59666 Federal Register / Vol. 75, No. 187 / Tuesday, September 28, 2010 / Proposed Rules 

1See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law 111–203, 124 

Stat. 1376 (2010). The text of the Dodd-Frank Act 

may be accessed at http://www.cftc.gov./ 

LawRegulation/OTCDERIVATIVES/index.htm. 

2Pursuant to § 701 of the Dodd-Frank Act, Title 

VII may be cited as the ‘‘Wall Street Transparency 

and Accountability Act of 2010.’’ 

3 7 U.S.C. 1 et seq. 

Availability of Rulemaking Documents 

You can get an electronic copy of 

rulemaking documents using the 

Internet by— 

1. Searching the Federal eRulemaking 

Portal (http://www.regulations.gov); 

2. Visiting the FAA’s Regulations and 

Policies Web page at http:// 

www.faa.gov/regulations_policies; or 

3. Accessing the Government Printing 

Office’s Web page at http:// 

www.gpoaccess.gov/fr/index.html. 

You can also get a copy by sending a 

request to the Federal Aviation 

Administration, Office of Rulemaking, 

ARM–1, 800 Independence Avenue, 

SW., Washington, DC 20591, or by 

calling (202) 267–9680. Make sure to 

identify the docket number or notice 

number of this rulemaking. 

You may access all documents the 

FAA considered in developing this 

proposed rule, including economic 

analyses and technical reports, from the 

Internet through the Federal 

eRulemaking Portal referenced in 

paragraph (1). 

List of Subjects in 14 CFR Part 187 

Administrative practice and 

procedure, Air transportation. 

The Proposed Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

proposes to amend Chapter I of Title 14, 

Code of Federal Regulations, as follows: 

PART 187—FEES 

1. The authority citation for part 187 

continues to read as follows: 

Authority: 31 U.S.C. 9701, 49 U.S.C. 

106(g), 49 U.S.C. 106(l)((6), 40104–401–5, 

40109, 40113–40114, 44702. 

2. In part 187, Appendix B is 

amended by revising paragraph (e)(2) to 

read as follows: 

Appendix B to Part 187—Fees for FAA 

Services for Certain Flights 

* * * * * 

(e) * * * 

(2) A User (operator of an Overflight) is 

assessed a fee for each 100 nautical miles (or 

portion thereof) flown in each segment and 

type of U.S.-controlled airspace. Separate 

calculations are made for transiting Enroute 

and Oceanic airspace. The total fee charged 

for an Overflight between any entry and exit 

point is equal to the sum of these two 

charges. This relationship is summarized as: 

Rij = X*DEij + Y*DOij,

Where: 

Rij = the fee charged to aircraft flying 

between entry point i and exit point j, 

DEij = total great circle distance traveled in 

each segment of U.S.-controlled Enroute 

airspace expressed in hundreds of 

nautical miles for aircraft flying between 

entry point i and exit point j for each 

segment of Enroute airspace. 

DOij = total great circle distance traveled in 

each segment of U.S.-controlled Oceanic 

airspace expressed in hundreds of 

nautical miles for aircraft flying between 

entry point i and exit point j for each 

segment of Oceanic airspace. 

X and Y = the values respectively set forth 

in the following schedule: 

Time period X (Enroute) Y (Oceanic) 

Through September 30, 2011 ......................................................................................................................... $33.72 $15.94 

October 1, 2011 through September 30, 2012 ............................................................................................... 38.44 17.22 

October 1, 2012 through September 30, 2013 ............................................................................................... 43.82 18.60 

October 1, 2013 through September 30, 2014 ............................................................................................... 49.95 20.09 

October 1, 2014 and beyond ........................................................................................................................... 56.86 21.63 

* * * * * 

Issued in Washington, DC, on September 

22, 2010. 

Carl W. Burrus, 

Director, Office of Financial Controls. 

[FR Doc. 2010–24342 Filed 9–27–10; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 35 

Agricultural Swaps 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Advanced notice of proposed 

rulemaking and request for comment. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is charged with proposing rules 

to implement new statutory provisions 

enacted by Title VII of the Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (‘‘Dodd-Frank Act’’). 

Section 723(c)(3) of the Dodd-Frank Act 

provides that swaps in an ‘‘agricultural 

commodity’’ (as defined by the 

Commission) are prohibited unless 

entered into pursuant to a rule, 

regulation or order of the Commission 

adopted pursuant to section 4(c) of the 

Commodity Exchange Act (‘‘CEA’’ or 

‘‘Act’’). This advance notice of proposed 

rulemaking (‘‘ANPRM’’) requests 

comment on the appropriate conditions, 

restrictions or protections to be 

included in any such rule, regulation or 

order governing the trading of 

agricultural swaps. 

DATES: Comments must be received on 

or before October 28, 2010. The 

Commission is not inclined to grant 

extensions of this comment period. 

ADDRESSES: You may submit comments, 

identified with ‘‘Agricultural Swaps 

ANPRM’’ in the subject line, by any of 

the following methods: 

• E-mail for comments: 

agswapsANPR@cftc.gov. 

• Mail: David A. Stawick, Secretary of 

the Commission, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

mail above. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. All comments 

provided in any electronic form or on 

paper will be published on the CFTC 

Web site, without review and without 

removal of personally identifying 

information. All comments are subject 

to the CFTC privacy policy. 

FOR FURTHER INFORMATION CONTACT: 

Donald Heitman, Senior Special 

Counsel, (202) 418–5041, 

dheitman@cftc.gov, or Ryne Miller, 

Attorney Advisor, (202) 418–5921, 

rmiller@cftc.gov, Division of Market 

Oversight, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

On July 21, 2010, President Obama 

signed the Dodd-Frank Wall Street 

Reform and Consumer Protection Act.1

Title VII of the Dodd-Frank Act 2

amended the CEA3 to establish a 

comprehensive new regulatory 

framework for swaps and security-based 

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4Prior to the Dodd-Frank Act, the Commission 

had defined a ‘‘swap’’ as follows: ‘‘A swap is a 

privately negotiated exchange of one asset or cash 

flow for another asset or cash flow. In a commodity 

swap [including an agricultural swap], at least one 

of the assets or cash flows is related to the price 

of one or more commodities.’’ (See 72 FR 66099, 

note 7 (November 27, 2007)). See new CEA § 1a(47) 

for the statutory definition of a ‘‘swap,’’ as added to 

the CEA by § 721 of the Dodd-Frank Act. 

5Current § 2(g) provides: 

Excluded swap transactions. 

No provision of this chapter (other than section 

5a (to the extent provided in section 5a(g)), 5b, 5d, 

or 12(e)(2)) shall apply to or govern any agreement, 

contract, or transaction in a commodity other than 

an agricultural commodity if the agreement, 

contract, or transaction is— 

(1) Entered into only between persons that are 

eligible contract participants at the time they enter 

into the agreement, contract, or transaction; 

(2) subject to individual negotiation by the 

parties; and 

(3) not executed or traded on a trading facility. 

CEA § 2(g), 7 U.S.C. 2(g). 

6Current CEA § 2(g) was added to the CEA as 

§ 105(b) of the CFMA, enacted as Appendix E to PL 

106–554. 

7 ‘‘The term ‘exempt commodity’ means a 

commodity that is not an excluded commodity or 

an agricultural commodity.’’ Current CEA § 1a(14). 

An ‘‘excluded commodity’’ is defined in current 

CEA § 1a(13) to include financial commodities such 

as interest rates, currencies, economic indexes, and 

other similar items. As noted above, of the three 

operative terms, only ‘‘agricultural commodity’’ is 

not defined. 

8H.R. 5660, the final version of the CFMA, which 

was enacted into law as an appendix to Public Law 

No. 106–554, the Consolidated Appropriations Act, 

2001, was not accompanied by congressional 

committee reports. 

9H.R. 4541, also titled the Commodity Futures 

Modernization Act of 2000, was reported by all 

three committees of jurisdiction (Agriculture, 

Commerce, and Banking and Financial Services) in 

the House of Representatives and was passed by the 

House on October 19, 2000 by a vote of 377 yeas 

to 4 nays. On December 14, 2000, H.R. 5660 was 

introduced and contained major provisions of the 

House-passed version of H.R. 4541. 

10Current CEA § 1a(4) defines the term 

‘‘commodity’’ to include wheat, cotton, rice, corn, 

oats, barley, rye, flaxseed, grain sorghums, mill 

feeds, butter, eggs, Solanum tuberosum (Irish 

potatoes), wool, wool tops, fats and oils (including 

lard, tallow, cottonseed oil, peanut oil, soybean oil, 

and all other fats and oils), cottonseed meal, 

cottonseed, peanuts, soybeans, soybean meal, 

livestock, livestock products, and frozen 

concentrated orange juice, and all other goods and 

articles, except onions as provided in Public Law 

85–839 (7 U.S.C. 13–1), and all services, rights, and 

interests in which contracts for future delivery are 

presently or in the future dealt in.’’ 7 U.S.C. 1a(4). 

The agricultural commodities specifically identified 

in current CEA § 1a(4) are often referred to as the 

‘‘enumerated’’ agricultural commodities. The DoddFrank Act redesignates current CEA § 1a(4) as new 

CEA § 1a(9). 

11H.R. Rep. No. 106–711, Part 1, at 33 (June 29, 

2000). 

12Notably, current CEA § 2(g) is not the only 

statutory provision that excludes or exempts 

bilateral swaps between eligible contract 

participants from the Commission’s jurisdiction. 

Current CEA § 2(d)(1) excludes any such bilateral 

‘‘agreement, contract, or transaction’’ in excluded 

commodities from Commission jurisdiction, while 

CEA § 2(h)(1) creates a similar exemption for a 

‘‘contract, agreement or transaction’’ in exempt 

commodities. The overlap between these two 

provisions and the swap exemption in CEA § 2(g) 

serves to reinforce Congress’ clear intent to not 

exclude agricultural swaps from the Commission’s 

jurisdiction through the CFMA. 

13Exchange-traded futures and options on futures 

are specifically excluded from the Dodd-Frank 

swaps definition. See new CEA § 1a(47)(B), as 

added to the CEA by § 721 of the Dodd-Frank Act. 

14Section 4c(b) provides: 

Regulated option trading 

No person shall offer to enter into, enter into or 

confirm the execution of, any transaction involving 

any commodity regulated under this Act which is 

of the character of, or is commonly known to the 

trade as, an ‘‘option’’, ‘‘privilege’’, ‘‘indemnity’’, 

‘‘bid’’, ‘‘offer’’, ‘‘put’’, ‘‘call’’, ‘‘advance guaranty’’, or 

‘‘decline guaranty’’, contrary to any rule, regulation, 

or order of the Commission prohibiting any such 

transaction or allowing any such transaction under 

such terms and conditions as the Commission shall 

prescribe. Any such order, rule, or regulation may 

be made only after notice and opportunity for 

hearing, and the Commission may set different 

terms and conditions for different markets. CEA 

§ 4c(b); 7 U.S.C. 6c(b). 

swaps. The legislation was enacted to 

reduce risk, increase transparency, and 

promote market integrity within the 

financial system by, among other things: 

(1) Providing for the registration and 

comprehensive regulation of swap 

dealers and major swap participants; (2) 

imposing clearing and trade execution 

requirements on standardized derivative 

products; (3) creating robust 

recordkeeping and real-time reporting 

regimes; and (4) enhancing the 

Commission’s rulemaking and 

enforcement authorities with respect to, 

among others, all registered entities and 

intermediaries subject to the 

Commission’s oversight. 

Section 723(c)(3) of the Dodd-Frank 

Act provides that swaps in an 

‘‘agricultural commodity’’ (as defined by 

the Commission) are prohibited unless 

entered into pursuant to a rule, 

regulation or order of the Commission 

adopted pursuant to § 4(c) of the 

Commodity Exchange Act. This ANPRM 

reviews the current statutory and 

regulatory framework governing 

agricultural swaps, as well as the DoddFrank Act provisions applicable to 

agricultural swaps. The ANPRM then 

requests comment on the appropriate 

conditions, restrictions or protections to 

be included in any Commission rule, 

regulation or order governing the 

trading of agricultural swaps. 

A. Current Statutory Framework for 

OTC Agricultural Swaps, Including 

Options Swaps 

Since 2000, bilateral over-the-counter 

(‘‘OTC’’) swaps 4 between certain 

sophisticated counterparties have been 

generally exempted from the 

Commission’s jurisdiction pursuant to 

current CEA § 2(g),5 which was added to 

the CEA by the Commodity Futures 

Modernization Act of 2000 (‘‘CFMA’’).6

However, current § 2(g) specifically 

excludes an ‘‘agreement, contract, or 

transaction’’ in an ‘‘agricultural 

commodity’’ from the CFMA swaps 

exemption. 

While the term ‘‘agricultural 

commodity’’ is not specifically defined 

in the Act, it is used in the Act in 

conjunction with the definition of the 

term ‘‘exempt commodity,’’ which is 

defined as neither an ‘‘agricultural 

commodity’’ nor an ‘‘excluded 

commodity.’’ 7 There is limited 

legislative history regarding the CFMA 

to explain Congress’ intent in excluding 

‘‘agricultural commodities’’ from the 

§ 2(g) swaps exemption.8 However, the 

legislative history of H.R. 4541, the 

predecessor to the CFMA (H.R. 5660),9

which included the same basic structure 

of excluded and exempt commodities, 

indicates that Congress did not intend 

that the term ‘‘agricultural commodity’’ 

be limited to those commodities 

enumerated in the definition of the term 

‘‘commodity’’ in current CEA § 1a(4).10

The House Committee on Agriculture 

stated the following: 

The Committee notes that the term ‘‘exempt 

commodity’’ means a commodity other than 

an ‘‘excluded commodity’’ or an ‘‘agricultural 

commodity.’’ For purposes of this definition, 

the Committee intends ‘‘agricultural 

commodity’’ to include all agricultural 

commodities, whether or not such 

agricultural commodities are specifically 

enumerated in the definition of ‘‘commodity’’ 

in section 1a[4] of the CEA.11

Notably, the definition of exempt 

commodity did not change from H.R. 

4541 to H.R. 5660, the final version of 

the CFMA as enacted into law. 

The effect of excluding agricultural 

commodities from current CEA § 2(g) 

was that swaps involving exempt and 

excluded commodities were allowed to 

transact largely outside of the 

Commission’s jurisdiction or oversight, 

while swaps involving agricultural 

commodities, including both the 

enumerated agricultural commodities 

and other non-enumerated agricultural 

commodities, remained subject to the 

Commission’s pre-CFMA swaps 

regulations as set forth in 17 CFR part 

35.12

Options 

The Dodd-Frank Act defines the term 

‘‘swap’’ to include not only the various 

types of swaps listed in the definition, 

including commodity swaps and 

agricultural swaps, but also OTC 

options of any kind.13 Commodity 

options are subject to the Commission’s 

plenary authority under CEA § 4c(b).14

Based on § 4c(b)’s general prohibition of 

any option transactions contrary to any 

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59668 Federal Register / Vol. 75, No. 187 / Tuesday, September 28, 2010 / Proposed Rules 

15See 58 FR 5587 (Jan. 22, 1993). Note that 

because Part 35 was implemented pursuant to a 

§ 4(c) exemption, agricultural swaps that rely on 

Part 35 for their legal authority will continue to be 

permitted under the Dodd-Frank language whereby 

existing agricultural swaps provisions adopted 

pursuant to § 4(c), including Part 35, are 

grandfathered. This is discussed more fully at 

section C, below. 

16See id. at 5590–5591; see also 17 C.F.R. 

§ 35.2(a)–(d). 

17Part 35, at § 35.2(d), also provides that ‘‘any 

person may apply to the Commission for exemption 

from any of the provisions of the Act (except 

2(a)(1)(B) [liability of principal for act of agent]) for 

other arrangements or facilities, on such terms and 

conditions as the Commission deems appropriate, 

including but not limited to, the applicability of 

other regulatory regimes.’’ See 17 CFR 35.2(d). The 

Commission has granted three such exemptions, 

which have in each instance been styled as § 4(c) 

exemptive orders. See: 

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

Commodity Exchange Act (a) Permitting Eligible 

Swap Participants To Submit for Clearing and ICE 

Clear U.S., Inc. and Futures Commission Merchants 

To Clear Certain Over-The-Counter Agricultural 

Swaps and (b) Determining Certain Floor Brokers 

and Traders To Be Eligible Swap Participants; and 

(2) Pursuant to Section 4d of the Commodity 

Exchange Act, Permitting Certain Customer 

Positions in the Foregoing Swaps and Associated 

Property To Be Commingled With Other Property 

Held in Segregated Accounts, 73 FR 77015 (Dec. 18, 

2008); 

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

Commodity Exchange Act, Permitting the Chicago 

Mercantile Exchange to Clear Certain Over-theCounter Agricultural Swaps and (2) Pursuant to 

Section 4d of the Commodity Exchange Act, 

Permitting Customer Positions in Such ClearedOnly Contracts and Associated Funds To Be 

Commingled With Other Positions and Funds Held 

in Customer Segregated Accounts, 74 FR 12316 

(March 24, 2009); and 

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

Commodity Exchange Act, Permitting the Kansas 

City Board of Trade Clearing Corporation To Clear 

Over-the-Counter Wheat Calendar Swaps and (2) 

Pursuant to Section 4d of the Commodity Exchange 

Act, Permitting Customer Positions in Such 

Cleared-Only Swaps and Associated Funds To Be 

Commingled With Other Positions and Funds Held 

in Customer Segregated Accounts, 75 FR 34983 

(June 21, 2010). 

18See Commission regulation 32.11, 17 CFR 

32.11. 

19Note that Part 32 was not issued under the 

Commission’s § 4(c) exemptive authority. After the 

effective date of the Dodd-Frank Act, options on 

agricultural commodities will also fall under the 

Dodd-Frank Act’s provisions governing the trading 

of swaps (and, specifically, agricultural swaps) 

since options on commodities fall within the Act’s 

definition of a swap. Accordingly, it is important 

to identify what options on agricultural 

commodities are currently being traded pursuant to 

part 32. 

20 63 FR 18821 (April 16, 1998); and 64 FR 68011 

(December 6, 1999), respectively. 

21 ‘‘Eligible contract participant’’ is defined in 

current CEA § 1a(12). Generally speaking, an 

eligible contract participant is considered to be a 

sophisticated investor. 

22A designated contract market is a board of trade 

designated as a contract market under CEA § 5. 

23See new CEA § 2(e) as added by § 723(a)(2) of 

the Dodd-Frank Act. 

Commission rule, regulation or order 

prohibiting options, or allowing them 

under such conditions as the 

Commission may prescribe, the only 

options currently authorized under the 

CEA are those specifically provided for 

in the Commission’s regulations. 

B. Current Regulatory Framework 

Swaps 

As mentioned previously, Part 35 of 

the Commission’s regulations provides a 

broad-based exemption for certain swap 

agreements. Adopted by the 

Commission under its § 4(c) exemptive 

authority in 1993,15 Part 35 allows for 

swaps to transact OTC if certain 

conditions are met: (1) The swap 

agreements are entered into solely 

between eligible swap participants; (2) 

the swap agreements are not part of a 

fungible class of agreements that are 

standardized as to their material 

economic terms; (3) the 

creditworthiness of any party having an 

actual or potential obligation under the 

swap agreement must be a material 

consideration in entering into or 

determining the terms of the swap 

agreement, including pricing, cost, or 

credit enhancement terms; and (4) the 

swap agreement is not entered into and 

traded on or through a multilateral 

transaction execution facility.16

After the CFMA amendments to the 

CEA, which excluded swaps on 

‘‘exempt’’ and ‘‘excluded’’ commodities 

from virtually all of the Commission’s 

jurisdiction, Part 35 remained relevant 

only for agricultural swaps. With the 

exception of three outstanding § 4(c) 

exemptions related to cleared 

agricultural basis and calendar swaps,17

Part 35 is the sole authority under 

which market participants may transact 

agricultural swaps that are not options. 

Options 

As noted above, the Commission 

maintains plenary authority over 

options pursuant to CEA § 4c(b). It has 

used that authority to, among other 

things, issue Part 32 of the 

Commission’s regulations, which 

includes a general ban on OTC 

options,18 but allows for OTC option 

transactions under certain conditions. 

Part 32 allows OTC options on 

agricultural commodities in two 

instances.19

Rule 32.13 establishes rules for 

trading OTC options on the 

‘‘enumerated’’ agricultural commodities 

(‘‘agricultural trade options’’ or ‘‘ATOs’’) 

whereby ATOs may only be sold by an 

Agricultural Trade Option Merchant 

(‘‘ATOM’’), who must first register with 

the Commission as such pursuant to 

CFTC rule 3.13. Since its 1998 adoption 

and one amendment in 1999,20 the 

ATOM registration scheme has attracted 

only one registrant, which registrant has 

since withdrawn its ATOM registration. 

Accordingly, ATOs currently may only 

be transacted pursuant to an exemptive 

provision found at § 32.13(g)(1). The 

exemption at § 32.13(g)(1) allows ATOs 

to be sold when: (1) The option is 

offered to a commercial (‘‘a producer, 

processor, or commercial user of, or a 

merchant handling’’ the underlying 

commodity); (2) the commercial enters 

the transaction solely for purposes 

related to its business as such; and (3) 

each party to the option contract has a 

net worth of not less than $10 million. 

In either case (whether transacted 

pursuant to the ATOM registration 

scheme or accomplished via the 

exemption at § 32.13(g)), the phrase 

‘‘agricultural trade option’’ refers 

specifically to an OTC option on an 

enumerated agricultural commodity. 

In addition to the § 32.13(g) ATO 

exemption, Part 32 includes, at § 32.4, a 

basic trade option exemption applicable 

to options on commodities other than 

the enumerated agricultural 

commodities. The terms of the § 32.4 

exemption are essentially the same as 

those of the § 32.13(g) exemption with 

one significant difference. Under § 32.4, 

the option must be offered to a 

producer, processor, or commercial user 

of, or a merchant handling, the 

commodity, who enters into the 

commodity option transaction solely for 

purposes related to its business as such. 

However, § 32.4 does not include any 

net worth requirement. 

Because the term ‘‘agricultural 

commodity’’ in the Act refers to more 

than just the enumerated commodities, 

the Commission recognizes that certain 

options authorized under § 32.4 (e.g. 

options on coffee, sugar, cocoa, and 

other agricultural products that do not 

appear in the enumerated commodity 

list) would also fall under the DoddFrank Act’s general prohibition of 

agricultural swaps (see discussion 

below of the Dodd-Frank rules for 

agricultural swaps and their implication 

for the existing agricultural swaps 

markets, including OTC options on 

agricultural commodities). 

C. Dodd-Frank Provisions 

Non-Agricultural Swaps 

Under the CEA, as amended by the 

Dodd-Frank Act, only eligible contract 

participants (‘‘ECPs’’) 21 may enter into a 

swap, unless such swap is entered into 

on a designated contract market 

(‘‘DCM’’),22 in which case any person 

may enter into the swap.23

New CEA § 2(h), as added by 

§ 723(a)(3) of the Dodd-Frank Act, 

establishes a clearing requirement for 

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Federal Register / Vol. 75, No. 187 / Tuesday, September 28, 2010 / Proposed Rules 59669 

24 Generally, a commercial end user is described 

in new CEA § 2(h)(7) as a non-financial entity that 

is using swaps to hedge or mitigate commercial risk 

and that notifies the Commission as to how it 

generally meets its financial obligations associated 

with entering into non-cleared swaps. 

25The requirements for SEFs are set forth in new 

CEA § 5h. 

26 ‘‘Swap dealer’’ is defined in new CEA § 1a(49), 

as added by § 721(a)(21) of the Dodd-Frank Act. 

‘‘Major swap participant’’ is defined in new CEA 

§ 1a(33), as added by § 721(a)(16) of the Dodd-Frank 

Act. 

swaps. Under that subsection, the 

Commission would determine, based on 

factors listed in the statute, whether a 

swap, or a group, category, type, or class 

of swaps, should be required to be 

cleared. A swap entered into by a 

commercial end user 24 is not subject to 

the mandatory clearing requirement; 

however an end user may opt to submit 

the swap for clearing. A swap that is 

required to be cleared must be executed 

on a DCM or a swap execution facility 

(‘‘SEF’’),25 if a DCM or SEF makes the 

swap available for trading. Swaps that 

are not required to be cleared may be 

executed bilaterally OTC. 

Section 731 of the Dodd-Frank Act 

adds a new § 4s to the CEA that 

provides for the registration and 

regulation of swap dealers and major 

swap participants.26 The new 

requirements for swap dealers and 

major swap participants include, in 

part, capital and margin requirements, 

business conduct standards, and 

reporting, recordkeeping, and 

documentation requirements. 

Section 737 of the Dodd-Frank Act 

amends current CEA § 4a regarding 

position limits. Under the Dodd-Frank 

provisions, the Commission must adopt 

position limits for futures, exchangetraded options, and swaps that are 

economically equivalent to futures and 

exchange-traded options within 180 

days of the date of enactment of the 

Dodd-Frank Act for exempt 

commodities and within 270 days of the 

date of enactment of the Dodd-Frank 

Act for agricultural commodities. 

Agricultural Swaps 

Under § 723(c)(3) of the Dodd-Frank 

Act, swaps in an ‘‘agricultural 

commodity’’ (as defined by the 

Commission) are prohibited unless the 

swap is entered into pursuant to an 

exemption granted under CEA § 4(c). 

Generally speaking, § 4(c) provides that, 

in order to grant an exemption, the 

Commission must determine that: 

(1) The exemption would be consistent 

with the public interest and the 

purposes of the CEA; (2) any agreement, 

contract, or transaction affected by the 

exemption would be entered into by 

‘‘appropriate persons’’ as defined in 

§ 4(c); and (3) any agreement, contract, 

or transaction affected by the exemption 

would not have a material adverse effect 

on the ability of the Commission or any 

contract market to discharge its 

regulatory or self-regulatory duties 

under the CEA. 

Section 723(c)(3) includes a 

‘‘grandfather’’ clause that provides that 

any rule, regulation, or order regarding 

agricultural swaps that was issued 

pursuant to § 4(c), and that was in effect 

on the date of enactment of the DoddFrank Act, would continue to be 

permitted. Such rules, regulations or 

orders would include Part 35 with 

respect to agricultural swaps and the 

agricultural basis and calendar swaps 

noted above, but would not include 

options entered into pursuant to Part 32. 

D. Agricultural Commodities Definition 

As noted above, § 723(c)(3) of the 

Dodd-Frank Act applies to any swap in 

an agricultural commodity ‘‘as defined 

by the Commodity Futures Trading 

Commission.’’ The Commission plans to 

publish a proposed definition of the 

term ‘‘agricultural commodity’’ in the 

near future. That proposed definition 

will cover all such commodities that 

are, or could in the future be, traded 

pursuant to a swap or futures contract. 

However, for purposes of commenting 

on this ANPRM, commenters may 

assume that ‘‘agricultural commodity’’ 

includes the following commodities that 

are currently the subject of derivatives 

trading, whether listed for trading on a 

futures exchange or traded bilaterally 

OTC: (1) The enumerated commodities 

that are listed in current § 1a(4) of the 

CEA (e.g., corn, wheat, soybeans, 

livestock, cotton); (2) the international 

‘‘soft commodities’’ (e.g., coffee, sugar, 

cocoa); (3) lumber, plywood and similar 

wood-derived commodities; (4) 

contracts based on underlying 

commodities listed in (1)–(3) (e.g., corn 

and wheat basis swaps and calendar 

swaps); and (5) other commodities 

derived from living organisms, 

including plant, animal or aquatic life, 

that are used for human food, animal 

feed or fiber, and that currently are the 

subject of derivatives trading. To the 

extent that any commenter is aware of 

any agricultural commodity that is not 

currently the subject of derivatives 

trading, but which they anticipate may 

be so traded in the future, and which 

might be affected by potential rules 

governing the trading of agricultural 

swaps, the Commission would welcome 

comments regarding such commodity. 

Part II—Questions for Comment 

Section 723(c)(3) of the Dodd-Frank 

Act and CEA § 4(c) authorize the 

Commission to impose such terms and 

conditions as it deems appropriate in 

order for a person to enter into or 

execute an agricultural swap. The 

Commission is requesting input on the 

following questions: 

Current Agricultural Swaps Business 

1. How big is the current agricultural 

swaps business—including both 

agricultural swaps trading under current 

part 35 and ATOs under §§ 32.4 and 

32.13(g) of the Commission’s 

regulations? 

2. What types of entities are 

participating in the current agricultural 

swaps business? 

3. Are agricultural swaps/ATO 

participants significantly different than 

the types of entities participating in 

other physical commodity swaps/trade 

options? 

Agricultural Swaps Clearing 

4. What percentage of existing 

agricultural swaps trading is cleared vs. 

non-cleared? 

5. What percentage of existing 

agricultural swaps would be eligible for 

the commercial end-user exemption 

from the mandatory clearing 

requirement? 

6. What percentage of trading would 

be subject to the Dodd-Frank clearing 

requirement, if that requirement applied 

automatically to agricultural swaps 

(other than those eligible for the 

commercial end-user exemption)? 

7. What would be the practical and 

economic effect of a rule requiring 

agricultural swaps transactions (other 

than those eligible for the commercial 

end-user exemption) generally to be 

cleared? The Commission is interested 

in the views of agricultural swaps 

market participants (both users and 

swap dealers) regarding a potential 

clearing requirement for agricultural 

swaps. 

8. What would be the practical and 

economic effect of requiring agricultural 

swaps to be cleared under the DoddFrank clearing regime? 

Trading 

9. Have current agricultural swaps/ 

ATO participants experienced any 

significant trading problems, including: 

(a) economic problems (i.e., contracts 

not providing an effective hedging 

mechanism, or otherwise not 

performing as expected); (b) fraud or 

other types of abuse; or (c) difficulty 

gaining access to the agricultural swaps 

market? 

Agricultural Swaps Purchasers 

10. Do agricultural swaps/ATO 

purchasers need more protections than 

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59670 Federal Register / Vol. 75, No. 187 / Tuesday, September 28, 2010 / Proposed Rules 

participants in other physical 

commodity swaps/trade options? 

11. If so, why, and what should those 

protections be? 

12. Would additional protections for 

agricultural swaps purchasers unduly 

restrict their risk management 

opportunities? 

13. Should the Commission consider 

rules to make it easier for agricultural 

producers to participate in agricultural 

swaps—for example, by allowing 

producers who do not qualify as ECPs 

to purchase agricultural swaps? 

Designated Contract Markets 

14. Should agricultural swaps 

transactions be permitted to trade on 

DCMs to the same extent as all other 

swaps are permitted on DCMs? 

15. If yes, why? 

16. If no, what other requirements, 

conditions or limitations should apply? 

Swap Execution Facilities 

17. Should agricultural swaps 

transactions be permitted on SEFs to the 

same extent as all other swaps are 

permitted to transact on SEFs? 

18. If yes, why? 

19. If no, what other requirements, 

conditions or limitations should apply? 

Trading Outside of DCMs and SEFs 

20. Should agricultural swaps be 

permitted to trade outside of a DCM or 

SEF to the same extent as all other 

swaps? 

21. If yes, why? 

22. If no, what other requirements, 

conditions or limitations should apply? 

23. Should agricultural swaps be 

permitted to trade outside of a DCM or 

SEF to a different extent than other 

swaps due to the nature of the products 

and/or participants in the agricultural 

swaps market? 

24. In general, should agricultural 

swaps be treated like all other physical 

commodity swaps under Dodd-Frank? 

25. If yes, why? 

26. If no, are there any additional 

requirements, conditions or limitations 

not already discussed in other answers 

that should apply? 

27. If agricultural swaps are generally 

treated like swaps in other physical 

commodities, are there specific 

agricultural commodities that would 

require special or different protections? 

Issued in Washington, DC, on September 

21, 2010, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. 2010–24198 Filed 9–27–10; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Food and Drug Administration 

21 CFR Part 866 

[Docket No. FDA–2010–N–0429] 

Immunology and Microbiology 

Devices; Reclassification of the Herpes 

Simplex Virus Serological Assay 

Device 

AGENCY: Food and Drug Administration, 

HHS. 

ACTION: Proposed rule. 

SUMMARY: The Food and Drug 

Administration (FDA) is proposing to 

amend the special controls for the 

herpes simplex virus (HSV) serological 

assay device type, which is classified as 

class II (special controls). These device 

types are devices that consist of antigens 

and antisera used in various serological 

tests to identify antibodies to herpes 

simplex virus in serum, and the devices 

that consist of herpes simplex virus 

antisera conjugated with a fluorescent 

dye (immunofluorescent assays) used to 

identify herpes simplex virus directly 

from clinical specimens or tissue 

culture isolates derived from clinical 

specimens. Elsewhere in this issue of 

the Federal Register, FDA is 

announcing the availability of the 

revised draft guidance document 

entitled ‘‘Class II Special Controls 

Guidance Document: Herpes Simplex 

Virus Types 1 and 2 Serological Assays’’ 

that would serve as the special control 

for the device, if FDA amends the 

special controls. Because FDA is 

proposing to amend the special control 

for this device type, the agency is 

publishing the proposed rule that 

designates the revised guidance 

document as the special control for HSV 

serological devices. 

DATES: Submit written or electronic 

comments on the proposed rule by 

November 29, 2010. 

ADDRESSES: You may submit comments, 

identified by Docket No. FDA–2010–N– 

0429, by any of the following methods, 

except that comments on information 

collection issues under the Paperwork 

Reduction Act of 1995 must be 

submitted to the Office of Regulatory 

Affairs, Office of Management and 

Budget (OMB) (see the ‘‘Paperwork 

Reduction Act of 1995’’ section of this 

document). 

Electronic Submissions 

Submit electronic comments in the 

following way: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Written Submissions 

Submit written submissions in the 

following ways: 

• FAX: 301–827–6870. 

• Mail/Hand delivery/Courier [For 

paper, disk, or CD–ROM submissions]: 

Division of Dockets Management (HFA– 

305), Food and Drug Administration, 

5630 Fishers Lane, rm. 1061, Rockville, 

MD 20852. 

To ensure more timely processing of 

comments, FDA is no longer accepting 

comments submitted to the agency by 

email. FDA encourages you to continue 

to submit electronic comments by using 

the Federal eRulemaking Portal, as 

described previously, in the ADDRESSES

portion of this document under 

Electronic Submissions. 

Instructions: All submissions received 

must include the agency name and 

Docket No(s). and Regulatory 

Information Number (RIN) (if a RIN 

number has been assigned) for this 

rulemaking. All comments received may 

be posted without change to http:// 

www.regulations.gov, including any 

personal information provided. For 

additional information on submitting 

comments, see the ‘‘Comments’’ heading 

of the SUPPLEMENTARY INFORMATION

section of this document. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov and insert the 

docket number(s), found in brackets in 

the heading of this document, into the 

‘‘Search’’ box and follow the prompts 

and/or go to the Division of Dockets 

Management, 5630 Fishers Lane, rm. 

1061, Rockville, MD 20852. 

FOR FURTHER INFORMATION CONTACT: Haja 

Sittana El Mubarak, Center for Devices 

and Radiological Health, Bldg. 66, rm. 

5519, Food and Drug Administration, 

10903 New Hampshire Ave., Silver 

Spring, MD 20993–0002, 301–796–6193. 

SUPPLEMENTARY INFORMATION: 

I. Regulatory Authorities 

The act (21 U.S.C. 301 et seq.), as 

amended by the Medical Device 

Amendments of 1976 (the 1976 

amendments) (Public Law 94–295), Safe 

Medical Devices Act (SMDA) (Public 

Law 101–629), Food and Drug 

Administration Modernization Act 

(FDAMA) (Public Law 105–115), and 

the Medical Device User Fee and 

Modernization Act (MDUFMA) (Public 

Law 107–250), established a 

comprehensive system for the regulation 

of medical devices intended for human 

use. Section 513 of the Federal Food, 

Drug, and Cosmetic Act (the FD&C Act) 

(21 U.S.C. 360c) established three 

categories (classes) of devices, defined 

WReier-Aviles on DSKGBLS3C1PROD with PROPOSALS