Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Rules and Regulations 59241 

Examining the AD Docket 

You may examine the AD docket on 

the Internet at http:// 

www.regulations.gov; or in person at the 

Docket Management Facility between 9 

a.m. and 5 p.m., Monday through 

Friday, except Federal holidays. The AD 

docket contains the NPRM (76 FR 

40286, July 8, 2011), the regulatory 

evaluation, any comments received, and 

other information. The street address for 

the Docket Office (telephone (800) 647– 

5527) is in the ADDRESSES section. 

Comments will be available in the AD 

docket shortly after receipt. 

List of Subjects in 14 CFR Part 39 

Air transportation, Aircraft, Aviation 

safety, Incorporation by reference, 

Safety. 

Adoption of the Amendment 

Accordingly, under the authority 

delegated to me by the Administrator, 

the FAA amends 14 CFR part 39 as 

follows: 

PART 39—AIRWORTHINESS 

DIRECTIVES 

■ 1. The authority citation for part 39 

continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40113, 44701. 

§ 39.13 [Amended] 

■ 2. The FAA amends § 39.13 by adding 

the following new AD: 

2011–20–01 Empresa Brasileira de 

Aerona ́utica S.A. (EMBRAER): 

Amendment 39–16810; Docket No. 

FAA–2011–0713; Directorate Identifier 

2011–CE–023–AD. 

Effective Date 

(a) This airworthiness directive (AD) 

becomes effective October 31, 2011. 

Affected ADs 

(b) None. 

Applicability 

(c) This AD applies to Empresa Brasileira 

de Aerona ́utica S.A. (EMBRAER) Model 

EMB–505 airplanes, all serial numbers (SN) 

through 50500023, certificated in any 

category. 

Subject 

(d) Air Transport Association of America 

(ATA) Code 27: Flight Controls. 

Reason 

(e) The mandatory continuing 

airworthiness information (MCAI) states: 

It has been found the possibility of freeplay between the mass balance weight and 

the elevator structure. This condition if not 

corrected could lead to elevator flutter and 

possible loss of airplane control. 

Since this condition may occur in other 

airplanes of the same type and affects flight 

safety, a corrective action is required. Thus, 

sufficient reason exists to request compliance 

with this AD in the indicated time limit. 

The MCAI requires replacement of the bolts 

that attach the balance mass weights to the 

elevator structure. 

Actions and Compliance 

(f) Unless already done, within 12 calendar 

months after October 31, 2011 (the effective 

date of this AD), replace the bolts that attach 

the balance mass weights to the elevator 

structure following EMBRAER S.A. Phenom 

Service Bulletin No.: 505–55–0002, dated 

January 14, 2011. 

FAA AD Differences 

Note: This AD differs from the MCAI and/ 

or service information as follows: The MCAI 

applies to SN 50500004 through 50500023. 

This AD applies to all SN through 50500023. 

Other FAA AD Provisions 

(g) The following provisions also apply to 

this AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, Standards Office, 

FAA, has the authority to approve AMOCs 

for this AD, if requested using the procedures 

found in 14 CFR 39.19. Send information to 

ATTN: Jim Rutherford, Aerospace Engineer, 

FAA, Small Airplane Directorate, 901 Locust, 

Room 301, Kansas City, Missouri 64106; 

telephone: (816) 329–4165; fax: (816) 329– 

4090; e-mail: jim.rutherford@faa.gov. Before 

using any approved AMOC on any airplane 

to which the AMOC applies, notify your 

appropriate principal inspector (PI) in the 

FAA Flight Standards District Office (FSDO), 

or lacking a PI, your local FSDO. 

(2) Airworthy Product: For any requirement 

in this AD to obtain corrective actions from 

a manufacturer or other source, use these 

actions if they are FAA-approved. Corrective 

actions are considered FAA-approved if they 

are approved by the State of Design Authority 

(or their delegated agent). You are required 

to assure the product is airworthy before it 

is returned to service. 

(3) Reporting Requirements: For any 

reporting requirement in this AD, a federal 

agency may not conduct or sponsor, and a 

person is not required to respond to, nor 

shall a person be subject to a penalty for 

failure to comply with a collection of 

information subject to the requirements of 

the Paperwork Reduction Act unless that 

collection of information displays a current 

valid OMB Control Number. The OMB 

Control Number for this information 

collection is 2120–0056. Public reporting for 

this collection of information is estimated to 

be approximately 5 minutes per response, 

including the time for reviewing instructions, 

completing and reviewing the collection of 

information. All responses to this collection 

of information are mandatory. Comments 

concerning the accuracy of this burden and 

suggestions for reducing the burden should 

be directed to the FAA at: 800 Independence 

Ave., SW., Washington, DC 20591, Attn: 

Information Collection Clearance Officer, 

AES–200. 

Related Information 

(h) Refer to MCAI Ageˆncia Nacional De 

Aviac ̧a ̃o Civil—Brazil (ANAC) AD No.: 2011– 

05–05, effective date June 16, 2011; and 

EMBRAER S.A. Phenom Service Bulletin 

No.: 505–55–0002, dated January 14, 2011, 

for related information. For service 

information related to this AD, contact 

EMBRAER S.A., Phenom Maintenance 

Support, Av. Brig. Faria Lima, 2170, Sao Jose 

dos Campos—SP, CEP: 12227–901—PO Box: 

36/2, Brasil; telephone: ++55 12 3927–5383; 

fax: ++55 12 3927–2619; E-mail: 

Phenom.Reliability@Embraer.Com.Br; 

Internet: http://www.embraer.com.br. You 

may review copies of the referenced service 

information at the FAA, Small Airplane 

Directorate, 901 Locust, Kansas City, 

Missouri 64106. For information on the 

availability of this material at the FAA, call 

(816) 329–4148. 

Material Incorporated by Reference 

(i) You must use EMBRAER S.A. Phenom 

Service Bulletin No.: 505–55–0002, dated 

January 14, 2011, to do the actions required 

by this AD, unless the AD specifies 

otherwise. 

(1) The Director of the Federal Register 

approved the incorporation by reference of 

this service information under 5 U.S.C. 

552(a) and 1 CFR part 51. 

(2) For service information identified in 

this AD, contact EMBRAER S.A., Phenom 

Maintenance Support, Av. Brig. Faria Lima, 

2170, Sao Jose dos Campos—SP, CEP: 12227– 

901—PO Box: 36/2, Brasil; telephone: ++55 

12 3927–5383; fax: ++55 12 3927–2619; Email: phenom.reliability@embraer.com.br; 

Internet: http://www.embraer.com.br. 

(3) You may review copies of the 

referenced service information at the FAA, 

Small Airplane Directorate, 901 Locust, 

Kansas City, Missouri 64106. For information 

on the availability of this material at the 

FAA, call (816) 329–4148. 

(4) You may also review copies of the 

service information incorporated by reference 

for this AD at the National Archives and 

Records Administration (NARA). For 

information on the availability of this 

material at NARA, call (202) 741–6030, or go 

to: http://www.archives.gov/federal_register/ 

code_of_federal_regulations/ 

ibr_locations.html. 

Issued in Kansas City, Missouri, on 

September 12, 2011. 

Earl Lawrence, 

Manager, Small Airplane Directorate, Aircraft 

Certification Service. 

[FR Doc. 2011–23768 Filed 9–23–11; 8:45 am] 

BILLING CODE 4910–13–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. 


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59242 Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Rules and Regulations 

1 7 U.S.C. 2(a)(1)(C)(ii). Such a contract also is 

referred to herein as ‘‘non-narrow-based security 

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

index futures contract.’’ 

2See 75 FR 77588, Dec. 13, 2010 (the ‘‘Proposal’’). 

3Comments were submitted by Eurex 

Deutschland (‘‘Eurex’’); BM&FBovespa; INFINIUM 

Capital Management; and three private citizens. 

4The private individuals’ comments related to 

speculation in the futures markets and did not 

address the proposed rule. 

5Eurex’s comment is discussed in section I.D., 

infra. 

6See, 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). 

7The data, information, facts, and statements 

required to be submitted will be the same as that 

specified in current Appendix D to part 30. 

Specifically, 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(s) on which the 

underlying securities are traded and provide 

assurance of its ability and willingness to share 

information with the Commission. The Commission 

requests that the required data relating to the index, 

including the index components and their market 

capitalizations, index weights, and average daily 

trading volumes (by share and by dollar value) over 

a six month period, be submitted in a Microsoft 

Excel file with an extension of .xls or .xlsx, as 

appropriate. In this final rulemaking, Appendix D 

will be revised to retain only the information 

currently set forth in paragraph G of Appendix D. 

8While 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. 

9Additionally, 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, 

Mar. 18, 1996. 

10The 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. 

ACTION: Final rule. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’) is 

adopting a new rule, which establishes 

a Commission certification procedure 

applicable to the offer or sale, to persons 

in the U.S., of a non-narrow-based 

security index futures contract traded 

on a foreign board of trade; the new 

certification procedure will replace the 

existing staff no-action process. 

Additionally, the new rule establishes a 

procedure for a foreign board of trade to 

request and receive a Commission 

certification on an expedited basis. 

Under this expedited procedure, a nonnarrow-based 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 notification by 

the Commission. 

DATES: Effective Date: October 26, 2011. 

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. Introduction 

A. Background 

Currently, a non-narrow-based 

security index futures contract (‘‘foreign 

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 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’’) 

(such letter hereinafter referred to as a 

‘‘Foreign Security Index No-Action 

Letter’’).1 On December 13, 2010, the 

Commission published in the Federal 

Register a proposal to adopt new rule 

30.13, which would establish 

Commission certification procedures for 

confirming that a 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.2 The 

Commission received six comment 

letters in response to the Proposal.3

Three commenters, two foreign boards 

of trade and a proprietary capital 

management firm, expressed strong 

support for proposed rule 30.13.4

Eurex also recommended that the new 

rule provide for a foreign board of trade 

to list a new contract with prior 

notification, in lieu of filing a request 

for certification, in certain limited 

circumstances.5 To address such 

comment, the Commission is providing 

in rule 30.13 that a foreign board of 

trade may make available for offer or 

sale to U.S. customers a new contract in 

reliance upon a previously-issued 

Foreign Security Index No-Action Letter 

or Commission certification where the 

new contract is: (i) Based on an index 

that was the subject of such prior noaction relief or certification issued to 

that board; and (ii) ‘‘substantially 

identical’’ to the contract overlying such 

index. 

B. Proposed Rule 30.13: Commission 

Certification Procedure 

Rule 30.13 sets forth a procedure 

whereby a foreign board of trade may 

apply to the Commission for 

certification that a security index 

futures contract traded on, or subject to, 

that board conforms to the criteria 

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

the Act. The Commission certification 

procedure will be available to futures 

contracts based on a non-narrow-based 

index of foreign or U.S. securities.6

Under this new procedure, the foreign 

board of trade seeking Commission 

certification 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 paragraph 

(a)(2) of rule 30.13.7 In addition, the 

foreign board of trade also must provide 

a written statement that the subject 

contract conforms to section 

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

foreign board of trade must 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).8

The substantive review will remain 

the same under rule 30.13 as it is under 

the current staff no-action process. 

Further, consistent with the existing 

staff no-action review process the 

Commission’s review of the subject 

contract will 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.9

Finally, foreign boards of trade that 

have received Foreign Security Index 

No-Action Letters prior to the effective 

date of rule 30.13 will be grandfathered, 

provided that the board submits a 

written statement representing that it 

remains fully compliant with the 

underlying conditions of the subject 

letter.10 Accordingly, a foreign board of 


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Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Rules and Regulations 59243 

11Since 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 Designated Contract 

Market or registration as a Derivatives Transaction 

Execution Facility (‘‘Foreign Board of Trade NoAction Letters’’). To avail itself of the expedited 

review process, the FBOT must submit a written 

statement representing that it remains fully 

compliant with the terms and conditions of the 

applicable Foreign Board of Trade No-Action Letter. 

12To avail itself of the expedited review process, 

the FBOT must submit a written statement 

representing that it remains fully compliant with 

the terms and condition of the applicable Foreign 

Board of Trade No-Action Letter. 

13 Dodd-Frank Wall Street Reform and Consumer 

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

(2010). 

14 75 FR 70974, Nov. 19, 2010. 

15Requests for staff no-action letters respecting 

foreign security index futures contracts that are 

currently pending or submitted prior to adoption of 

a final rule will 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. 

16Letter from Eurex, to the Commission’s Office 

of the Secretariat (January 18, 2011). 

trade that has received from 

Commission staff such no-action letters 

will be able to rely on such relief, in lieu 

of obtaining new Commission 

certification (for the contract that is the 

subject of that letter). 

C. Expedited Review for Qualifying 

Foreign Boards of Trade 

The new rule establishes a procedure 

for a foreign board of trade to request 

and receive a Commission certification 

on an expedited basis. This expedited 

procedure is an alternative to the regular 

review procedure and will be available 

to a foreign board of trade that has 

received a Foreign Security Index NoAction Letter or Commission 

certification with respect to a nonnarrow-based security index futures 

contract traded on that board. 

Additionally, the expedited review will 

be available to a foreign board of trade 

that has received, and is compliant with 

the requirements of, the applicable staff 

no-action letter 11 permitting a foreign 

board of trade to offer U.S. traders with 

direct access to its trading system.12

As the Commission noted in the 

Proposal, the 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.13 On November 19, 

2010, the Commission proposed rules to 

implement the new statutory 

provision.14 The Commission 

anticipates that at such time as the 

Commission may adopt such 

registration requirements, the expedited 

review procedure would be extended to 

recipients of an FBOT registration 

license. 

Under the 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. 

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 will 

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 rule 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 will 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. 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, will not be 

precluded from filing a new submission, 

provided that such submission 

sufficiently addresses the deficiencies or 

issues identified in the Commission 

notification.15

D. Eurex Comments 

Eurex states that the proposed 

Commission certification procedures 

focus on an index’s compliance with the 

standards for non-narrow security index 

trading. Therefore, Eurex recommends 

that only prior notification be required: 

(i) For any change in contract terms that 

do not relate to the composition of the 

index, such as index multiplier; or (ii) 

to list additional products based on an 

index for which a contract has been 

certified and whose terms differ from 

the original contract by the ‘‘size of the 

multiplier or other non-index related 

features.’’ 16

As a preliminary matter, the 

Commission notes that under the 

current staff no-action process, the staff 

reviews the underlying index, as well as 

the terms and conditions of the 

overlying futures contract, and in 

particular those terms and conditions 

relating to cash settlement. In that 

regard, the staff 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 summary, although the 

staff review of foreign security index 

contracts may be focused primarily on 

the nature of the underlying index, it is 

not exclusively so. As noted above, the 

substantive review will remain the same 

under the new rule 30.13 as it is under 

the current no-action process. 

The Commission also notes that under 

the existing staff no-action process, a 

foreign board of trade is required to 

notify the Commission of any material 

changes in facts or representations 

submitted in connection with the 

original request for relief; non-material 

changes to contract terms do not trigger 

any such notification requirement. 

Generally speaking, the Commission 

considers the following routine and 

non-material changes: (i) Changes in the 

composition, computation, or method of 

selection of component entities of an 

index referenced and defined in the 

contract’s terms; or (ii) changes that do 

not affect the pricing basis of the index, 

which are made by an independent 

third party whose business relates to the 

collection or dissemination of price 

formation and which was not formed 

solely for the purpose of compiling an 

index for use in connection with a 

futures or option product. 

In response to Eurex’s comments and 

to further remove any unnecessary 

impediments to offerings of foreign 


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59244 Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Rules and Regulations 

17For example, a contract that is identical to an 

existing contract except that it has a different 

contract multiplier would generally be able to rely 

on a previously-issued Foreign Security Index NoAction Letter or Commission certification. 

18This authority is delegated to the Director of 

the Division of Market Oversight in consultation 

with the General Counsel. See paragraph (o) of the 

rule. 19See 47 FR 18618, Apr. 30, 1982. 

20See 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). 

security index contracts, the 

Commission is adding paragraph (m) to 

rule 30.13 to provide that a foreign 

security index futures contract may be 

offered or sold to U.S. customers in 

reliance on a previously-issued Foreign 

Board of Trade No-Action Letter or 

Commission certification, provided that 

the contract is: (i) Based on an index 

that was the subject of such prior 

certification or no-action relief; (ii) 

‘‘substantially identical’’ to the contract 

overlying such index. In such case, the 

foreign board of trade may submit the 

contract to the Commission for an 

accelerated review of fifteen business 

days for confirmation that such contract 

is substantially identical to the relevant 

existing contract 17 and thus may be 

offered or sold in the U.S. upon reliance 

of a previously-issued Foreign Security 

Index No-Action Letter or Commission 

certification. In making such 

submission, the foreign board of trade 

must provide an explanation of why the 

subject contract is substantially 

identical to a contract that was the 

subject of a prior Commission 

certification or Foreign Security Index 

No-Action Letter, together with 

information specified in § 30.13(a)(2)(v) 

to (vii). Unless the Commission notifies 

the foreign board of trade within the 

fifteen business days that the contract 

will be reviewed under either the full or 

expedited procedure, such contract may 

be offered or sold in the U.S. at the end 

of that 15 day period.18

II. 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. 

In the proposed rule, the Commission 

determined that there are no apparent 

new 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 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. 

The Commission received no 

comments on the costs associated with 

this rulemaking, and two foreign boards 

of trade commented that the benefits to 

them would be significant. 

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.19 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.’’ 20 A foreign board of 

trade that may seek Commission 

certification pursuant to the proposed 

rule is not likely to meet such criteria. 

In the proposed rule, the Commission 

solicited comments on this matter; no 

comment letter was submitted. 

Accordingly, pursuant to 5 U.S.C. 

605(b), the Chairman, on behalf of the 

Commission, certifies that the final rules 

promulgated herein will not have a 

significant impact on a substantial 

number of small entities. 

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. In the proposing release, the 

Commission stated that the proposed 

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. No comments were 

submitted on this matter. Accordingly, 

the PRA is inapplicable. 

List of Subjects in 17 CFR Part 30 

Advertising, Designated contract 

market, Fast-track, Foreign board of 


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Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Rules and Regulations 59245 

trade, Foreign security index futures, 

No-action letter, Non-narrow foreign 

security index future, Reporting and 

recordkeeping requirements. 

For the reasons set forth in the 

Preamble, the Commission hereby 

amends 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 

the 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 the Act. A submission requesting 

such certification must: 

(1) Be filed electronically with the 

Secretary of the Commission; 

(2) 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 

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 (‘‘Foreign Board of 

Trade No-Action Letter’’), or pursuant to 

any foreign board of trade registration 

order issued by the Commission 

(‘‘Foreign Board of Trade Registration 

Order’’), and a certification from the 

foreign board of trade that it is in 

compliance with the terms and 

conditions of that no-action letter or 

Foreign Board of Trade Registration 

Order; and 

(ix) 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 Board of Trade No-Action 


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59246 Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Rules and Regulations 

Letter or the Foreign Board of Trade 

Registration Order. 

(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 

(‘‘Foreign Security Index No-Action 

Letter’’) or Commission certification 

regarding a non-narrow based security 

index futures contract traded on that 

foreign board of trade and submit a 

written statement representing that the 

board remains fully compliant with the 

terms and conditions of such letter or 

certification; or 

(2) Have received a Foreign Board of 

Trade No-Action Letter or Foreign Board 

of Trade Registration Order and submit 

a written statement representing that the 

board remains fully compliant with the 

terms and conditions of such letter or 

order. 

(g) Deemed to be in conformance. 

Unless notified pursuant to paragraph 

(h), (i), or (j) 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 pursuant to paragraph (e), 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 

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 of Trade No-Action Letter (and 

is compliant with the requirements of 

such letter) or Foreign Board of Trade 

Registration Order and is requesting 

Commission certification of its nonnarrow-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 or pursuant to the 

registration order, 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 

contracts 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) Additional contracts on 

previously-reviewed index: A new nonnarrow-based security index futures 

contract may be offered or sold in the 

U.S. in reliance on a prior Foreign 

Security Index No-Action Letter or 

Commission certification, provided that 

the new contract is based on an index 

that was the subject of such Foreign 

Security Index No-Action Letter or 

Commission certification; and 

substantially identical to the contract 

overlying such index. In this context, 

the foreign board of trade may submit 

the contract to the Commission for an 

accelerated review of fifteen business 

days for confirmation that the subject 

contract is substantially identical to the 

existing contract. Unless the 

Commission notifies the foreign board 

of trade within those fifteen business 

days that the review will be conducted 

pursuant to either the full or expedited 

review procedure, the foreign board of 

trade may make available such contract 

for offer or sale within the U.S. 

(n) 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 foreign board of 

trade submits a written statement 

representing that the contract remains 

fully compliant with the requirements 

of such letter. 

(o) Delegation. The Commission 

hereby delegates, until such time as it 


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Federal Register / Vol. 76, No. 186 / Monday, September 26, 2011 / Rules and Regulations 59247 

1Food Chemicals Codex, 7th Edition, pp. 115 and 

529, Rockville, MD: United States Pharmacopeial 

Convention, 2010. 

orders otherwise, to the Director of 

Market Oversight or his designee, in 

consultation with the General Counsel 

or his designee, the authority reserved 

to the Commission under paragraph (m) 

of this section. The Director of the 

Division of Market Oversight may 

submit to the Commission for its 

consideration any matter which has 

been delegated pursuant to this 

paragraph (o). 

■ 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 § 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 September 

16, 2011 by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. 2011–24609 Filed 9–23–11; 8:45 am] 

BILLING CODE P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

21 CFR Parts 25, 173, 175, 177, 178, 

182, and 184 

[Docket No. FDA–2011–N–0011] 

Environmental Impact Considerations, 

Food Additives, and Generally 

Recognized As Safe Substances; 

Technical Amendments 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Final rule; technical 

amendments. 

SUMMARY: The Food and Drug 

Administration (FDA) is amending 

certain regulations regarding 

environmental impact considerations, 

food additives, and generally recognized 

as safe (GRAS) substances to correct 

minor errors in the Code of Federal 

Regulations (CFR). This action is 

editorial in nature and is intended to 

provide accuracy and clarity to the 

Agency’s regulations. 

DATES: This rule is effective October 3, 

2011. 

FOR FURTHER INFORMATION CONTACT: 

Ellen M. Waldron, Center for Food 

Safety and Applied Nutrition (HFS– 

206), Food and Drug Administration, 

5100 Paint Branch Pkwy., College Park, 

MD 20740–3835, 240–402–1256. 

SUPPLEMENTARY INFORMATION: FDA is 

amending certain regulations in parts 

25, 173, 175, 177, 178, 182, and 184 (21 

CFR parts 25, 173, 175, 177, 178, 182, 

and 184). Minor errors were 

inadvertently published in the CFR 

affecting certain regulations regarding 

environmental impact considerations 

(part 25), food additives (parts 173, 175, 

177, and 178), and GRAS substances 

(parts 182 and 184). This action makes 

the needed corrections. 

The final rule contains no collection 

of information. Therefore, clearance by 

the Office of Management and Budget 

under the Paperwork Reduction Act of 

1995 is not required. 

Publication of this document 

constitutes final action of these changes 

under the Administrative Procedure Act 

(5 U.S.C. 553). These amendments are 

merely correcting nonsubstantive errors. 

FDA therefore, for good cause, finds 

under 5 U.S.C. 553(b)(3)(B) and (d)(3) 

that notice and public comment are 

unnecessary. The changes addressed in 

this document are as follows: 

1. The Agency is correcting 

typographical errors. Two chemical 

names are corrected: 

Polytetrafluoroethylene in § 175.105 and 

dialkyl (C8–C18) dimethylammonium 

chloride in § 177.2600. Two chemical 

formulas are corrected: N,N-B-is(2- 

hydroxyethyl) alkylamine, where the 

alkyl groups (C14–C18) are derived from 

tallow in § 178.3130, and MnCl2 in 

§ 184.1446. 

2. The Agency is also correcting five 

Chemical Abstract Service registry 

numbers (CAS Reg. Nos.) that are 

incorrectly listed: 123–93–5 in 

§ 173.375, 1302–78–9 in § 184.1155, 

7758–99–8 in § 184.1261, 10024–66–5 

in § 184.1449, and 10025–69–1 in 

§ 184.1845. 

3. The Agency is updating citations. 

The two citations in 21 CFR 182.99 are 

updated to 40 CFR 180.910 and 40 CFR 

180.920 due to a recent U.S. 

Environmental Protection Agency 

regulation. A citation in § 25.32 is 

updated. Section 25.32(p) refers to a 

petition pertaining to the label 

declaration of ingredients as described 

in § 101.103 (21 CFR 101.103). However, 

FDA revoked § 101.103 on June 3, 1996 

(61 FR 27771 at 27779) because it 

duplicated the procedures in 21 CFR 

10.30 for citizen petitions. 

4. The Agency is amending tables in 

§§ 175.300 and 177.1210. 

5. Finally, the Agency is updating 

§ 184.1165. Under § 184.1165(a), both nbutane and iso-butane are described as 

odorless. However, the Food Chemicals 

Codex, 7th Edition (2010) 1 does not use 

the word ‘‘odorless’’ to describe the 

gases. Therefore, the Agency is 

amending its description by removing 

the word ‘‘odorless.’’ 

List of Subjects 

21 CFR Part 25 

Environmental impact statements, 

Foreign relations, Reporting and 

recordkeeping requirements. 

21 CFR Part 173 

Food additives. 

21 CFR Part 175 

Adhesives, Food additives, Food 

packaging. 


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