibited full validation of

system design and operational

effectiveness in realistic theater

environments. As a result, the no action

alternative was eliminated as a prudent

and feasible alternative because it did

not satisfy the mandatory requirements

identified by the BMDO as necessary to

fulfill its TMD program needs. The

BMDO issued a Record of Decision in

March 1995 that adopted all practicable

means to avoid or minimize harm.

In February 2000, the FAA completed

a written reevaluation of the EIS. The

FAA adopted the EIS as final, pursuant

to 40 CFR 1506.3(c) and (b) 62 FR 43730

and 62 FR 44685. After careful and

thorough consideration of the facts

contained herein and following

consideration of the views of those

Federal agencies having jurisdiction by

law and special expertise with respect

to the environmental impacts described,

the undersigned finds that this Federal

action is consistent with existing

national policies and objectives as set

forth in section 101(a) of the National

Environmental Policy Act of 1959, as

amended.

This final rule constitutes final agency

action under 49 USC 46110. Any person

disclosing a substantial interest in this

order may appeal the order to the

United States Court of Appeals of the

District of Columbia upon petition, filed

within 60 days after the order is issued.

List of Subjects in 14 CFR Part 73

Airspace, Navigation (air).

Adoption of the Amendment

In consideration of the foregoing, the

Federal Aviation Administration

amends 14 CFR part 73 as follows:

PART 73—SPECIAL USE AIRSPACE

1. The authority citation for part 73

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40103, 40113,

40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959–

1963 Comp., p. 389.

§ 73.51 [Amended]

2. § 73.51 is amended as follows:

* * * * *

R–5117 Fort Wingate, NM [New]

Boundaries. Beginning at lat. 35°25′51′′N.,

long. 108°30′09′′ W.; to lat. 35°28′46′′ N.,

long. 108°37′14′′W.; to lat. 35°28′46′′ N., long.

108°37′39′′ W.; to lat. 35°21′27′′ N., long.

108°36′58′′ W.; to the point of beginning.

Designated altitudes. Surface to unlimited.

Time of designation. Intermittent by

NOTAM 24 hours in advance.

Controlling agency. FAA, Albuquerque

ARTCC.

Using agency. Commanding General, White

Sands Missile Range, NM.

Federal Register / Vol. 65, No. 78 / Friday, April 21, 2000 / Rules and Regulations 21309

1 65 FR 6569 (February 10, 2000).

2Commission rules cited herein can be found at

17 CFR Ch. I (1999).

3The prohibition against withdrawal of equity

capital set forth in Regulation 1.17(e) applies to

both FCMs and IBs. The restriction requires

consideration of both the minimum dollar amount

of net capital required for both types of registrants

($250,000 for FCMs and $30,000 for IBs) and, just

for FCMs, the amount of funds required to be

segregated and set aside for FCMs’ customers. For

purposes of this final rulemaking, only the

restriction on FCMs need be addressed since the

amendments relate only to the percentage applied

to the amount of funds required to be segregated

and set aside for customers.

4Before applying the percentage capital factor,

the amount required to be segregated or set aside

is reduced by the market value of commodity

options purchased by customers on or subject to the

rules of a contract market or a foreign board of trade

for which the full premiums have been paid:

provided, however, that the option premium

deduction for each customer is limited to the

amount of customer funds and the foreign futures

and foreign options secured amounts in such

customer’s account(s).

5SEC rules cited herein can be found at 17 CFR

Part 240 (1999).

R–5119 Socorro, NM [New]

Boundaries. Beginning at lat. 33°59′56′′ N.,

long. 106°43′29′′ W.; to lat. 33°59′51′′ N.,

long. 106°56′27′′ W.; to lat. 34°08′16′′ N.,

long. 107°05′17′′ W.; to lat. 34°00′28′′ N.,

long. 107°12′04′′ W.; to lat. 33°46′04′′ N.,

long. 107°02′38′′ W.; to lat. 33°26′49′′ N.,

long. 107°02′25′′ W.; to lat. 33°26′49′′ N.,

long. 107°00′00′′ W.; to lat. 33°32′44′′ N.,

long. 106°58′47′′ W.; to lat. 33°54′10′′ N.,

long. 106°46′24′′ W.; to lat. 33°57′16′′ N.,

long. 106°43′58′′ W.; to the point of

beginning.

Designated altitudes. FL 350 to unlimited.

Time of designation. Intermittent by

NOTAM 24 hours in advance.

Controlling agency. FAA, Albuquerque

ARTCC.

Using agency. Commanding General, White

Sands Missile Range, NM.

R–5121 Ft. Wingate, NM [New]

Boundaries. Beginning at lat. 35°25′51′′ N.,

long. 108°30′09′′ W.; to lat. 35°21′22′′ N.,

long. 108°25′59′′ W.; to lat. 35°19′18′′ N.,

long. 108°28′10′′ W.; to lat. 35°17′48′′ N.,

long. 108°31′41′′ W.; to lat. 35°21′27′′ N.,

long. 108°36′58′′ W.; to the point of

beginning.

Designated altitudes. FL 200 to unlimited.

Time of designation. Intermittent by

NOTAM 24 hours in advance.

Controlling agency. FAA, Albuquerque

ARTCC.

Using agency. Commanding General, White

Sands Missile Range, NM.

R–5123 Magdalena, NM [New]

Boundaries. Beginning at lat. 34°22′30′′ N.,

long. 107°57′00′′ W.; to lat. 34°25′00′′ N.,

long. 107°49′00′′ W.; to lat. 34°24′45′′ N.,

long. 107°37′00′′ W.; to lat. 34°18′00′′ N.,

long. 107°30′00′′ W.; to lat. 34°15′08′′ N.,

long. 107°37′00′′ W.; to lat. 34°19′00′′ N.,

long. 107°40′00′′ W.; to lat. 34°15′08′′ N.,

long. 107°45′20′′ W.; to lat. 34°14′52′′ N.,

long. 107°44′40′′ W.; to lat. 34°13′00′′ N.,

long. 107°48′00′′ W.; to the point of

beginning.

Designated altitudes. Surface to unlimited.

Time of designation. Intermittent by

NOTAM 24 hours in advance.

Controlling agency. FAA, Albuquerque

ARTCC.

Using agency. Commanding General, White

Sands Missile Range, NM.

* * * * *

Issued in Washington, DC, on April 14,

2000.

Reginald C. Matthews,

Manager, Airspace and Rules Division.

[FR Doc. 00–10010 Filed 4–20–00; 8:45 am]

BILLING CODE 4910–13–P

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Part 1

RIN 3038–AB51

Minimum Financial Requirements for

Futures Commission Merchants and

Introducing Brokers

AGENCY: Commodity Futures Trading

Commission.

ACTION: Final rules.

SUMMARY: The Commodity Futures

Trading Commission (‘‘Commission’’) is

amending Regulation 1.17, which

governs the minimum financial

requirements imposed upon futures

commission merchants (‘‘FCMs’’) and

introducing brokers (‘‘IBs’’). The

amendments will ease the restrictions

imposed upon the withdrawal of equity

capital from an FCM. The amendments

also increase the percentage deduction

(i.e., ‘‘haircut’’) applied to the value of

equity securities pledged as collateral

for secured demand notes that are

included in the adjusted net capital of

an FCM or IB and delete a reference to

a section of the Securities and Exchange

Commission’s (‘‘SEC’’) capital rule that

has been repealed.

EFFECTIVE DATE: May 22, 2000.

FOR FURTHER INFORMATION CONTACT:

Henry J. Matecki, Financial Audit and

Review Branch, Commodity Futures

Trading Commission, 300 S. Riverside

Plaza, Room 1600–N, Chicago, IL 60606;

telephone (312) 886–3217; electronic

mail hmatecki@cftc.gov: or Thomas J.

Smith, Special Counsel, Division of

Trading and Markets, Commodity

Futures Trading Commission, Three

Lafayette Centre, 1155 21st Street, NW.,

Washington, DC 20581; telephone (202)

418–5495; electronic mail

tsmith@cftc.gov.

SUPPLEMENTARY INFORMATION

I. Background

On February 10, 2000, the

Commission published in the Federal

Register 1 for public comment proposed

amendments to Regulation 1.17, which

governs the minimum financial

requirements imposed upon FCMs and

IBs (the ‘‘Proposal’’).2 The Proposal was

to: (1) Ease the restrictions imposed

upon the withdrawal of equity capital

from an FCM; (2) increase the

percentage deduction (i.e., ‘‘haircut’’)

applied to the value of equity securities

pledged as collateral for secured

demand notes that are included in the

adjusted net capital of an FCM or IB;

and (3) delete a reference to a section of

the SEC’s capital rules that has been

repealed. The comment period expired

on March 13, 2000. No comments were

received.

After considering the issues, the

Commission has determined to adopt

the amendments as proposed. A

discussion of the final rule amendments

is provided below.

II. Rule Amendments

A. Restriction on the Withdrawal of

Equity Capital From an FCM

Commission Regulation 1.17(e)

prohibits the withdrawal of equity

capital from an FCM 3 to redeem or to

repurchase shares of stock of the FCM,

to pay dividends, or to make an

unsecured advance or loan to a

stockholder, partner, sole proprietor or

employee of the FCM if, after giving

effect to the withdrawal and to certain

other specified withdrawals and

payments, the FCM’s adjusted net

capital would be less than the greatest

of:

(1) $300,000 (120 percent of the

$250,000 minimum adjusted net capital

requirement);

(2) Seven percent of the customer

funds required to be segregated or set

aside pursuant to the Commodity

Exchange Act (‘‘Act’’) and Commission

regulations, 4 (hereinafter collectively

referred to as the ‘‘customer segregated

and secured amount’’);

(3) 120 percent of the amount of

adjusted net capital required by a

registered futures association of which

the FCM is a member; or

(4) For an FCM that is also a securities

broker or dealer registered with the SEC,

the amount of net capital specified in

SEC Rule 15c3–1(e).5