Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Proposed Rules 67301 

1 17 CFR 145.9. 

2See Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Law No. 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. 

3Pursuant to Section 701 of the Dodd-Frank Act, 

Title VII may be cited as the ‘‘Wall Street 

Transparency and Accountability Act of 2010.’’ 

4 7 U.S.C. 1 et seq. (2006). 

registered entity, market participants, and the 

overall market. The narrative should describe 

the substance of the submission with enough 

specificity to characterize all material aspects 

of the filing. 

(b) Other Requirements—A submission 

shall comply with all applicable filing 

requirements for proposed rules, rule 

amendments, or products. The filing of the 

submission cover sheet does not obviate the 

registered entity’s responsibility to comply 

with applicable filing requirements (e.g., 

rules submitted for Commission approval 

under § 40.5 must be accompanied by an 

explanation of the purpose and effect of the 

proposed rule along with a description of any 

substantive opposing views). 

(c) Checking the box marked ‘‘confidential 

treatment requested’’ on the Submission 

Cover Sheet does not obviate the submitter’s 

responsibility to comply with all applicable 

requirements for requesting confidential 

treatment in § 40.8 and, where appropriate, 

§ 145.9 of this chapter, and will not 

substitute for notice or full compliance with 

such requirements. 

Issued in Washington, DC, on October 26, 

2010, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

Note: The following attachment will not 

appear in the Code of Federal Regulations. 

Statement of Chairman Gary Gensler 

Provisions Common to Registered Entities 

October 26, 2010 

I support the proposal to publish for 

comment the proposed rule on the 

Commission’s process for certification and 

approval of rules and new products for 

designated contract markets (DCMs), 

derivatives clearing organizations (DCOs), 

swap execution facilities (SEFs) and swap 

data repositories (SDRs). The Dodd-Frank Act 

establishes enhanced procedures for 

Commission review and certification of new 

rules, rule amendments and products. 

Today’s rule gives important procedural 

guidance to registered entities on how to 

comply with Congress’s mandate for the 

Commission’s review of new rules and 

products. 

[FR Doc. 2010–27533 Filed 11–1–10; 8:45 am] 

BILLING CODE 6351–01–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Chapter I 

RIN Number 3038–AD26 

Antidisruptive Practices Authority 

Contained in the Dodd-Frank Wall 

Street Reform and Consumer 

Protection Act 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Advance notice of proposed 

rulemaking; request for comments. 

SUMMARY: The Dodd-Frank Wall Street 

Reform and Consumer Protection Act 

(the ‘‘Dodd-Frank Act’’) amends section 

4c(a) of the Commodity Exchange Act 

(‘‘CEA’’) in section 747 to expressly 

prohibit certain trading practices 

deemed disruptive of fair and equitable 

trading. The Commodity Futures 

Trading Commission (‘‘Commission’’) is 

issuing this advance notice of proposed 

rulemaking and request for public 

comment to assist the Commission in 

promulgating such rules and regulations 

to meet the requirements of section 747. 

DATES: Comments must be in writing 

and received by January 3, 2011. 

ADDRESSES: You may submit comments, 

identified by RIN number AD26, by any 

of the following methods: 

• Agency Web site, via its Comments 

Online process: Comments may be 

submitted to: http://comments.cftc.gov. 

Follow the instructions for submitting 

comments on the Web site. 

• Mail: David A. Stawick, Secretary of 

the Commission, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

mail above. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. Comments will be 

posted as received to http:// 

www.cftc.gov. You should submit only 

information that you wish to make 

available publicly. If you wish the 

Commission to consider information 

that is exempt from disclosure under the 

Freedom of Information Act, a petition 

for confidential treatment of the exempt 

information may be submitted according 

to the established procedures in CFTC 

Regulation 145.9.1

The Commission reserves the right, 

but shall have no obligation, to review, 

pre-screen, filter, redact, refuse or 

remove any or all of your submission 

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

deem to be inappropriate for 

publication, such as obscene language. 

All submissions that have been redacted 

or removed that contain comments on 

the merits of the rulemaking will be 

retained in the public comment file and 

will be considered as required under the 

Administrative Procedure Act and other 

applicable laws, and may be accessible 

under the Freedom of Information Act. 

FOR FURTHER INFORMATION CONTACT: 

Robert Pease, Counsel to the Director of 

Enforcement, 202–418–5863, 

rpease@cftc.gov, or Mark D. Higgins, 

Counsel to the Director of Enforcement, 

202–418–5864, mhiggins@cftc.gov, 

Division of Enforcement, Commodity 

Futures Trading Commission, Three 

Lafayette Centre, 1151 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 

(‘‘Dodd-Frank Act’’).2 Title VII of the 

Dodd-Frank Act 3 amended the 

Commodity Exchange Act (‘‘CEA’’) 4 to 

establish a comprehensive new 

regulatory framework for swaps and 

security-based 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 realtime 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 747 of the Dodd-Frank Act 

amends section 4c(a) of the CEA to add 

a new section entitled ‘‘Disruptive 

Practices.’’ 

II. Solicitation for Comments About 

Disruptive Practices Pursuant to DoddFrank Act Section 747 

In section 747 of the Dodd-Frank Act, 

Congress amended the CEA to expressly 

prohibit certain trading practices that it 

determined were disruptive of fair and 

equitable trading. Dodd-Frank section 

747 amends section 4c(a) of the CEA to 

make it unlawful for any person to 

engage in any trading, practice, or 

conduct on or subject to the rules of a 

registered entity that— 

(A) violates bids or offers; 

(B) demonstrates intentional or 

reckless disregard for the orderly 

execution of transactions during the 

closing period; or 

(C) is, is of the character of, or is 

commonly known to the trade as, 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
67302 Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Proposed Rules 

5Specifically, in a sufficiently illiquid market, a 

trader might enter an order for a large quantity at 

a price that is so far beyond the best available 

resting quote that the order executes against all 

resting quotes. In doing so, the trader would 

establish a new artificial best bid or offer that does 

not reflect market forces. See In re Henner, 30 

Agric. Dec. 1151, 1155 (1971) (Defendant ‘‘bought 

the board’’—accepted all outstanding offers—and 

then bid for a single contract well in excess of the 

previously prevailing price. He was sanctioned for 

manipulating the price of egg futures; the fact that 

he paid more than necessary for shell egg futures 

was the basis for finding an artificial price). 

‘‘spoofing’’ (bidding or offering with the 

intent to cancel the bid or offer before 

execution). 

Dodd-Frank section 747 also amends 

section 4c(a) by granting the 

Commission authority to promulgate 

such ‘‘rules and regulations as, in the 

judgment of the Commission, are 

reasonably necessary to prohibit the 

trading practices’’ enumerated in section 

747 ‘‘and any other trading practice that 

is disruptive of fair and equitable 

trading.’’ The prohibition on the 

disruptive practices specified in new 

section 4c(a) will become effective 360 

days after the enactment of the DoddFrank Act. 

The Commission invites comment on 

all aspects of Dodd-Frank Act section 

747. In particular, commenters are 

encouraged to address the following 

questions: 

1. Should the Commission provide 

additional guidance as to the nature of the 

conduct that is prohibited by the specifically 

enumerated practices in paragraphs (A–C)? 

2. With respect to the practice enumerated 

in paragraph (A)—violating bids and offers— 

how should the provision be applied in the 

context of electronic trading platforms with 

pre-determined order-matching algorithms 

that preclude a trader from executing an 

order against a quote other than the best one 

available? In particular, should the provision 

apply to ‘‘buying the board’’ in an illiquid 

market? 5

3. How should the Commission distinguish 

between orderly and disorderly trading 

during the closing period as articulated in 

paragraph (B)? What factors should a 

factfinder consider in this inquiry? 

4. How should ‘‘orderly execution’’ be 

defined? How should the closing period be 

defined? Should the definition of closing 

period include: 

a. Daily settlement periods? 

b. Some period prior to contract 

expiration? 

c. Trading periods used to establish indices 

or pricing references? 

5. Should the Commission recognize that a 

trading practice or conduct outside of the 

closing period is actionable so long as it 

‘‘demonstrates intentional or reckless 

disregard for the execution of transactions 

during the closing period?’’ 

6. Should (B) extend to order activity as 

well as consummated transactions? 

7. Should executing brokers have an 

obligation to ensure that customer trades are 

not disruptive trade practices? If so, in what 

circumstances? What pre-trade risk checks 

should executing brokers have in place to 

ensure customers using their automated 

trading systems, execution systems or access 

to their trading platforms do not engage in 

disruptive trade practices? 

8. How should the Commission distinguish 

‘‘spoofing,’’ as articulated in paragraph (C), 

from legitimate trading activity where an 

individual enters an order larger than 

necessary with the intention to cancel part of 

the order to ensure that his or her order is 

filled? 

9. Should the Commission separately 

specify and prohibit the following practices 

as distinct from ‘‘spoofing’’ as articulated in 

paragraph (C)? Or should these practices be 

considered a form of ‘‘spoofing’’ that is 

prohibited by paragraph (C)? 

a. Submitting or cancelling bids or offers to 

overload the quotation system of a registered 

entity, or delay another person’s execution of 

trades; 

b. Submitting or cancelling multiple bids 

or offers to cause a material price movement; 

c. Submitting or cancelling multiple bids 

or offers to create an appearance of market 

depth that is false. 

10. Does partial fill of an order or series of 

orders necessarily exempt that activity from 

being defined as ‘‘spoofing’’? 

11. Are there ways to more clearly 

distinguish the practice of spoofing from the 

submission, modification, and cancelation of 

orders that may occur in the normal course 

of business? 

12. Should the Commission specify an 

additional disruptive trading practice 

concerning the disorderly execution of 

particularly large orders during periods other 

than the closing period? If so, at what size 

should this provision become effective and 

how should the Commission distinguish 

between orderly and disorderly trading? 

13. Should the Commission specify and 

prohibit other additional practices as 

disruptive of fair and equitable trading? 

14. Should the Commission articulate 

specific duties of supervision relating to the 

prohibited trading practices articulated in 

paragraphs (A–C) (as well as any other 

trading practice that the Commission 

determines to be disruptive of fair and 

equitable trading) to supplement the general 

duty to supervise contained in Commission 

Regulation 166.3? To which entities should 

these duties of supervision apply? 

15. Should the Commission consider 

promulgating rules to regulate the use of 

algorithmic or automated trading systems to 

prevent disruptive trading practices? If so, 

what kinds of rules should the Commission 

consider? 

16. Should the Commission consider 

promulgating rules to regulate the design of 

algorithmic or automated trading systems to 

prevent disruptive trading practices? If so, 

what kinds of rules should the Commission 

consider? 

17. Should the Commission consider 

promulgating rules to regulate the 

supervision and monitoring of algorithmic or 

automated trading systems to prevent 

disruptive trading practices? If so, what kinds 

of rules should the Commission consider? 

18. Should the Commission promulgate 

additional rules specifically applicable to the 

use of algorithmic trading methodologies and 

programs that are reasonably necessary to 

prevent algorithmic trading systems from 

disrupting fair and equitable markets? If so, 

what kinds of rules should the Commission 

consider? 

19. Should algorithmic traders be held 

accountable if they disrupt fair and equitable 

trading? If so, how? 

When commenting on the above 

questions, please comment generally 

and specifically, and please include 

empirical data and other information in 

support of such comments, where 

appropriate and available, regarding any 

of the comments provided and please 

also take into account the statutory text 

of Dodd-Frank Act section 747, 

reprinted herein as follows: 

Sec. 747. ANTIDISRUPTIVE PRACTICES 

AUTHORITY 

Section 4c(a) of the Commodity Exchange 

Act (7 U.S.C. 6c(a)) (as amended by section 

746) is amended by adding at the end the 

following: 

‘‘(5) Disruptive practices.—It shall be 

unlawful for any person to engage in any 

trading, practice, or conduct on or subject to 

the rules of a registered entity that— 

‘‘(A) violates bids or offers; 

‘‘(B) demonstrates intentional or reckless 

disregard for the orderly execution of 

transactions during the closing period; or 

‘‘(C) is, is of the character of, or is 

commonly known to the trade as, ‘spoofing’ 

(bidding or offering with the intent to cancel 

the bid or offer before execution). 

‘‘(6) Rulemaking authority.—The 

Commission may make and promulgate such 

rules and regulations as, in the judgment of 

the Commission, are reasonably necessary to 

prohibit the trading practices described in 

paragraph (5) and any other trading practice 

that is disruptive of fair and equitable 

trading. 

‘‘(7) Use of swaps to defraud.—It shall be 

unlawful for any person to enter into a swap 

knowing, or acting in reckless disregard of 

the fact, that its counterparty will use the 

swap as part of a device, scheme, or artifice 

to defraud any third party.’’ 

Dated: October 26, 2010. 

By the Commodity Futures Trading 

Commission. 

David A. Stawick, 

Secretary of the Commission. 

Statement of Chairman Gary Gensler 

Anti-Disruptive Practices Authority 

Contained in Title VII of Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act, October 26, 2010 

I support the proposed Advanced 

Notice of Proposed Rulemaking 

concerning disruptive trading practices. 

Congress expressly prohibited three 

trading practices that it deemed were 

disruptive of fair and equitable trading. 

In addition, Congress granted the 

Commission authority to prohibit other 


jlentini on DSKJ8SOYB1PROD with PROPOSALS
Federal Register / Vol. 75, No. 211 / Tuesday, November 2, 2010 / Proposed Rules 67303 

trading practices that are disruptive of 

fair and equitable trading. Today’s 

advanced notice of proposed 

rulemaking asks 18 questions, the 

answers to which will inform moving 

forward with a proposed rule on this 

issue. Commission staff also will lead a 

roundtable on December 2 on disruptive 

trading practices. I am particularly 

interested in hearing from the public on 

algorithmic trading. In addition to the 

public comments and the December 2 

roundtable, we will benefit from the 

input of the Joint CFTC–SEC Advisory 

Committee on Emerging Regulatory 

Issues. 

[FR Doc. 2010–27547 Filed 11–1–10; 8:45 am] 

BILLING CODE 6351–01–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 81 

[EPA–R09–OAR–2010–0718; FRL–9219–8] 

Determinations of Attainment by the 

Applicable Attainment Date for the 

Hayden, Nogales, Paul Spur/Douglas 

PM10 Nonattainment Areas, Arizona 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: EPA proposes to determine 

that the Hayden, Nogales, and Paul 

Spur/Douglas nonattainment areas in 

Arizona attained the National Ambient 

Air Quality Standard (NAAQS) for 

particulate matter with an aerodynamic 

diameter of less than or equal to a 

nominal ten micrometers (PM10) by the 

applicable attainment date of December 

31, 1994. On the basis of this proposed 

determination, EPA concludes that 

these three ‘‘moderate’’ nonattainment 

areas are not subject to reclassification 

by operation of law to ‘‘serious.’’ Lastly, 

on the basis of a review of more recent 

ambient monitoring data, EPA also is 

proposing to determine that the Hayden, 

Nogales and Paul Spur/Douglas 

nonattainment areas are not currently 

attaining the PM10 standard. 

DATES: Comments must be received on 

or before December 2, 2010. 

ADDRESSES: Submit comments, 

identified by docket number EPA–R09– 

OAR–2010–0718, by one of the 

following methods: 

1. Federal eRulemaking Portal: 

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

on-line instructions. 

2. E-mail: tax.wienke@epa.gov. 

3. Mail or Deliver: Wienke Tax, Air 

Planning Office, EPA Region IX, 75 

Hawthorne Street, San Francisco, CA 

94105–3901. 

Please see the direct final rule which 

is located in the Rules section of this 

Federal Register for detailed 

instructions on how to submit 

comments. 

FOR FURTHER INFORMATION CONTACT: 

Wienke Tax at telephone number: (415) 

947–4192; e-mail address: 

tax.wienke@epa.gov, or the above EPA, 

Region IX address. 

SUPPLEMENTARY INFORMATION: For 

further information, please see the 

direct final action, of the same title, 

which is located in the Rules section of 

this Federal Register. EPA is 

determining that the Hayden, Nogales, 

and Paul Spur/Douglas nonattainment 

area attained the PM10 standard by the 

applicable attainment date (1994), and 

that the three areas are not currently 

attaining the standard, as a direct final 

rule without prior proposal because 

EPA views this as a noncontroversial 

action and anticipates no adverse 

comments. A detailed rationale for the 

determinations is set forth in the 

preamble to the direct final rule. If EPA 

receives no adverse comments, EPA will 

not take further action on this proposed 

rule. 

If EPA receives adverse comments, 

EPA will withdraw the direct final rule 

and it will not take effect. EPA will 

address all public comments in a 

subsequent final rule based on this 

proposed rule. EPA will not institute a 

second comment period on this action. 

Any parties interested in commenting 

on this action should do so at this time. 

Please note that if we receive adverse 

comment on one of the determinations, 

EPA may adopt as final those 

determinations that are not the subject 

of an adverse comment. 

Dated: October 25, 2010. 

Jared Blumenfeld, 

Regional Administrator, EPA Region IX. 

[FR Doc. 2010–27635 Filed 11–1–10; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

42 CFR Part 5 

Negotiated Rulemaking Committee on 

Designation of Medically Underserved 

Populations and Health Professional 

Shortage Areas; Notice of Meeting 

AGENCY: Health Resources and Services 

Administration, HHS. 

ACTION: Negotiated Rulemaking 

Committee meeting. 

SUMMARY: In accordance with section 

10(a)(2) of the Federal Advisory 

Committee Act (Pub. L. 92–463), notice 

is hereby given of the following meeting 

of the Negotiated Rulemaking 

Committee on Designation of Medically 

Underserved Populations and Health 

Professional Shortage Areas. 

DATES: Meetings will be held on 

November 17, 2010, 9:30 a.m. to 6 p.m. 

and November 18, 2010, 8 a.m. to 4:30 

p.m. 

ADDRESSES: Meetings will be held at the 

Legacy Hotel and Meeting Centre, 

Georgetown Room, 1775 Rockville Pike, 

Rockville, Maryland 20852, (301) 881– 

2300. 

FOR FURTHER INFORMATION CONTACT: For 

more information, please contact Nicole 

Patterson, Office of Shortage 

Designation, Bureau of Health 

Professions, Health Resources and 

Services Administration, Room 9A–18, 

Parklawn Building, 5600 Fishers Lane, 

Rockville, Maryland 20857, Telephone 

(301) 443–9027, E-mail: 

npatterson@hrsa.gov or visit http:// 

www.hrsa.gov/advisorycommittees/ 

shortage/. 

SUPPLEMENTARY INFORMATION: 

Status: The meeting will be open to 

the public. 

Purpose: The purpose of the 

Negotiated Rulemaking Committee on 

Designation of Medically Underserved 

Populations and Health Professional 

Shortage Areas is to establish a 

comprehensive methodology and 

criteria for Designation of Medically 

Underserved Populations and Primary 

Care Health Professional Shortage 

Areas, using a Negotiated Rulemaking 

(NR) process. It is hoped that use of the 

NR process will yield a consensus 

among technical experts and 

stakeholders on a new rule, which will 

then be published as an Interim Final 

Rule in accordance with Section 5602 of 

Public Law 111–148, the Patient 

Protection and Affordable Care Act of 

2010. 

Agenda: The meeting will be held on 

Wednesday, November 17 and 

Thursday, November 18. It will include 

a discussion of the various components 

of a possible methodology for 

identifying areas of shortage and 

underservice, based on the 

recommendations of the Committee in 

the previous meeting. The Thursday 

meeting will also include development 

of the agenda for the next meeting, as 

well as an opportunity for public 

comment. 

Requests from the public to make oral 

comments or to provide written 

comments to the Committee should be 

sent to Nicole Patterson at the contact 

address above at least 10 days prior to 

the meeting. The meetings will be open 


jlentini on DSKJ8SOYB1PROD with PROPOSALS