Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Notices 41641

1Access to Automated Boards of Trade, 64 FR

32829 (June 18, 1999).

2 In February 1996, Commission staff issued noaction relief to Deutsche Termibourse (‘‘DTB’’), an

automated international futures and options

exchange headquartered in Frankfurt, German, that

permitted DTB, subject to certain terms and

conditions, to place computer terminals in the U.S.

offices of its members for principal trading. See

CFTC Interpretative Letter No. 96–28 (1996–1997

Transfer Binder) Comm. Fut. L. Rep. (CCH) ¶ 26,669

(Feb. 20. 1996.) In June 1998, DTB changed its name

to Eurex Deutschland.

3Access to Automated Boards of Trade, 64 FR

32829 (June 18, 1999).

4Commission staff has issued Foreign Trading

System No-Action Letters to Eurex Deutschland; the

Hong Kong Futures Exchange Ltd.; the International

Petroleum Exchange of London Limited; LIFFE

Administration and Management (‘‘LIFFE’’);

Parisbourse SBF SA; the Singapore Exchange Ltd.

(formerly known as the Singapore International

Monetary Exchange); and, collectively, the Sydney

Futures Exchange Limited and the New Zealand

Futures and Options Exchange Limited. The text of

these letters may be accessed through the

Commission’s website, located at www.cftc.gov. See

Letter from I. Michael Greenberger, Director,

Division of Trading and Markets, Commodity

Futures Trading Commission, to Edward J. Rosen,

Esq., Cleary, Gottlieb, Steen & Hamilton (Aug. 10,

1999); Letter from John C. Lawton, Acting Director,

Division of Trading and Markets, Commodity

Futures Trading Commission, to Philip McBride

Johnson, Esq., Skadden, Arps, Slate, Meagher &

Flom LLP (June 9, 2000); Letter from John C.

Lawton, Acting Director, Division of Trading and

Markets, Commodity Futures Trading Commission,

to Arthur W. Han, Esq., Katten Muchin & Zavis

(Nov. 12, 1999); Letter from I. Michael Greenberger,

Director, Division of Trading and Markets,

Commodity Futures Trading Commission, to Arthur

W. Hahn, Esq., Katten Muchin & Zavis (July 23,

1999); Letter from I. Michael Greenberger, Director,

Division of Trading and Markets, Commodity

Futures Trading Commission, to Catherine Langlais,

Senior Vice President, Parisbourse SBF SA (Aug. 10,

1999); Letter from John C. Lawton, Acting Director,

Division Trading and Markets, Commodity Futures

Trading Commission to Jane Kang Thorpe, Esq.,

Brown & Wood LLP (Dec. 17, 1999); Letter from I.

Michael Greenberger, Director, Division of Trading

and Markets, Commodity Futures Trading

Commission, to Philip McBride Johnson, Esq.,

Skadden, Arps, Slate, Meagher & Flom (Aug. 10,

1999).

5Commission staff has granted two separate

requests from LIFFE to list additional futures and

option contracts through LIFFE CONNECTTM, its

automated trading and order matching system. See

Letter from John C. Lawton, Acting Director,

Division of Trading and Markets, Commodity

Futures Trading Commission, to Arthur W. Han,

Esq., Katten Muchin & Zavis (Dec. 10, 1999) and

Letter from John C. Lawton, Acting Director,

Division of Trading and Markets, Commodity

Futures Trading Commission, to Arthur W. Han,

Esq. Katten Muchin & Zavis (Mar. 14, 2000).

6The first Foreign Trading System No-Action

Letter was issued to LIFFE on July 23, 1999. See

Letter from I. Michael Greenberger, Director,

Division of Trading and Markets, Commodity

Futures Trading Commission, to Arthur W. Han,

Esq., Katten Muchin & Zavis (July 23, 1999).

7Rule 5.3 allows a domestic board of trade that

has been designated as a contract market in at least

one non-dormant commodity to list new futures

and option contracts for trading upon satisfaction

of specified filing and certification requirements. A

domestic board of trade is permitted, but not

required, to list new contracts through this filing

and certification procedure in lieu of compliance

with either the regular or fast-track procedure for

contract market designation. Revised Procedures for

Listing New Contracts, 64 FR 66373 (Nov. 26, 1999).

5. It would be helpful for purposes of

determining space needs, but is not

required, if the applicant would also

indicate which Break Out sessions he or

she intends to attend. For convenience,

a registration form has been placed on

the USPTO web-site at www.uspto.gov.

Dated: June 29, 2000.

Q. Todd Dickinson,

Under Secretary of Commerce for Intellectual

Property and Director of the United States

Patent and Trademark Office.

[FR Doc. 00–17030 Filed 7–5–00; 8:45 am]

BILLING CODE 3510–16–P

COMMODITY FUTURES TRADING

COMMISSION

Notice of Statement of Commission

Policy Regarding the Listing of New

Futures and Option Contracts by

Foreign Boards of Trade That Have

Received Staff No-Action Relief To

Place Electronic Trading Devices in the

United States

AGENCY: Commodity Futures Trading

Commission.

ACTION: Statement of policy.

SUMMARY: The Commodity Futures

Trading Commission (‘‘Commission’’)

has issued a Statement of Policy in

which it expresses the view that foreign

boards of trade that have placed

automated trading systems in the U.S.

pursuant to a Commission staff noaction letter shall be permitted to list

certain additional futures and option

contracts without obtaining

supplemental no-action relief, subject to

specified filing and certification

requirements.

EFFECTIVE DATE: This Statement of

Policy is effective immediately.

FOR FURTHER INFORMATION CONTACT:

Jocelyn B. Brone, Attorney-Advisor,

Division of Trading and Markets,

Commodity Futures Trading

Commission, Three Lafayette Center,

1155 21st Street, NW, Washington, DC

20581. Telephone: (202) 418–5450.

SUPPLEMENTARY INFORMATION: On June 2,

1999, the Commodity Futures Trading

Commission (‘‘Commission’’) issued an

order which, among other things,

withdrew proposed rules that would

have governed automated access to

foreign boards of trade (‘‘June 2

Order’’).1 The June 2 Order also

instructed the Commission staff to

‘‘begin immediately processing noaction requests from foreign boards of

trade seeking to place trading terminals

in the United States, and to issue

responses where appropriate, pursuant

to the general guidelines included in the

Eurex (DTB) no-action process, 2 or

other guidelines established by the

Commission. * * * ’’ 3 In accordance

with these instructions, Commission

staff has issued seven no-action letters

that permit foreign boards of trade to

place in the U.S. electronic trading

devices that provide access to those

boards of trade, without obtaining

contract market designation (‘‘Foreign

Trading System No-Action Letters’’). 4

The relief is subject to the terms and

conditions set forth in each no-action

letter and applies exclusively to the

futures and option contracts delineated

therein. Foreign boards of trade that

wish to list additional futures and

option contracts for trading through

their U.S.-located trading systems are

require to request and receive

supplemental no-action relief

(‘‘Supplemental Relief’’) from

Commission staff prior to doing so. To

date, Commission staff has granted two

requests for Supplemental Relief. 5

Almost one year has passed since the

first Foreign Trading System No-Action

Letter was issued. 6 In that time,

Commission staff has not learned of any

significant problems or concerns

regarding the operation of U.S.-located

foreign trading systems nor has

Commission staff learned that foreign

boards of trade are listing impermissible

products through such systems. Also

within the past year, the Commission

has promulgated Rule 5.3 which

generally permits domestic boards of

trade to list new futures and option

contracts for trading without acquiring

Commission approval of such contracts

or their respective terms and

conditions. 7 In light of Commission

staff’s successful experience with the

relief provided by the Foreign Trading

System No-Action Letters and in

consideration of the relief provided to

domestic boards of trade via Rule 5.3,

the Commission believes that it is

appropriate to permit foreign boards of

trade that are operating electronic

trading devices in the U.S. pursuant to

Commission staff no-action relief to be

permitted to list certain new futures and

option contracts for trading through

those devices, without requiring

additional regulatory action.

Accordingly, it has issued the following

Statement of Policy setting forth this

view.

41642 Federal Register / Vol. 65, No. 130 / Thursday, July 6, 2000 / Notices

8Revised Procedures for Listing New Contracts,

64 FR 66373 (Nov. 26, 1999).

9 7 USC 2a (1994). For example, this Statement of

Policy does not alter requirement that a foreign

board of trade seeking to offer in the U.S. a futures

or futures option contract based upon a stock index

receive a no-action letter from the Commission’s

Office of General Counsel.

Issued in Washington, DC on June 30,

2000, by the Commission.

Jean A. Webb,

Secretary of the Commission.

Statement of Policy of the Commodity

Futures Trading Commission Regarding

the Listing of New Futures and Option

Contracts by Foreign Boards of Trade

That Have Received Staff No-Action

Relief to Place Electronic Trading

Devices in the U.S.

In light of newly-adopted Commodity

Futures Trading Commission

(‘‘Commission’’) Rule 5.3 8 and the lack

of difficulties that have arisen regarding

the placement of the automated trading

systems of foreign boards of trade in the

U.S. pursuant to no-action relief issued

by Commission staff, the Commission

believes that foreign boards of trade

generally should be permitted to list

additional futures and option contracts

through such systems, without

obtaining supplemental no-action relief

from Commission staff (‘‘Supplemental

Relief’’). Specifically, the Commission

believes that, subject to the exceptions

and conditions listed below, a foreign

board of trade that has received a noaction letter from Commission staff

permitting it to place electronic trading

devices in the U.S. that provide access

to that board of trade (‘‘Foreign Trading

System No-Action Letter’’) should be

permitted to list new futures and option

contracts for trading through the devices

that are the subject of the particular noaction letter, without requesting or

receiving Supplemental Relief.

In order to list new futures and option

contracts without acquiring

Supplemental Relief, a foreign board of

trade should file the following with the

Commission’s Division of Trading and

Markets at the Commission’s

Washington, D.C. headquarters no later

than the close of Commission business

on the business day preceding the initial

listing of such futures and option

contracts for trading through electronic

trading devices located in the U.S.: (1)

A copy of the initial terms and

conditions of the additional futures and

option contracts the foreign board of

trade intends to list for trading through

its U.S.-located electronic devices and

(2) a certification from the foreign board

of trade that it is in compliance with the

terms and conditions of the Foreign

Trading System No-Action Letter that it

has received and that the additional

futures and option contracts will be

traded in accordance with such terms

and conditions. This Statement of

Policy does not apply to futures and

option contracts that are covered by

section 2(a)(1)(B) of the Commodity

Exchange Act.9 Foreign boards of trade

continue to be required to seek and

receive written supplemental no-action

relief from Commission staff prior to

offering such contracts through U.S.-

located trading systems.

This Statement of Policy applies only

to those foreign boards of trade that

have received a Foreign Trading System

No-Action Letter from Commission staff.

It is intended exclusively to express the

Commission’s view that foreign boards

of trade that have received a Foreign

Trading System No-Action Letter be

permitted to list futures and option

contracts other than those specifically

delineated therein without obtaining

Supplemental Relief. The trading of all

contracts through electronic trading

devices that provide access to foreign

boards of trade from within the U.S.

continue to be subject to the terms and

conditions of the Foreign Trading

System No-Action Letter issued to the

particular foreign board of trade.

Moreover, this Statement of Policy does

not alter the analysis that the

Commission staff uses when

considering requests for Foreign Trading

System No-Action Letters, dictate the

result of that analysis, or alter the

authority of Commission staff to

condition, modify, suspend, terminate,

or otherwise restrict the no-action relief

that it issues.

This Statement of Policy is effective

immediately. This Statement of Policy

and the Foreign Trading System NoAction Letters will cease to be effective

in the event that the Commission adopts

generally applicable rules or guidelines

regarding the issues addressed therein,

and foreign boards of trade would be

subject to those rules or guidelines.

Chairman William J. Rainer, June 29, 2000.

Commissioner Barbara P. Holum, June 29,

2000.

Commissioner David D. Spears, June 29,

2000.

Commissioner James E. Newsome, June 28,

2000.

Commissioner Thomas J. Erickson, June 28,

2000.

Dissent of Commissioner Erickson to

Statement of Commission Policy

Regarding the Listing of New Futures

and Option Contracts by Foreign

Boards of Trade that Have Received

Staff No Action Relief to Place

Electronic Trading Devices in the

United States

I respectfully dissent from the

Commission’s determination to expand,

by today’s policy statement, the noaction relief previously granted to

certain foreign exchanges listing

contracts on terminals located in the

United States. On June 2, 1999, the

Commission issued an order that

provided for the issuance of staff noaction relief for the placement of

terminals in the United States by foreign

boards of trade. Although the June 1999

Order directed staff to ‘‘begin

immediately processing no-action

requests,’’ it also committed the agency

to ‘‘proceed[ing] expeditiously toward

adoption of rules and/or guidelines.’’

Since then, the Commission’s staff has

issued no-action relief to seven foreign

exchanges, yet the Commission has

taken no steps to initiate a public

rulemaking process. Rather, the

Commission today validates staff noaction as the appropriate vehicle for

granting relief.

The no-action process is typically

used to provide limited relief on

discreet matters for individual

petitioners. Today’s relief extends to

numerous exchanges that have not

formally petitioned the Commission’s

staff for the expanded relief. While the

expanded relief ultimately may be

appropriate, the public policy issues

raised by today’s Commission action

warrant notice to the public and an

opportunity for comment. Today’s

policy statement sanctions a closed

process to address matters of broad

public policy. One of the fundamental

obligations of any federal agency is to

ensure that the public and interested

parties have the opportunity to

comment on policy actions of broad

effect. I believe that today’s decision

fails to uphold that basic tenet of

regulation and that the time has come

for the Commission to propose rules

that would foster the public debate and

provide unified guidance through rules,

rather than relief on a case-by-case

basis.

Dated: June 28, 2000.

Thomas J. Erickson

[FR Doc. 00–17040 Filed 7–5–00; 8:45 am]

BILLING CODE 6351–01–M