88594 Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Rules and Regulations 

1Commission regulations referred to in this 

release are found at 17 CFR chapter I (2024), and 

are accessible on the Commission’s website at 

https://www.cftc.gov/LawRegulation/

CommodityExchangeAct/index.htm. 

2Section 1a(40) of the CEA defines the term 

registered entity to include DCMs, DCOs, SEFs and 

SDRs. 

3See CEA section 5c(c)(1), §§ 40.2 and 40.6. But 

see, e.g., § 40.4 (requiring that a DCM submit for 

Commission approval any rule that would 

materially change a term or condition of a contract 

for future delivery in an agricultural commodity 

enumerated in CEA Section 1a(9) or of an option 

on such contract or commodity). 

4See CEA section 5c(c)(4), §§ 40.3 and 40.5. 

5See § 40.8. Regulation § 40.8 is not the subject 

of this rulemaking. Regulations 40.11 and 40.12 

(which relate to the Commission’s review of certain 

event contracts and the staying of certification and 

tolling of review period pending jurisdictional 

determination, respectively) are also not the subject 

of this rulemaking. A private citizen suggested 

changes to §§ 40.11 and 40.12. See Ravnitzky at 2– 

3. The Commission cannot consider herein changes 

to §§ 40.11 and 40.12 as §§ 40.11 and 40.12 are not 

the subject of this rulemaking and no changes were 

proposed to §§ 40.11 or 40.12 in the NPRM for 

notice and public comment. 

6See § 40.10. 

7Provisions Common to Registered Entities, 76 

FR 44776 (July 27, 2011) (the ‘‘2011 Final Rule’’). 

In 2021, the Commission made targeted, conforming 

amendments to § 40.1(j)(1)(vii) and (j)(2)(vii) (the 

portion of the definition of ‘‘terms and conditions’’ 

that relates to position limits) to conform this text 

to reflect the position limits amendments adopted 

by the Commission at that time. See Position Limits 

for Derivatives, 86 FR 3236 (January 14, 2021). 

Additionally, in 2015, the Commission removed 

from § 40.8 and appendix D to part 40 all references 

to electronic trading facilities on which significant 

price discovery contracts are traded or executed to 

reflect the fact that the Dodd-Frank Act eliminated 

these facilities from the CEA. See Repeal of the 

Exempt Commercial Market and Exempt Board of 

Trade Exemptions, 80 FR 59575 (October 2, 2015). 

8Provisions Common to Registered Entities, 88 

FR 61432 (September 6, 2023). 

9As discussed below in note 19, the Commission 

is also making two conforming, non-substantive 

changes to update the citations referencing the 

§ 40.1 definition of emergency mentioned in 

appendix B to part 37 and appendix B to part 38. 

10The comment file for responses to the NPRM 

is available at https://comments.cftc.gov/ 

PublicComments/CommentList.aspx?id=7430. 

11Cboe Global Markets, Inc. (‘‘Cboe’’) commented 

on behalf of its two DCMs—Cboe Futures Exchange, 

LLC and Cboe Digital Exchange, LLC. CME Group 

Inc. (‘‘CME Group’’) commented on behalf of its 

four DCMs—Chicago Mercantile Exchange Inc. 

(‘‘CME’’), Board of Trade of the City of Chicago, 

Inc., New York Mercantile Exchange, Inc. and 

Commodity Exchange, Inc. (collectively, the ‘‘CME 

Group Exchanges’’). The Intercontinental Exchange 

Inc. (‘‘ICE’’) commented on behalf of its DCM—ICE 

Futures U.S. LMX Labs, LLC, which does business 

as Coinbase Derivatives (‘‘Coinbase’’) commented as 

a DCM. 

12Cboe commented on behalf of its SEF—Cboe 

SEF, LLC. ICE commented on behalf of its SEF— 

Ice Swap Trade. 

13 ICE commented on behalf of its SDR—Ice Trade 

Vault. 

14Cboe commented on behalf of its DCO—Cboe 

Clear Digital, LLC. CME Group commented on 

behalf of CME in its capacity as a DCO (also known 

as ‘‘CME Clearing’’). Eurex Clearing AG (‘‘Eurex’’) 

commented as a DCO. ICE commented on behalf of 

its four DCOs—ICE Clear Credit, ICE Clear U.S., ICE 

Clear Europe, and ICE NGX. 

15Better Markets. 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 37, 38, and 40 

RIN 3038–AF28 

Provisions Common to Registered 

Entities 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Final rule. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’) is 

adopting amendments to the 

Commission’s regulations under the 

Commodity Exchange Act (‘‘CEA’’ or 

‘‘Act’’) that govern how registered 

entities submit self-certifications, and 

requests for approval, of their rules, rule 

amendments, and new products for 

trading and clearing, as well as the 

Commission’s review and processing of 

such submissions. The amendments are 

intended to clarify, simplify and 

enhance the utility of those regulations 

for registered entities, market 

participants and the Commission. 

DATES: The effective date for this final 

rule is December 9, 2024. 

FOR FURTHER INFORMATION CONTACT: 

Rachel Kaplan, Senior Special Counsel, 

rkaplan@cftc.gov, 202–418–6233, 

Steven Benton, Industry Economist, 

sbenton@cftc.gov, 202–418–5617, and 

Nancy Markowitz, Deputy Director, 

nmarkowitz@cftc.gov, 202–418–5453, 

Division of Market Oversight, and 

Eileen Chotiner, Senior Compliance 

Analyst, echotiner@cftc.gov, 202–418– 

5467, Division of Clearing and Risk, 

Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1151 21st Street NW, Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Background 

II. Amendments 

III. Related Matters 

A. Regulatory Flexibility Act 

B. Paperwork Reduction Act 

C. Cost Benefit Considerations 

D. Antitrust Considerations 

I. Background 

Part 40 of the Commission’s 

regulations 1 implements section 5c(c) of 

the CEA and sets forth provisions that 

are common to registered entities, 

including designated contract markets 

(‘‘DCMs’’), derivatives clearing 

organizations (‘‘DCOs’’), swap execution 

facilities (‘‘SEFs’’) and swap data 

repositories (‘‘SDRs’’).2 Part 40 

establishes requirements and 

procedures for registered entities to 

submit their rules and products to the 

Commission prior to implementing 

rules, listing products for trading, or 

accepting products for clearing. Part 40 

generally provides two means for 

registered entities to submit products, 

rules, and rule amendments (which 

include product amendments) to the 

Commission. Typically, a registered 

entity elects to use the self-certification 

process through which the registered 

entity certifies that the product, rule or 

rule amendment complies with the CEA 

and the Commission regulations.3

Alternatively, a registered entity may 

seek Commission approval of the 

product, rule or rule amendment.4

The part 40 regulations also set forth 

the Commission’s procedures for review 

(including approval or non-approval) of 

product and rule submissions. The part 

40 regulations set forth certain 

information that must be made publicly 

available in connection with an 

application to become designated as a 

DCM, or registered as a SEF, DCO or 

SDR and when registered entities file 

new products, new rules and rule 

amendments.5 Additionally, the 

regulations include special certification 

provisions for certain rules submitted by 

systemically important DCOs 

(‘‘SIDCOs’’).6

With two exceptions, the Commission 

last amended the part 40 regulations in 

2011,7 in connection with implementing 

various amendments made to the CEA 

by the Dodd-Frank Wall Street Reform 

and Consumer Protection Act (‘‘DoddFrank Act’’). In September 2023, based 

on the Commission’s experience 

applying the part 40 regulations over the 

ensuing years, the Commission issued a 

notice of proposed rulemaking (the 

‘‘NPRM’’) in which it proposed 

amendments to the part 40 regulations.8

The Commission proposed the 

amendments to the part 40 regulations 

in the NPRM to clarify, simplify and 

enhance the utility of the part 40 

regulations for registered entities, 

market participants and the 

Commission.9

The comment period for the NPRM 

ended on November 6, 2023.10 In 

response to the NPRM, the Commission 

received nine comment letters that 

expressed a wide range of views on the 

proposed revisions to part 40. The 

letters collectively represented eight 

DCMs; 11 two SEFs; 12 one SDR; 13 seven 

DCOs; 14 one non-profit; 15 two trade 


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16The Futures Industry Association (‘‘FIA’’) and 

the International Swap Derivatives Association 

(‘‘ISDA’’) submitted a joint letter. 

17Mr. Michael Ravnitzky. 

18Andreessen Horowitz (‘‘a16z’’). 

19The Commission also is making two 

conforming changes that are necessitated by this 

change to § 40.1. Specifically, the Commission is 

updating the references to the definition of 

emergency located in the guidance section 

regarding Emergency Authority of appendix B for 

each of parts 37 and 38 such that they reference 

§ 40.1 rather than § 40.1(h). No substance is 

intended to be changed by these amendments. 

20The Office of the Federal Register prefers the 

solely alphabetical approach to definitions sections. 

See Document Drafting Handbook, Office of the 

Federal Register at 2–27 (Revision 1.4, January 7, 

2022). 

21The Commission is not making any substantive 

changes to the definition of ‘‘Business day.’’ 

22See § 40.2(a)(2). 

23This release uses ‘‘dormant contract’’ and 

‘‘dormant product’’ interchangeably. 

24NPRM at 61433. 

25Section 113 of the Commodity Futures 

Modernization Act of 2000 [Appendix E of Pub. L. 

106–554, 114 Stat. 2763] added Section 5c(c) to the 

CEA. 

26Cboe at 2; CME Group at 3. 

associations; 16 one private citizen; 17

and one venture capital firm.18

The Commission is making revisions 

and additions to §§ 40.1 through 40.7, 

40.10 and appendices D and E to part 40 

to clarify, simplify and enhance the 

utility of the part 40 regulations for 

registered entities, market participants 

and the Commission. This release will 

address the comments received on each 

of the relevant regulations and 

appendices below. 

II. Amendments 

A. § 40.1—Definitions 

1. Formatting Change to § 40.1 

Currently, the defined terms in § 40.1 

are arranged in alphabetical order, with 

lettered headers. The Commission is 

adopting the amendments proposed to 

remove the lettered headers from § 40.1 

and to instead arrange the defined terms 

in § 40.1 solely in alphabetical order,19

resulting in the Commission having to 

make fewer conforming changes in the 

future to § 40.1 and other regulations 

when adding or removing defined 

terms.20 The Commission received no 

comments on these proposed changes. 

2. Non-Substantive Amendments to the 

Definition of ‘‘Business Day’’ 

The Commission is adopting the 

proposed non-substantive changes to 

the definition of the term ‘‘business 

day’’ in § 40.1(a). Currently, the 

definition of the term ‘‘business day’’ in 

§ 40.1(a) uses the term ‘‘business hour’’ 

and defines the term ‘‘business hour’’ to 

mean ‘‘any hour between 8:15 a.m. and 

4:45 p.m.’’ With the exception of 

§ 40.1(a), the term ‘‘business hour’’ is 

not used in part 40. To enhance the 

readability of the definition of ‘‘business 

day,’’ the Commission is deleting the 

definition of the term ‘‘business hour’’ 

and all references to the term ‘‘business 

hour’’ that currently appear in the 

definition of ‘‘business day’’ in § 40.1(a). 

As amended, the term ‘‘business day’’ 

means ‘‘the intraday period of time 

starting at 8:15 a.m. and ending at 4:45 

p.m. Eastern Standard Time or Eastern 

Daylight Savings Time, whichever is 

currently in effect in Washington, DC, 

on all days except Saturdays, Sundays, 

and Federal holidays in Washington, 

DC.’’ 21 By way of example, both prior 

to this amendment and as amended, the 

Commission must receive a § 40.2 selfcertification submission before 8:15 a.m. 

on a business day in order for the DCM 

or SEF to be able to list the product 

starting at 8:15 a.m. on the following 

business day.22 The Commission 

received no comments on these 

proposed changes. 

3. Amendments to the Definitions of 

Dormant Entities 

The Commission is amending as 

proposed the definitions of the terms 

‘‘dormant designated contract market,’’ 

‘‘dormant derivatives clearing 

organization,’’ ‘‘dormant swap data 

repository,’’ and ‘‘dormant swap 

execution facility’’ in § 40.1. These 

amendments relate to the calculation of 

the duration of inactivity of a registered 

entity that will result in the registered 

entity being deemed dormant. As noted 

in the NPRM, the definitions in § 40.1(c) 

through (f) were inconsistent and, in 

some cases, unclear as to how the 

applicable time periods were to be 

determined. Specifically, the 

Commission is amending the 

regulations as proposed to consistently 

state the time periods in days—i.e., 365 

calendar days instead of 12 months, and 

1,095 calendar days rather than 36 

months. 

The amendments establish 

consistency of the regulatory text across 

the sections with respect to the 

calculation of the duration of inactivity 

and simplify the calculation of how long 

a registered entity has been inactive 

thereby reducing the potential that 

market participants may interpret the 

regulatory language differently. The 

Commission received no comments on 

these proposed changes. 

4. Removal of the Terms ‘‘Dormant 

Contract or Dormant Product’’ and 

‘‘Dormant Rule,’’ and Related 

Requirements 

Regulation § 40.1(b) defines the term 

‘‘dormant contract or dormant product,’’ 

and § 40.1(g) defines the term ‘‘dormant 

rule.’’ If a contract or product of a DCM 

or SEF is dormant pursuant to 

§§ 40.1(b), 40.2(a) prohibits the DCM or 

SEF from listing the contract or product 

until the DCM or SEF either self certifies 

that the contract or product to be listed 

complies with the CEA and Commission 

regulations pursuant to § 40.2(a) or 

obtains Commission approval of the 

contract or product pursuant to § 40.3. 

Likewise, if a rule of a registered entity 

is dormant pursuant to §§ 40.1(g), 

40.6(a) prohibits the registered entity 

from implementing the rule until the 

registered entity either certifies that the 

rule complies with the CEA and 

Commission regulations in accordance 

with § 40.6(a) or obtains Commission 

approval of the rule pursuant to § 40.5. 

In the NPRM, the Commission 

proposed to remove the terms ‘‘dormant 

contract or dormant product’’ and 

‘‘dormant rule’’ from § 40.1, and the 

requirements relating to dormant 

products and dormant rules from 

§§ 40.2 and 40.6.23 The Commission 

noted in the NPRM that at the time the 

Commission adopted the dormant 

contract definition and the applicable 

requirements, contract markets were 

generally required to obtain 

Commission approval of any new 

products prior to listing the products.24

The Commission also noted that the 

CEA no longer requires approval of each 

contract or product listed by an 

exchange.25 Rather, a DCM or SEF may 

list a product after self-certifying that 

the product to be listed complies with 

the CEA and Commission regulations in 

accordance with § 40.2. Given this 

flexibility, DCMs and SEFs typically use 

the self-certification process in § 40.6(a) 

to delist a contract that does not have 

any open interest before the contract 

could be considered dormant. 

Monitoring the dormancy status of 

products is an inefficient and 

unnecessary use of Commission 

resources. 

The Commission received comments 

from Cboe and CME Group in support 

of the proposal to remove the dormant 

product definition. Cboe and CME 

Group commented that the removal of 

the dormant product definition would 

result in little, if any, market integrity or 

safety concerns as the DCM or SEF 

listing the product has a continuing 

obligation to ensure that the product 

complies with the CEA and applicable 

Commission regulations.26 Cboe and 

CME Group also noted that removing 

the dormant product definition would 

have the benefit of reducing, or 

potentially reducing, compliance costs 


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27 Id. 

28Cboe at 2. 

29See CEA sections 5(d)(1) and 5h(f)(1) and 

§§ 38.100(a) and 37.100(a). 

30See CEA sections 5(d)(1) and 5h(f)(1) and 

§§ 38.100(a) and 37.100(a). 

31See, e.g., §§ 38.4(a)(2), 37.4(d), and 49.8(b). 

Similarly, in adopting changes to § 39.4(a) in 2020, 

the Commission stated that ‘‘[its] issuance of an 

order of registration as a DCO constitutes an 

approval of the applicant’s rules that were 

submitted as part of the application.’’ 85 FR 4852, 

Jan. 27, 2020. 

32See, e.g., §§ 38.4(b), 37.4(d), 40.2, and 40.3. 

33As noted in the NPRM, prior to the enactment 

of the CFMA in 2000, section 5a(a)(12)(A) of the 

CEA required that all changes to contract terms and 

conditions be submitted to the Commission for 

approval ‘‘except those rules relating to the setting 

of levels of margin.’’ The CFMA removed Section 

5a(a)(12)(A) and adopted new Section 5c(c), 

allowing registered entities to amend their rules by 

self-certification. The new provision did not retain 

any reference to the exclusion of margin rules. 

However, Section 8a(7) of the CEA was not 

amended by the CFMA except to replace ‘‘contract 

market’’ with ‘‘registered entity’’, and retained the 

provision that allowed the Commission to alter or 

supplement the rules of a DCO, except for rules 

related to ‘‘the setting of levels of margin,’’ thereby 

creating uncertainty as to whether registered 

entities could adopt or change margin rules without 

certifying those rules to the Commission. Because 

there was no indication that Congress intended to 

alter the status of rules relating to the setting of 

margin levels, the Commission had resolved this 

ambiguity by excluding the setting of margin levels, 

with limited exceptions, from the definition of 

‘‘rule’’ in § 40.1(h), as in effect prior to the July 2011 

amendments to part 40. Section 8a(7)(D) of the CEA, 

as amended by the Dodd-Frank Act, provides that 

the Commission is authorized to alter or 

supplement rules of a DCO, including rules with 

respect to margin requirements, provided that the 

rules: (i) are limited to protecting the financial 

integrity of the [DCO]; (ii) are designed for risk 

management purposes to protect the financial 

integrity of transactions; and (iii) do not set specific 

margin amounts. The Commission eliminated the 

exclusion of the setting of margin levels from the 

definition of ‘‘rule’’ in its 2011 Final Rule. 

34FIA/ISDA at 1. 

35CME Group at 3. 

36 ICE at 2. 

37 ICE at 2. 

for market participants and oversight 

costs for the Commission.27 Cboe further 

commented in support of removing the 

dormant rule definition and noted that 

such removal will not result in any 

reduction in market integrity or safety 

and will reduce compliance costs for 

market participants and oversight costs 

for the Commission.28

While the removal of the term 

‘‘dormant product’’ will enable a 

contract that has not been traded for an 

extended period of time to remain 

listed, the Commission believes any 

new trading of the contract will likely 

not pose concerns regarding market 

integrity or safety because the DCM or 

SEF listing the contract has a continuing 

obligation to ensure that the contract 

complies with the CEA and 

Commission’s regulations thereunder.29

The removal of the term ‘‘dormant rule’’ 

will enable a registered entity to 

implement a rule more than one year 

after the rule is certified by the 

registered entity as complying with the 

CEA and Commission regulations in 

accordance with § 40.6, or approved by 

the Commission in accordance with 

§ 40.5. The Commission believes the 

implementation of a rule more than one 

year after it was certified or approved 

likely will not pose concerns regarding 

market integrity or safety because the 

registered entity implementing the rule 

has a continuing obligation to ensure 

that the rule complies with the CEA and 

the Commission’s regulations 

thereunder.30 The Commission believes 

that monitoring the dormancy status of 

rules is an inefficient and unnecessary 

use of Commission resources. 

The Commission considered all 

comments received and believes that 

deleting the definitions would result in 

little, if any, reduction in market 

integrity or safety while potentially 

reducing compliance costs for market 

participants and oversight costs for the 

Commission. Accordingly, the 

Commission is removing the definitions 

of ‘‘dormant contract or dormant 

product’’ and ‘‘dormant rule,’’ and all 

references to ‘‘dormant contract or 

dormant product’’ and ‘‘dormant rule’’ 

in the regulations. The Commission will 

retain its definitions of dormant 

registered entities, and the rules of a 

dormant DCM, dormant SEF, dormant 

DCO, or dormant SDR would still need 

to be approved in connection with the 

entity being reinstated as a DCM, SEF, 

DCO or SDR, respectively.31 Also, all 

products of a registered entity that 

becomes dormant (including products 

previously listed for trading or offered 

for clearing) would still need to be 

approved or self-certified in order to be 

listed for trading by the reinstated DCM 

or SEF or offered for clearing by the 

reinstated DCO.32

5. Amendment to the Definitions of 

‘‘rule’’ and ‘‘Terms and Conditions’’ 

In the NPRM, the Commission 

proposed to add ‘‘margin methodology’’ 

to the definition of ‘‘rule’’ in § 40.1. 

Prior to 2011, the definition of rule in 

§ 40.1 included a restriction on 

Commission review of rules relating to 

margin levels, based on section 8a(7) of 

the CEA.33 After section 736 of the 

Dodd-Frank Act amended section 8a(7) 

of the CEA to remove the restriction on 

Commission review of rules relating to 

margin levels, the Commission removed 

the restriction from the definition of 

‘‘rule.’’ Although DCOs have been 

submitting margin-related rule changes 

to the Commission since 2011, in order 

to address any perceived ambiguity 

regarding whether DCOs are required to 

do so, the Commission proposed to 

revise the definition of ‘‘rule’’ to include 

an explicit reference to margin 

methodology. 

ISDA and FIA supported the 

inclusion of ‘‘margin methodology’’ in 

the definition of ‘‘rule,’’ and noted the 

change would provide further clarity to 

DCOs with respect to submission of 

proposed changes relating specifically 

to margin methodology.34 CME Group 

also supported the addition, noting that 

its margin methodologies are filed as 

rules and it would be prudent to apply 

this practice uniformly across all 

DCOs.35 ICE opposed the addition. ICE 

argued a margin methodology is not the 

same as a margin-related rule and the 

reference to ‘‘margin methodology’’ 

could broaden the scope of the 

definition of ‘‘rule’’ and place additional 

reporting burdens on DCOs to submit 

documents that are not ‘‘rules.’’ 36 ICE 

stated that the Commission has not 

established a proper basis for requiring 

such documents to be filed.37

The Commission is adopting as 

proposed the amendment to add 

‘‘margin methodology’’ to the definition 

of ‘‘rule.’’ The addition of ‘‘margin 

methodology’’ is not an expansion of the 

definition of ‘‘rule,’’ but a clarification 

that a margin methodology, which 

establishes a DCO’s policies and 

procedures for the setting of margin 

levels, is a ‘‘stated policy’’ of the DCO, 

and a ‘‘stated policy’’ is already 

included in the definition of ‘‘rule.’’ The 

fact that DCOs have been submitting 

such margin-related rules, including 

margin methodologies, since 2011 

demonstrates that the interpretation of 

the definition to include margin 

methodology was understood by 

registered DCOs generally. 

The Commission proposed to amend 

the definition ‘‘terms and conditions’’ 

by removing the following two items 

from the scope of the definition such 

that the items to be removed will no 

longer be treated as terms and 

conditions, and adding the items to the 

categories of rules that may be 

implemented without certification 

pursuant to the notification processes in 

§ 40.6(d). With respect to a contract for 

the purchase or sale of a commodity for 

future delivery or an option on such a 

contract or an option on a commodity 

(other than a swap), the Commission 

proposed to remove ‘‘payment or 

collection of commodity option 

premiums or margins’’ from 

§ 40.1(j)(1)(xi)). With respect to a swap, 

the Commission proposed to remove 


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38CME Group at 3. 

39 Id. 

40The Commission notes that these rules and rule 

amendments do not include details regarding the 

models used to calculate the premiums or margins. 

41 ICE requested an alternative process to enable 

them to submit a single filing that would cover 

multiple new contracts. See ICE at 3. The reason 

that each contract must be submitted through a 

separate filing is not a regulatory requirement, but 

rather a technical limitation and is thus not 

addressed herein. The Commission acknowledges 

that a private citizen suggested: (i) that more 

information be provided regarding the portal to 

ensure registered entities and market participants 

know how to use the portal; (ii) the Commission 

provide templates for registered entities and market 

participants to use as models for their part 40 

submissions; and (iii) the Commission ensure the 

portal is user-friendly, reliable and secure. 

Ravnitzky at 1. The Commission clarifies that only 

registered entities (and not market participants) 

submit filings pursuant to Part 40 through the portal 

and that no changes are being made to the portal 

through this rulemaking. If registered entities have 

questions about using the portal, Commission staff 

remain available to answer their questions. The 

content required to be included in a submission is 

addressed in the relevant section of Part 40. 

42See 86 FR 3236, 3307 (January 14, 2021) 

Position Limits for Derivatives (adding the 

definition of ‘‘referenced contract’’ to § 150.1 and 

incorporating the term referenced contract into 

§§ 40.1(j)(1)(vii) and (j)(2)(vii). See also Appendix C 

to Part 150-Guidance Regarding the Definition of 

Referenced Contract. Generally, the term 

‘‘referenced contract’’ as used for purposes of 

Federal position limits in part 150 and as defined 

in § 150.1 means either a futures contract or an 

option on a futures contract whose settlement price 

is determined by reference, directly or indirectly, to 

the price of one of 25 physically-settled core 

referenced futures contracts enumerated in § 150.2, 

or a swap that qualifies as an ‘‘economically 

equivalent swap’’ (as such term is defined in 

§ 150.1) to any of the 25 physically-settled core 

referenced futures contracts enumerated in § 150.2. 

43See §§ 40.1(j)(1)(vii) and (j)(2)(vii), 40.2 and 

40.3. 

44CME Group at 3. 

45CME Group at 3. 

46Regulation § 40.2(a)(3)(ii) requires the selfcertification to include ‘‘a copy of the product’s 

rules including all rules related to its terms and 

conditions.’’ Regulation § 40.3(a)(3) says 

substantively the same thing, but using different 

words (requiring the voluntary submission for 

Continued 

‘‘payment or collection of option 

premiums or margins’’ from 

§ 40.1(j)(2)(xi)). 

CME Group supported the proposed 

amendment to § 40.1(j)(1)(xi) and the 

corresponding change to § 40.6(d)(2).38

CME Group commented that this pair of 

changes will lower the burden on 

registered entities while still providing 

sufficient notice to the Commission.39

The Commission received no comments 

objecting to the proposed deletions from 

§ 40.1 or to the corresponding additions 

to § 40.6(d)(2). 

The Commission is adopting these 

changes as proposed. The Commission 

continues to believe that registered 

entities should be able to submit rules 

or rule amendments governing the 

payment or collection of these 

premiums or margins through weekly 

notices to the Commission pursuant to 

§ 40.6(d)(2) as this will lower the burden 

for registered entities and still provide 

sufficient notice to the Commission 

given the fact that these rules and rule 

amendments are general in substance.40

B. § 40.2—Listing Products for Trading 

by Certification 

1. Amendments to the Cover Sheet 

Requirement and the Filing Format and 

Manner Requirements in §§ 40.2(a)(3)(i), 

40.3(a)(2), 40.5(a)(2) and 40.6(a)(7)(i), 

and Appendix D 

The NPRM proposed to remove the 

requirement to submit a cover sheet 

when filing a product submission or a 

rule submission (along with related 

references) from §§ 40.2(a)(3)(i), 

40.3(a)(2), 40.5(a)(2) and 40.6(a)(7)(i), 

and appendix D to part 40. Given the 

development and evolution of the 

Commission’s online portal for the filing 

of rule and product submissions (and 

the fact that the cover sheet information 

required by Appendix D is now entered 

by registered entities via the portal and 

processed and stored in the 

Commission’s online systems), the cover 

sheet itself is now unnecessary. The 

Commission received no comments on 

these proposed changes.41

Accordingly, the Commission is 

revising §§ 40.2(a)(3)(i), 40.3(a)(2), 

40.5(a)(2) and 40.6(a)(7)(i), and 

appendix D, each as proposed, to 

remove the cover sheet requirement and 

related references. As revised, appendix 

D will continue to specify the 

information that must be entered by a 

registered entity as part of the filing 

process, and the Commission will 

continue to use such information as part 

of its processing and review of 

submissions. 

Additionally, the Commission 

proposed to amend appendix D to 

require a SEF or DCM when submitting 

a new product to indicate whether the 

product to be listed is a ‘‘referenced 

contract’’ as such term is defined in 

§ 150.1 and as is described in appendix 

C to part 150. By way of background, the 

Commission’s amendments to part 150 

of the Commission’s regulations 

(position limits) that became effective 

on March 15, 2021 introduced the term 

‘‘referenced contract’’ and incorporated 

the term ‘‘referenced contract’’ into the 

definition of ‘‘terms and conditions’’ in 

part 40.42 As a result, before listing a 

new contract for trading, a DCM or SEF 

must determine whether a new contract 

to be listed is a referenced contract 

pursuant to part 150.43 To facilitate 

market participants’ compliance with 

position limits, Commission staff 

maintain an accessible workbook of all 

referenced contracts that are currently 

listed on DCMs and SEFs. The proposed 

amendment would better enable 

Commission staff to consider whether 

new contracts to be listed should be 

added to the workbook in a timely, 

efficient manner and to review such 

submissions. 

CME Group stated it supports this 

proposed amendment, noting that CME 

Group Exchanges identify products as 

referenced contracts when submitting 

new products, and it would be prudent 

for this to be a uniform practice across 

all DCMs and SEFs.44 The Commission 

believes that the identification of new 

products as referenced contracts as part 

of the filing process will enable the 

Commission to more efficiently process 

and review submissions of new 

contracts that are referenced contracts. 

The Commission is adopting the 

amendment as proposed to require a 

SEF or DCM when submitting a new 

product to indicate whether the product 

to be listed is a ‘‘referenced contract.’’ 

Finally, as a related matter, the 

Commission is amending as proposed 

§§ 40.2(a)(1), 40.3(a)(1), 40.5(a)(1) and 

40.6(a)(1) to remove the reference to the 

‘‘Secretary of’’ the Commission. The 

Commission also proposed to delegate 

the Commission’s authority to specify 

the format and manner of filing under 

these regulations to the Directors of the 

Division of Clearing and Risk and the 

Division of Market Oversight by adding 

proposed § 40.7(e). CME Group 

supported this delegation, noting that 

their DCMs, DCO and SEF collectively 

submit hundreds of filings each 

calendar year and that they are 

confident that the division heads will 

endeavor to make the filing formats as 

uniform as possible.45 No other 

comments were received on the 

proposed changes described in this 

paragraph. The Commission is 

delegating the authority to specify the 

format and manner of filing under 

§§ 40.2(a)(1), 40.3(a)(1), 40.5(a)(1) and 

40.6(a)(1) to the Directors of the 

Division of Clearing and Risk and the 

Division of Market Oversight by 

adopting § 40.7(e) as proposed. 

2. Amendments to § 40.2(a)(3)(ii) 

As noted in the NPRM, both 

§ 40.2(a)(3)(ii) and § 40.3(a)(3) describe a 

requirement to submit as part of a selfcertification or a voluntary submission 

for Commission approval, respectively, 

the rules that set forth a contract’s terms 

and conditions. The two provisions use 

similar, but slightly different, 

language.46 Given that the two 


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Commission approval of a product to include ‘‘a 

copy of the rules that set forth the contract’s terms 

and conditions’’). 

47When reviewing a DCM’s product selfcertification submitted pursuant to § 40.2, 

Commission staff typically look to understand how 

the product complies with §§ 38.200 and 38.201 in 

connection with DCM Core Principle 3; §§ 38.250 

through 38.258 in connection with DCM Core 

Principle 4; § 38.300 and 301, §§ 150.2 and 150.5 in 

connection with DCM Core Principle 5; §§ 38.400 

and 38.401 in connection with DCM Core Principle 

7; and §§ 38.450 and 451 in connection with DCM 

Core Principle 8. Generally, a DCM will address the 

majority of these core principle obligations and 

Commission regulations (such as the DCM’s rules 

that establish surveillance, compliance and 

enforcement practices and procedures that apply to 

the trading and activity on all of the DCM’s 

products as required by §§ 38.250 and 38.251) by 

concisely referencing rules that the DCM already 

has implemented that will apply to the trading of 

the new product. For core principle obligations and 

Commission regulations that require compliance 

that is tailored to reflect the product’s 

characteristics and its underlying commodity, 

Commission staff typically look at how a product 

complies with §§ 38.200 and 38.201 in connection 

with DCM Core Principle 3; § 38.252 (for physicaldelivery contracts) or § 38.253 (for cash-settled 

contracts) in connection with DCM Core Principle 

4; and §§ 38.300, 38.301, 150.2 and 150.5 (position 

limits and accountability) in connection with DCM 

Core Principle 5. To the extent a product’s 

characteristics require additional tailored 

compliance (e.g., protections of markets and market 

participants from abusive practices in compliance 

with DCM Core Principle 12 and §§ 38.650 and 

38.651, and adopting price limits or trading halts 

to limit periods of extreme price volatility in the 

contract in compliance with DCM Core Principle 4 

and § 38.255), Commission staff will look to 

understand how the product will comply in light 

of the product’s unique characteristics. When 

reviewing a SEF’s product self-certification 

submitted pursuant to 40.2, Commission staff 

typically look to understand how the product 

complies with §§ 37.300 and 37.301 in connection 

with SEF Core Principle 3; §§ 37.400 through 

37.408 in connection with SEF Core Principle 4; 

§§ 37.600, 37.601, 150.2 and 150.5 in connection 

with SEF Core Principle 6; and §§ 37.900 and 

37.901 in connection with SEF Core Principle 9. 

Generally, a SEF will address the majority of these 

core principle obligations and Commission 

regulations (such as the SEF’s rules that establish 

surveillance, compliance and enforcement practices 

and procedures that apply to the trading and 

activity on all of the SEF’s products as required by 

§§ 37.400 and 37.401) by concisely referencing rules 

that the SEF already has implemented that will 

apply to the trading of the new product. For core 

principle obligations and Commission regulations 

that require compliance that is tailored to reflect the 

product’s characteristics and its underlying 

commodity, Commission staff typically look at how 

a product complies with § 38.300 and 38.301 in 

connection with SEF Core Principle 3, 37.402 (for 

physical-delivery swaps) or 37.403 (for cash-settled 

swaps) in connection to SEF Core Principle 4, 

§§ 37.600 and 37.601, 150.2 and 150.5 (position 

limits and accountability) in connection with SEF 

Core Principle 6. To the extent a product’s 

characteristics require additional tailored 

compliance (e.g., adopting price limits or trading 

halts to limit periods of extreme price volatility in 

the contract in compliance with SEF Core Principle 

4 and § 37.405), Commission staff will look to 

understand how the product will comply in light 

of the product’s unique characteristics. 

48As noted in § 40.2(a)(2)(vi), the DCM or SEF 

may redact information that it seeks to keep 

confidential from the documents published on its 

website, but must be republished consistent with 

any determination made pursuant to § 40.8(c)(4). 

See also DCM Core Principle 4 and § 38.401 that 

require a DCM, among other things, to have 

procedures, arrangements and resources for 

disclosing to the Commission, market participants, 

and the public dissemination of information 

pertaining to new product listings, new rules, rule 

amendments or other changes to previouslydisclosed information on the DCM’s website. 

49FIA/ISDA at 1. 

50 Id. 

51Better Markets at 4. 

provisions use slightly different words, 

but are both intended to require that the 

DCM or SEF include a copy of the rules 

that set forth the contract’s terms and 

conditions when submitting a selfcertification or a voluntary submission 

for Commission approval, respectively, 

the Commission is amending the text of 

§ 40.2(a)(3)(ii) as proposed to mirror the 

text used in § 40.3(a)(3). With this 

amendment, both provisions will use 

the same language for consistency and 

will avoid any potential misreading that 

the prior differences in language 

between the two provisions were 

intended to signify a difference in 

substance. The Commission received no 

comments on these proposed changes. 

3. Amendments to § 40.2(a)(3)(v) 

Section 5c(c)(1) of the Act and 

§ 40.2(a)(2)(iv) require a DCM or SEF 

that elects to list a new contract or other 

instrument for trading through the selfcertification process to provide to the 

Commission a written certification that 

the new contract or instrument complies 

with the Act and the Commission’s 

regulations thereunder prior to listing 

the product for trading. Regulation 

§ 40.2(a)(3)(v) requires the DCM or SEF 

to submit a concise explanation and 

analysis of the product and its 

compliance with applicable provisions 

of the Act, including core principles, 

and the Commission’s regulations 

thereunder.47 Regulation § 40.2(a)(3)(v) 

further requires that the concise 

explanation and analysis must (1) be 

accompanied by supporting 

documentation, or (2) incorporate the 

information contained in such 

documentation, with appropriate 

citations to data sources. Additionally, 

§ 40.2(a)(2)(vi) requires the DCM or SEF 

to certify that it posted on its website a 

notice of the pending product 

certification and a copy of the product 

submission.48

As noted in the NPRM and as further 

discussed below, staff has observed a 

trend of new product certifications that 

do not include sufficient information on 

the underlying commodity, particularly 

for contracts on new commodities (e.g., 

rare earth metals). To ensure that a DCM 

or SEF’s certification submission 

includes certain basic explanation and 

analysis concerning the product and its 

compliance with the Act and 

Commissions regulations thereunder, 

including the applicable core principles, 

the Commission proposed the following 

changes to § 40.2(a)(3)(v). 

Specifically, the Commission 

proposed to amend the text to include 

references to the ‘‘terms and conditions’’ 

of the product and to ‘‘the underlying 

commodity’’ to reiterate the 

Commission’s intent that § 40.2(a)(3)(v) 

requires an explanation and analysis of 

the product’s underlying commodity, as 

well as both the product’s terms and 

conditions, and the product’s 

compliance with the applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder. The 

Commission also proposed to add the 

words ‘‘that is complete with respect to’’ 

the product’s terms and conditions, the 

underlying commodity, and the 

product’s compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder to ensure that, 

although the explanation be concise, it 

nevertheless has to analyze and explain 

the underlying commodity and how and 

why the contract’s terms and conditions 

comply with the applicable core 

principles. This is not intended to 

expand or otherwise alter the scope of 

the explanation or analysis required in 

the current regulation. 

Some commenters supported the 

proposed amendments to § 40.2(a)(3)(v), 

and some commenters objected. 

Specifically, ISDA and FIA supported 

the proposed amendments, stating that 

they welcome the additional 

requirements for registered entities to 

provide ‘‘complete’’ information 

regarding a new product’s terms and 

conditions under § 40.2.49 ISDA and FIA 

noted they have observed the emergence 

of new asset classes over the last decade 

such as cryptocurrency products 

supporting the evolution of digital 

assets or environmental and carbon 

products to support the green transition, 

and that it is critical that CFTC staff 

have access to all relevant information 

in its review of new product 

submissions.50

Better Markets also commented in 

support of the proposed amendments, 

calling them (including the requirement 

to include additional details about the 

product’s underlying commodity) a 

much-needed enhancement.51 Better 

Markets stated the amendments 

‘‘acknowledge a recurring issue faced by 

Commission staff—the absence of 

sufficient information in product 


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52Better Markets at 2. 

53Better Markets at 2–4. 

54Better Markets at 4. 

55A16z at 6. 

56Cboe suggested the Commission can achieve 

the same outcome of requiring pertinent 

information to be included in product certification 

filings by using the word ‘‘of’’ instead of the phrase 

‘‘that is complete with respect to.’’ Cboe stated it 

believes that the inclusion of the word ‘‘complete’’ 

can lead to the possibility that this standard will be 

applied in a prescriptive, inconsistent, and 

unreasonable manner (which would in turn 

undermine the utility of the product certification 

process for registered entities, market participants, 

and the Commission; delay the ability to implement 

products and rule enhancements that benefit the 

market; and inhibit innovation and competition). 

Cboe further stated the concept of completeness is 

inherently ambiguous and could be applied in a 

rigid, onerous, arbitrary, and/or subjective manner. 

57Coinbase at 6. 

58Coinbase at 6. 

59Coinbase at 6. 

60Coinbase at 6. 

61Coinbase at 11. 

62Coinbase at 8. 

63Coinbase at 7. 

64Coinbase at 5. 

65Coinbase at 6. Coinbase also stated that ‘‘[a]s 

required by statute, the Commission should 

continue to rely upon a DCM’s judgment as to the 

level of information and analysis to include in a 

product certification to explain and analyze 

concisely the new product, including an 

explanation of the terms and conditions of the 

contract or the spot market for the underlying 

commodity where the DCM considers appropriate.’’ 

For a discussion of the difference between what 

must be submitted under §§ 40.2(a)(3)(v) and 

40.3(a)(4), see the discussion below in section 

II.C.1. 

66Coinbase at 6. 

67See CEA section 5(d)(1)(B). 

submissions to fulfill the Commission’s 

regulatory obligations.’’ 52 Better 

Markets characterized the amendments 

as requiring registered entities to 

provide ‘‘a comprehensive explanation 

of a new product’s terms and 

conditions’’ . . . that is ‘‘exhaustive in 

nature, covering the product’s terms and 

conditions and, critically, its adherence 

to the applicable provisions of the CEA, 

including the core principles and the 

Commission’s regulations.’’ 53 Better 

Markets further stated that by 

‘‘mandating comprehensive information 

about new products, including their 

underlying commodities, these 

amendments bolster market integrity, 

protect the interests of market 

participants, and ensure that the 

Commission can effectively and 

thoroughly evaluate compliance.’’ 54

A16z requested that the Commission 

provide guidance on how market 

participants can simultaneously satisfy 

the requirements to be ‘‘complete’’ 

while also being ‘‘concise’’.55 Cboe 

stated that the word ‘‘complete’’ should 

not be included in the product 

certification provisions, and, if it is 

included, Cboe requests, at a minimum, 

that the Commission clarify that the 

standard of completeness will be 

applied in a sensible and reasonable 

manner.56 Cboe stated that product 

certifications should focus on key 

points, as reflected by the inclusion of 

the word ‘‘concise’’ in the current and 

proposed regulatory language which 

describes the explanation and analysis 

that is required to be included. Cboe 

stated that it is important that the 

application of the product certification 

provisions focuses on requiring a 

concise description of what is relevant 

with respect to the applicable product 

in determining what information should 

be included instead of completeness for 

the sake of completeness which can lead 

to the inclusion of unneeded and 

irrelevant information. 

Coinbase opposed the proposed 

amendments to § 40.2(a)(3) and stated 

they ‘‘believe the proposed 

completeness standard ‘‘lacks clarity 

and would significantly alter the 

existing process for certification under 

Regulation § 40.2.’’ 57 Coinbase stated 

that the proposed revision is 

‘‘unnecessarily burdensome in what it 

would require a DCM to provide to 

evidence compliance with the CEA and 

Commission regulations’’ and is thus 

‘‘contrary to the policies embedded in 

CEA section 5c(c) that, prior to 

certification, the burden of evaluating a 

contract for compliance is with the DCM 

(not the Commission).’’ 58 Coinbase 

stated that CEA section 5c mandates 

that the Commission rely upon a DCM’s 

‘‘judgment as to the level of information 

and analysis to include in a product 

certification to explain and analyze 

concisely the new product, including an 

explanation of the terms and conditions 

of the contract or the spot market for the 

underlying commodity where they DCM 

considers appropriate.’’ 59 Coinbase 

further stated that the standard could 

‘‘significantly expand a DCM’s 

regulatory costs for preparing certified 

product filings’’ 60 and could ‘‘cause 

other adverse consequences including, 

but not limited to, unnecessarily 

limiting and delaying the availability of 

a process for listing of derivatives 

contracts quickly after expending the 

time, effort and diligence to develop the 

product in the highly competitive global 

derivatives market.’’ 61 Coinbase further 

noted that the proposed amendment 

‘‘would leave little daylight between 

what a DCM would submit in a certified 

filing compared to a new product filed 

voluntarily for CFTC review and 

approval under CFTC Regulation 

§ 40.3.’’ 62

Coinbase stated that the NPRM 

provides ‘‘only modest justification’’ 

and ‘‘does not cite any concerns that 

DCMs are abusing the certification 

procedure by certifying non-compliant 

products.’’ 63 Coinbase further noted 

that the changes are not in response to 

any statutory amendments, and that 

staff have not articulated any significant 

market failure or rationale that 

necessitates changes beyond those 

incorporated as a result of the 2011 

amendments to part 40.64 Coinbase 

noted it generally accepts the 

Commission’s position that it is 

appropriate to impose some standard on 

a registered entity to explain in the 

filing the basis for its compliance with 

the CEA and CFTC regulations, but 

Coinbase believes the Commission 

should not move away from the 

standards adopted in 2011.65

The Commission has considered the 

comments received in response to the 

proposed amendments to § 40.2(a)(3)(v). 

In response to the comment that the 

statute mandates that the Commission 

rely upon a DCM’s ‘‘judgment as to the 

level of information and analysis to 

include in a product certification to 

explain and analyze concisely the new 

product,’’ 66 the Commission notes that 

while a DCM has reasonable discretion 

in establishing the manner in which the 

DCM complies with § 40.2(a)(3)(v),67 the 

DCM is nonetheless required to provide 

the information, explanation and 

analysis required by § 40.2(a)(3)(v) when 

self-certifying a product pursuant to 

§ 40.2. For those DCMs and SEFs that 

submit written certifications that satisfy 

the current standards when filing § 40.2 

submissions, the changes being made to 

§ 40.2(a)(3)(v) should not expand their 

regulatory costs for preparing certified 

product filings. 

Relatedly, and in response to the 

request for additional justification for 

the amendments to § 40.2(a)(3)(v), the 

Commission is expanding upon the 

statement in the NPRM that staff have 

observed a trend of new product 

certifications that do not include 

sufficient information on the underlying 

commodity, particularly for contracts on 

new commodities (e.g., rare earth 

metals). The Commission has 

experienced numerous instances of 

registered entities certifying that their 

product complies with the Act and 

applicable regulations and submitting 

only cursory supporting analyses, 

evidence or documentation, which is 

not consistent with the current 


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68Coinbase’s letter quoted a statement made by 

Commission staff in 2018 in Advisory 18–14 that 

‘‘the existing self-certification process has worked 

well. Typically, exchanges reach out to Commission 

staff in advance of launching a new contract . . . 

[a] lengthy engagement is not unusual for products 

that may implicate complex issues.’’ Coinbase at 7. 

The Commission notes that while the Commission 

continues to believe it is helpful for both the 

registered entity and the Commission when 

exchanges reach out prior to self-certifying new 

products under § 40.2, it is not required by law and 

it does not always happen. Additionally, even when 

registered entities elect to engage informally with 

staff prior to submitting § 40.2 filings, separate and 

apart from such engagement, the § 40.2 filings must 

stand independently, provide the Commission with 

a concise explanation and analysis with respect to 

the product’s terms and conditions, the underlying 

commodity, and the product’s compliance with 

applicable provisions of the Act, including core 

principles, and the Commission’s regulations 

thereunder, and explain to the Commission and the 

public how and why the new contract is in 

compliance. See also DCM Core Principle 4 and 

§ 38.401 that require, among other things, that a 

DCM have procedures, arrangements and resources 

for disclosing to the Commission, market 

participants, and the public information pertaining 

to new product listings, new rules, rule 

amendments or other changes to previouslydisclosed information on the DCM’s website. 

69The Commission has experienced this 

challenge before. In 2011, when the Commission 

adopted the ‘‘concise explanation and analysis’’ 

requirement that applies today, the Commission 

provided the following insight into why it adopted 

this requirement then—stating that the Commission 

has encountered numerous instances in which 

registered entities provided only cursory supporting 

analyses for their product submissions or, in certain 

cases, failed to document the evidentiary basis for 

their certifications altogether. The Commission also 

has experienced undue delays in receiving certain 

requested information, suggesting that supporting 

analyses had not been prepared by the registered 

entities as of the time of request. Without prompt 

receipt of supporting information, the staff must 

expend significant resources and time to replicate 

existing analyses or to otherwise independently 

establish a product’s compliance with applicable 

law. In addition, the staff frequently has found it 

necessary to contact registered entities for 

additional guidance on product submissions. To 

address these problems, final § 40.2(a)(3)(v) 

facilitates the staff’s review of new products 

subsequent to certification while discouraging 

unsupported certification of products in the first 

instance. 2011 Final Rule at 44780. 

70See § 40.3(a) and (b). As noted below in section 

II.C.1, when a DCM, SEF or DCO is requesting that 

the Commission review the product for Commission 

approval pursuant to § 40.3, the Commission needs 

more information for § 40.3 submissions than for 

§ 40.2 submissions—hence the inclusion of the 

word ‘‘concise’’ in § 40.2 and the omission of the 

word ‘‘concise’’ in § 40.3. Specifically, pursuant to 

§ 40.3, the Commission needs to receive complete 

information regarding the product’s terms and 

conditions, the commodity underlying the product, 

and the product’s compliance with applicable 

provisions of the Act (including core principles) 

and the Commission’s regulations to understand 

and assess whether the terms and conditions of the 

product comply with the Act (including core 

principles) and the Commission’s regulations. 

71By contrast, for § 40.2 self-certification 

submissions, the DCM or SEF needs to submit 

concise information regarding the product and the 

commodity underlying the product that explains 

the terms and conditions of the product (as defined 

in § 40.1) and how the DCM or SEF views the terms 

and conditions of the product as compliant with the 

Act and the Commission’s regulations. 

72See CEA sections 5 and 5h, and parts 37 and 

38 of the Commission’s regulations. See also note 

47. 

73See id. When a DCM or SEF deems it necessary 

to adopt price limit or trading halt provisions for 

its new product to limit the impact of periods of 

extreme price volatility in the contract, Commission 

staff typically look for an explanation of the price 

limit or trading halt provisions to understand how 

the DCM will comply with § 38.255 in connection 

with DCM Core Principle 4, or how the SEF will 

comply with § 37.405 in connection with SEF Core 

Principle 4. 

74This means that a DCM should have completed 

research on the underlying commodity (including 

delivery points if physically delivered commodity 

and underlying cash price series if cash settled) and 

how the contract complies with the core principles. 

All this should be completed as part of developing 

the contract prior to listing. See note 47. 

75Regulation § 40.2(a)(3)(iv). 

76Regulation § 40.2(a)(3)(v). The DCM or SEF 

must also either include the documentation the 

DCM or SEF relied upon to establish its basis for 

compliance with applicable law, or incorporate the 

information contained in such documentation, with 

appropriate citations to data sources. See 

§ 40.2(a)(3)(v). 

77See 2011 Final Rule at 44780. When adopting 

the requirement that a DCM provide a ‘‘concise 

explanation and analysis’’ pursuant to 

§ 40.2(a)(3)(v) to self-certify a new product, the 

Commission described the required ‘‘concise 

explanation and analysis’’ of the certified product— 

and its compliance with applicable law in the 2011 

Final Rule—as ‘‘necessary for the Commission’s 

review of a new product certification.’’ 

requirement in § 40.2(a)(3)(v).68 When 

the Commission requested additional 

information, the Commission has on 

numerous occasions experienced delays 

in receiving certain requested 

information, suggesting that supporting 

analyses had not been prepared by 

registered entities prior to certifying 

compliance.69

By adding the word ‘‘complete’’ to 

§ 40.2, the Commission is not intending 

to create a standard that is comparable 

to a new product filed voluntarily for 

CFTC review and approval under § 40.3. 

That is, when a DCM or SEF voluntarily 

submits a product for Commission 

review and approval pursuant to § 40.3, 

the Commission is tasked with 

reviewing the information submitted for 

the product and using that information 

to determine whether the product 

would violate the Act or the 

Commission’s regulations.70 By 

contrast, when a DCM or SEF elects to 

submit a product pursuant to § 40.2, the 

DCM or SEF must certify that the 

product complies with the Act and the 

Commission’s regulations thereunder.71

The products offered for trading by 

registered entities vary widely, and the 

applicable statutory and regulatory 

requirements that apply to any 

particular product thus also vary 

widely. Each registered entity should be 

familiar with the statutory and 

regulatory requirements that apply for a 

particular product, and therefore should 

be able to determine what information 

is reasonable and appropriate for the 

submission to demonstrate compliance 

with these requirements when preparing 

a § 40.2 submission. 

Prior to the DCM or SEF selfcertifying that a product complies with 

the Act and Commission regulations 

thereunder, the DCM or SEF must 

complete its diligence on the product 

and its terms and conditions, on the 

underlying commodity, and on ensuring 

the product complies with the 

applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations thereunder.72

The DCM or SEF must have also 

established proper risk management and 

supervisory oversight prior to listing the 

product for trading, such as the 

adoption of price limits or trading halt 

provisions when deemed necessary by 

the DCM or SEF to limit the impact of 

periods of extreme price volatility.73

The DCM or SEF relies upon its own 

diligence, risk management and 

supervisory oversight when it selfcertifies that the product complies with 

applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations thereunder.74

Currently, and as amended herein, 

DCMs and SEFs must provide a written 

certification that the product to be listed 

complies with applicable provisions of 

the Act, including core principles, and 

the Commission’s regulations 

thereunder.75 The DCM or SEF must 

include a concise explanation and 

analysis of the underlying commodity, 

the terms and conditions of the contract 

and the compliance of the contract with 

applicable provisions of the Act, 

including applicable core principles and 

Commission regulations.76 Cursory or 

conclusory explanations will not 

suffice.77

The Commission is thus adding the 

word ‘‘complete’’ to § 40.2(a)(3)(v) to 

confirm that it is essential that the DCM 

or SEF include a concise explanation 

and analysis (including the supporting 

information and citations or together 

with the accompanying documentation) 

that explains how and why the 

contract’s terms and conditions comply 

with the applicable core principles and 

regulations, including how the terms 

and conditions reflect the cash market 

of the underlying commodity. This is a 

fact-specific endeavor that is dependent 

on the circumstances surrounding the 

contract and the underlying commodity. 

Given the tremendous breadth and 

variability of products and contracts 

that can be listed on CFTC regulated 

markets, it is not possible for the 

Commission to state definitively all of 


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78CEA sections 5(d)(3) and 5h(f)(3). 

79CEA sections 5(d)(5) and 5h(f)(6). 

80See Better Markets at 2–4. 

81The Commission retains the authority in 

§ 40.2(b) to obtain additional evidence, information 

or data that may be beneficial to the Commission 

in conducting a due diligence assessment of the 

filing and the registered entity’s compliance with 

any applicable requirements of the Act or the 

Commission’s regulations or policies thereunder. 

82Regulation § 40.2 (a)(3)(v) already requires that 

the explanation and analysis be accompanied by the 

documentation relied upon to establish the basis for 

compliance with applicable law, or incorporate 

information contained in such documentation, with 

appropriate citations to data sources. For a 

discussion of costs, see the Cost Benefit 

Considerations section below. 

83See also DCM Core Principle 7 (Availability of 

General Information) and implementing 

§§ 38.400(a) and 38.401. 

84 17 CFR part 38, appendix C. Guidance set forth 

in appendix B to part 38 states that a DCM may use 

the appendix C Guidance as guidance in meeting 

DCM Core Principle 3 for new product listings. 17 

CFR part 38, appendix B, Core Principle 3 

Guidance. For a discussion of the differences 

between §§ 40.2(a) and 40.3, see below at section 

II.C.1. 

85Commission Guidance Regarding the Listing of 

Voluntary Carbon Credit Derivative Contracts; 

Request for Comment, 88 FR 89410 (December 27, 

2023). 

86NPRM at 61436. 

87No other comments were received in response 

to the two specific product examples provided in 

the NPRM. 

88A16z at 6. 

89A16z at 2. 

90Specifically, A16z stated that an entity 

complying with appendix C to part 38 would satisfy 

the proposed completeness standard, but Advisory 

18–14 addresses more than appendix C (such as an 

information sharing agreement with any underlying 

spot markets). A16z at 2–4. A16z suggested the 

Commission make explicit that the Commission is 

not adopting 18–14. A16z at 4. 

91Cboe at 3. 

the core principles and regulations that 

are relevant for each particular contract. 

However, the Commission notes that for 

any contract to be listed for trading on 

a DCM or a SEF, it is relevant for the 

DCM or SEF to analyze how the contract 

is not readily susceptible to 

manipulation in compliance with DCM 

Core Principle 3 or SEF Core Principle 

3, respectively.78 For any contract to be 

listed for trading on a DCM or a SEF, it 

is also relevant for the DCM or SEF to 

analyze how the contract complies with 

DCM Core Principle 5 or SEF Core 

Principle 6, respectively,79 which relate 

to the adoption by the DCM or SEF of 

position limits or position 

accountability for speculators, as is 

necessary and appropriate, to reduce the 

potential threat of market manipulation 

or congestion (especially during trading 

in the delivery month) in the contract. 

In response to comments, the 

Commission reiterates it does not view 

the amended provision as altering what 

is intended to be the existing standard 

or process of complying with 

§ 40.2(a)(3)(v). The Commission clarifies 

in response to a comment received 80

that the ‘‘complete’’ explanation and 

analysis required by § 40.2(a)(3)(v) is 

intended to be concise and is not 

intended to be exhaustive in nature.81

The Commission also does not believe 

that the requirements in the amended 

provision to provide evidence of 

compliance with the CEA and 

Commission regulations are 

unnecessarily burdensome.82

Additionally, the Commission notes 

that, as proposed in the NPRM and as 

adopted herein, § 40.2(a)(3)(v) retains 

the word ‘‘concise.’’ In response to the 

request that the Commission provide 

guidance regarding how a DCM or SEF 

would satisfy the ‘‘complete’’ 

requirement while also being ‘‘concise,’’ 

the Commission notes that the 

explanation and analysis required under 

amended § 40.2(a)(3)(v) should explain 

and analyze the product’s terms and 

conditions, the underlying commodity, 

and how the product complies with 

applicable law and is not necessarily 

required to be lengthy in order to be 

‘‘complete.’’ Moreover, the explanation 

and analysis incorporates information 

that should already be reviewed or 

collected by registered entities. To the 

extent that registered entities may be 

unclear about how to apply these 

standards in a given submission, they 

are invited to engage with staff in 

advance of self-certifying the product. 

When a DCM or SEF files a product 

self-certification submission with the 

Commission pursuant to §§ 40.2, 

40.2(a)(3)(vi) requires the DCM or SEF 

to post a copy of its § 40.2 submission 

on its website, including a copy of the 

rules that set forth the contract’s terms 

and conditions as required by 

§ 40.2(a)(3)(ii) as well as the concise 

explanation and analysis that is 

complete with respect to the contract’s 

terms and conditions, the underlying 

commodity, and the product’s 

compliance with applicable provisions 

of the Act, including core principles, 

and the Commission’s regulations 

thereunder as required by 

§ 40.2(a)(3)(v).83 By including this 

information in the § 40.2 submission, 

the DCM or SEF makes the information 

accessible to market participants and 

the public. Access to the information 

enables market participants to make 

educated choices when selecting 

products to trade and platforms on 

which to trade these products. 

4. Guidance on Compliance With 

§§ 40.2 and 40.3 

In appendix C of part 38, the 

Commission offers general guidance that 

a DCM or SEF can use to demonstrate 

that a contract the DCM or SEF certifies 

or submits for voluntary Commission 

approval (pursuant to § 40.2(a) or § 40.3, 

respectively) is not readily susceptible 

to manipulation.84 Additionally, staff 

has offered guidance to help DCMs and 

SEFs understand how DCMs and SEFs 

might elect to demonstrate compliance 

with the part 40 regulations when 

listing contracts on novel commodities 

(such as the guidance regarding digital 

commodities in CFTC Staff Advisory 

No. 18–14) for trading. Recently, the 

Commission proposed non-binding 

Commission Guidance Regarding the 

Listing of Voluntary Carbon Credit 

Derivative Contracts.85

In the NPRM, the Commission 

included two specific product examples 

(one in each of two common categories 

of contracts) regarding the explanation 

and analysis that should be provided— 

one for a physically-settled futures 

contract on copper and another for a 

cash-settled futures contract on a stock 

index price series.86 The examples are 

intended to show how a DCM or SEF 

may use the guidance provided in 

appendix C to part 38 to develop the 

concise explanation and analysis to 

submit with a product self-certification 

filing. A16z supported the inclusion of 

the two examples provided in the 

NPRM,87 and requested the Commission 

add an example focused on a digital 

asset.88 A16z suggested that the 

Commission explicitly state it will not 

treat the self-certification of digital 

assets products and rules differently 

from other commodities.89 A16z stated 

that the NPRM appears to reject CFTC 

Staff Advisory 18–14 (‘‘Advisory 18– 

14’’) because the NPRM identifies 

activities that would be sufficient to 

meet the proposed rules for selfcertification, but would not meet 

Advisory 18–14.90 Cboe commented 

that appendix C to part 38 is guidance 

and should continue to apply as 

guidance.91

In response to these comments, the 

Commission notes that part 40 and the 

amendments adopted in this Final Rule 

are designed to apply across the many 

different types of products that are 

traded on DCMs and SEFs, cleared by 

DCOs and reported to SDRs. A product’s 

compliance, and demonstration of 

compliance, is a fact and circumstances 

specific analysis. Regardless of the 

underlying asset class of a product being 

listed for trading, when a DCM or SEF 

submits a new derivatives product via 

certification, the terms and conditions 

of the product should be designed to 

reflect the relevant commodity 

characteristics used by market 


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92See definition of terms and conditions in 

§ 40.1, CEA sections 5(d)(3) and 5h(f)(3). See also 

explanation of Core Principle 3 in appendix C to 

part 38. 

93 Including new examples could create a logical 

outgrowth problem under the Administrative 

Procedures Act. 

94For a product a DCM or SEF elects to submit 

for Commission review and approval, the DCM or 

SEF would satisfy the first sentence of § 40.3(a)(4) 

with respect to Core Principle 3 by explaining how 

the concepts described in appendix C to part 38 are 

addressed for the contract. As noted above, more 

information is needed for a 40.3 filing in order for 

the Commission to make an independent 

assessment to decide whether to approve the 

product than is required to understand the 

compliance diligence completed by a DCM or SEF 

in connection with their 40.2 self-certification filing 

of a new product. 

95See Appendix C to part 38, paragraph 

(b)(2)(i)(A) for physically-settled contracts and 

paragraph (c)(4)(i)(A) for cash-settled contracts. 96See id. 97CEA section 5(d)(3) and (5). 98CEA section 5h(f)(3) and (6). 99Appendix C to part 38, paragraph (b)(2)(i)(A). 100See id. Appendix C also provides that 

regardless of the type of commodity underlying the 

contract, the DCM or SEF’s explanation and 

analysis should describe the cash market for the 

underlying commodity and how the contract’s 

terms and conditions: reflect the cash market 

transactions in the underlying commodity; meet the 

risk management needs of prospective users; and 

promote price discovery of the underlying 

commodity. Appendix C to part 38, paragraph (a). 

101See Appendix C to part 38, paragraph 

(b)(2)(i)(A). When listing a cash settled futures 

contract on copper, the DCM should specify the 

acceptable standard of copper that underlies the 

cash price series or the physically-settled futures 

referenced price used for cash settlement purposes. 

See Appendix C to part 38, paragraph (c)(4)(i)(A). 

102See § 150.5(b)(1), part 38, § 38.201 Additional 

sources for compliance. Appendix C to part 38. 

participants transacting in the cash 

market for that commodity as well as 

cash-market practices for pricing and 

delivering that commodity, as 

applicable.92

Appendix C to part 38 is intended to 

assist registered entities in developing 

new products (including due diligence, 

compliance, and documentation 

thereof). The guidance is not altered by 

the amendments adopted in this Final 

Rule. The Commission agrees that 

Appendix C to part 38 is and remains 

guidance. The Commission is including 

below the two illustrative examples 

provided in the NPRM that show what 

information a DCM or SEF should 

include in the explanation and analysis 

portion of its self-certification for a 

product it intends to list for trading 

pursuant to § 40.2. While the 

Commission will not at this time 

provide additional examples for other 

asset classes generally in this Final 

Rule, the Commission notes that the 

examples provided are intended to serve 

as representative samples of what 

information an exchange should include 

in a self-certification. However, the 

Commission notes that each product is 

unique and may raise novel issues that 

require additional analysis or 

explanation not provided in the 

examples below. In this sense, digital 

assets will not be treated differently 

than the other commodities writ large, 

because the diversity of other 

commodities already requires a case by 

case determination of what an exchange 

should include in a self-certification. 

Staff remain available to answer any 

questions as DCMs and SEFs 

contemplate novel products and are 

uncertain of their compliance 

obligations.93

A DCM or SEF would satisfy the first 

sentence of § 40.2(a)(3)(v) with respect 

to Core Principle 3 by concisely 

explaining how the concepts described 

in appendix C to part 38 are addressed 

for the contract.94 Appendix C to part 38 

provides guidance on the quality 

standards that should be defined for the 

underlying commodity in the contract’s 

terms and conditions for a futures 

contract.95 The quality standards used 

should reflect those used in transactions 

in the commodity in normal cash 

marketing channels and comply with 

those industry established standards.96

To improve the understanding of the 

level of detail expected by the 

Commission, the discussion below 

addresses two common categories of 

contracts and provides two specific 

product examples that illustrate what 

would meet the standard articulated in 

§ 40.2(a)(3)(v) of ‘‘a concise explanation 

and analysis that is complete with 

respect to the product’s terms and 

conditions, the underlying commodity, 

and the product’s compliance with 

applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations thereunder.’’ 

Generally, as noted above, when 

listing a cash settled or physically 

settled contract on a commodity, the 

contract must comply with, among any 

other relevant provisions, DCM Core 

Principles 3 and 5,97 SEF Core 

Principles 3 and 6,98 and part 150. To 

be a complete and concise explanation 

and analysis of compliance with those 

requirements, the explanation and 

analysis the DCM or SEF submits 

describing the characteristics of the 

contract’s underlying commodity 

pursuant to § 40.2(a)(3)(v) should 

include characteristics such as the 

deliverable commodity’s grade, quality 

and deliverable supply, as applicable, as 

well as the other applicable contract 

characteristics described in appendix C 

to part 38. Appendix C to part 38 

provides guidance on the quality 

standards that should be defined for the 

underlying commodity in the contract’s 

terms and conditions for a physicallysettled futures contract.99 The quality 

standards used should reflect those used 

in transactions in the commodity in 

normal cash marketing channels and 

comply with those industry established 

standards.100

As a specific example for a 

physically-settled futures contract, 

when listing a physically settled futures 

contract on copper, the DCM should 

specify the acceptable standard of 

copper that is eligible for delivery on 

the physically-settled futures 

contract.101 Today, an acceptable 

quality standard for copper in the cash 

market is Grade 1 Electrolytic Copper 

Cathodes (full plate or cut) that 

conforms to the latest chemical and 

physical specifications adopted by the 

American Society for Testing and 

Materials for Grade 1 Electrolytic 

Copper Cathodes (B115–00 or its latest 

revision). If a DCM lists a physically 

settled futures contract on Grade 1 

Electrolytic Copper Cathodes, the only 

quality of copper allowed for delivery at 

the settlement of the futures contract 

would be copper of the quality that 

meets this industry-set standard, and as 

a result, the price of the futures contract 

would reflect the price of only this kind 

of copper. Moreover, for a physicallysettled futures contract on Grade 1 

Electrolytic Copper Cathodes, the DCM 

should provide its analysis of the 

estimated deliverable supply of the 

copper meeting the contract 

specifications located at the delivery 

facilities identified by the DCM for the 

contract, along with the DCM’s 

explanation and analysis explaining 

how the estimated deliverable supply 

was used to set an exchange-set 

speculative position limit in accordance 

with DCM Core Principle 5 and 

§ 150.5.102

Throughout the life of the futures 

contract up until the time of expiration, 

copper located in a DCM-approved 

warehouse of the quality specified in 

the contract would be eligible to be 

warranted by the warehouse for delivery 

on the contract. The price of the 

physical copper (Grade 1 Electrolytic 

Copper Cathode) to which the futures 

contract settles and the price of the 

physically settled futures contract on 

Grade 1 Electrolytic Copper Cathode 

should match—or converge—at the 

expiration date. The convergence 

demonstrates that the futures contract 

accurately reflects the cash price of the 

underlying commodity and compliance 

with DCM Core Principle 3 (that the 

contract is not readily susceptible to 

manipulation). 


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103See Appendix C to part 38, paragraphs (a) and 

(c). 

104For example, when listing a cash settled 

futures contract on the S&P 500 Index, the DCM’s 

contract specifications should describe the index 

and its methodology. 

105See Appendix C to part 38, paragraphs (a) and 

(c). 

106See CEA Sections 5(d)(3), §§ 38.200 and 201, 

and appendix C to part 38, paragraphs (c)(3)(iv) and 

(v). 

107See CEA section 5(d)(3), §§ 38.200 and 201, 

and appendix C to part 38, paragraph (a)(2). 

108See CEA section 5(d)(3), §§ 38.200 and 201, 

and appendix C to part 38, paragraph (a)(2). 

109See CEA section 5(d)(3), §§ 38.200 and 201, 

and appendix C to part 38, paragraph (a)(2). 

110See § 150.5(b)(1), part 38, § 38.201 Additional 

sources for compliance. Appendix C to part 38. 

111Better Markets at 2. 

112Pursuant to § 40.2(c), the Commission ‘‘may 

stay the listing of a contract [certified pursuant to 

§ 40.2(a)] during the pendency of Commission 

proceedings for filing a false certification or during 

the pendency of a petition to alter or amend the 

contract terms and conditions pursuant to Section 

8a(7) of the Act.’’ The analogous stay language for 

rules is set forth in § 40.6(c)(4). Pursuant to 

§ 40.6(c)(4), the Commission ‘‘may stay the 

effectiveness of an implemented rule during the 

pendency of Commission proceedings for filing a 

false certification or during the pendency of a 

petition to alter or amend the rule pursuant to 

section 8a(7) of the Act.’’ 

113Regulation § 40.6(c)(1) states in relevant part 

that the Commission ‘‘may stay the certification of 

a new rule or rule amendment submitted pursuant 

to [40.6(a)] . . . on the grounds that the rule or rule 

amendment presents novel or complex issues that 

require additional time to analyze, the rule or rule 

amendment is accompanied by an inadequate 

explanation or the rule or rule amendment is 

potentially inconsistent with the Act or the 

Commission’s regulations thereunder.’’ 

114Better Markets at 5–7. 

115Coinbase at 2 and 6. 

116A16z further noted that ‘‘5c(c) has extensive 

provisions for the Commission to review and stay 

certifications of rules, but it has no similar 

provisions for products . . . If these statutory 

differences do not suggest that the CFTC lacks the 

authority to require extensive disclosures as part of 

the ‘‘written certification’’ of a product, at a 

minimum they suggest that a product selfcertification should be materially more limited than 

a rule self-certification.’’ 

117A16z at 5. 

Similarly, when listing a cash-settled 

contract based on an excluded 

commodity, the explanation and 

analysis the DCM or SEF submits 

describing the characteristics of the 

contract’s underlying commodity 

should include characteristics such as 

the rate, index methodology, and 

pricing source, as applicable, as well as 

other applicable characteristics 

described in Appendix C to part 38.103

Appendix C to part 38 provides 

guidance on the cash settlement price 

calculation for a cash-settled futures 

contract.104 Appendix C provides that 

the cash-settlement price series used by 

a DCM or SEF to settle a cash-settled 

contract should be reflective of the 

underlying cash-market of the 

commodity, and that price series should 

be publicly available, timely and 

reliable.105 The DCM or SEF should 

include this information in its 

explanation of how the product 

complies with the applicable provisions 

of the Act, including core principles, 

and the Commission’s regulations 

thereunder. 

As a specific product example for a 

cash-settled excluded commodity, when 

listing a cash-settled futures contract on 

a stock index price series, such as the 

S&P 500 (a stock index of large 

capitalization stocks listed on U.S. stock 

exchanges), the DCM should specify 

how the cash settlement price based on 

the S&P 500 Index is reflective of the 

underlying cash-market, and how that 

price series is reliable, publicly 

available and timely.106 The DCM 

should describe how the S&P 500 Index 

price series is reflective of the 

underlying cash market of domestic 

large capitalization stocks by describing 

the methodology for constructing and 

maintaining the S&P 500 Index.107 The 

DCM should describe how the S&P 500 

Index is considered by industry as an 

accurate and reliable index of large 

capitalization stocks by describing how 

the index is used as a benchmark for 

measuring the movements of the U.S. 

stock exchanges.108 The DCM should 

describe how frequently the index is 

calculated and where it is disseminated 

to the marketplace to describe how the 

index is publicly available and 

timely.109 Moreover, for a cash-settled 

futures contract on the S&P 500, the 

DCM should provide its analysis of 

trading in S&P 500 futures or similar 

index futures and explain how this 

analysis was used to set an exchange-set 

position limit or position accountability 

level in accordance with DCM Core 

Principle 5 and § 150.5.110

While this rulemaking does not 

provide an example specifically for 

contracts on digital assets, the examples 

above for cash-settled contracts and 

physically-settled contracts are 

applicable for contracts on digital assets 

that are cash-settled or physicallysettled, just as the examples provide 

guidance on contracts on agricultural, 

energy, metals, and financial 

commodities that are cash-settled or 

physically-settled. Appendix C to part 

38 provides guidance on the relevant 

characteristics of the underlying 

commodity and contract terms and 

conditions that should be considered 

when the DCM or SEF is explaining 

how and why a contract is not readily 

susceptible to manipulation in 

compliance with Core Principle 3. 

Appendix C to part 38 also provides 

guidance on the estimated deliverable 

supply on the underlying commodity 

that should be considered when the 

DCM or SEF is explaining how and why 

a contract complies with DCM Core 

Principle 5 or SEF Core Principle 6 

(Position Limits or Accountability). 

5. Differences Between §§ 40.2 and 40.6 

In addition to the comments noted 

above regarding § 40.2, Better Markets 

commented that the NPRM ‘‘doesn’t 

adequately address the discrepancy in 

the way the Commission reviews selfcertified products in CFTC Regulation 

§ 40.2 as compared to the way it reviews 

self-certification of rules in CFTC 

Regulation § 40.6.’’ 111 Better Markets 

requested a 10-business day review for 

products certified under § 40.2 (and 

noted in support of this request that the 

U.S Securities and Exchange 

Commission adopted a 10-business day 

period for products to be listed on 

security-based swap execution 

facilities), and to expand the stay in 

§ 40.2(c) 112 to mirror § 40.6(c)(1) 113 and 

allow the Commission to postpone the 

certification of a product when that 

product introduces novel or complex 

issues necessitating extended analysis 

or is accompanied by inadequate 

explanation.114

By contrast, Coinbase stated that the 

Commission lacks statutory authority to 

reject or stay a self-certified submission 

for a product and suggested the 

proposed change to § 40.2(a)(3)(v) 

would create procedural confusion by 

incorrectly implying the Commission 

has this authority if it determines the 

registered entity did not satisfy the 

proposed prescriptive standard.115

Coinbase and A16z pointed to the 

differences in statutory text that apply 

to self-certified products and selfcertified rules.116 A16z urged the 

Commission to reconsider its ‘‘rationale 

and authority for more extensive 

product self-certifications’’ given the 

differences in statutory documentation 

requirements between product and rule 

self-certifications.117

In response to those comments, the 

Commission notes that CEA section 

5c(c)(2) and (3) provide for a 10 

business day review period for rules and 

rule amendments that are self-certified 

and a process to stay the certification of 

a rule or rule amendment that has novel 

or complex issues that require 

additional time to analyze, an 

inadequate explanation by the 


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118A private citizen stated that the NPRM does 

not define what constitutes a novel or complex 

issue, or how the Commission would determine if 

a submission is inconsistent with the CEA or the 

Commission’s regulations, and suggested that the 

Commission better define what constitutes a novel 

or complex issue, and how the Commission would 

determine if a submission is inconsistent with the 

CEA or the Commission’s regulations. Ravnitzky at 

1–2. Given that the Commission did not propose 

amendments to these standards, the Commission is 

not positioned to address them herein. 

119 2011 Final Rule at 44782. 

120 2011 Final Rule at 44782. 

121While the Commission is amending the 

regulation to include the word ‘‘complete,’’ the 

Commission notes that the ‘explanation and 

analysis’ requirement in § 40.3(a)(4) does not 

include the qualifier that the submission be 

’concise’ for the same reasons discussed below in 

footnote 144. 

122FIA/ISDA at 1. 

123FIA/ISDA at 1. 

124A16z at 7. A16z referenced note 47 in the 

NPRM and stated that ‘‘We are left only with a 

statement that the Commission requires ‘‘a more 

detailed explanation’’ without any further 

exposition about what additional details are 

required.’’ 

125A16z at 6. 

126See also CEA section 5c(c)(5)(B). 

submitting registered entity, or a 

potential inconsistency with the CEA or 

Commission regulations.118 By contrast, 

the CEA does not provide for a 10 

business day review period or an 

analogous stay process for products that 

are self-certified. Consistent with these 

statutory differences, for self-certified 

products, the Commission did not 

propose in the NPRM, and is not 

adopting, either a 10-business day 

review period or a stay process 

analogous to § 40.6(c)(1). 

In response to the comment 

suggesting that the Commission 

reconsider its ‘‘rationale and authority 

for more extensive product selfcertifications given the differences in 

statutory documentation requirements 

for product self-certification versus rule 

self-certifications’’ and the comment 

stating that the statutory differences 

suggest that a product self-certification 

should be materially more limited than 

a rule self-certification, the Commission 

notes that it is rational that the 

Commission needs more documentation 

or information at the time a new 

product filing is initially submitted 

pursuant to § 40.2 and all the terms and 

conditions of the new product are 

established than at the time a filing is 

submitted to amend the terms or 

conditions of an existing product 

pursuant to § 40.6. As discussed above, 

the second sentence of existing 

§ 40.2(a)(3)(v) requires that the 

explanation and analysis submitted to 

support a product self-certification 

‘‘either be accompanied by the 

documentation relied upon to establish 

the basis for compliance with applicable 

law, or incorporate information 

contained in such documentation, with 

appropriate citations to data sources.’’ 

The Commission notes it did not 

propose, and is not adopting, any 

amendments to the second sentence in 

§ 40.2(a)(3)(v). 

By contrast, § 40.6(a)(7)(v) does not 

include this documentation 

requirement. In the 2011 Final Rule, the 

Commission stated that it elected not to 

adopt a documentation requirement in 

§ 40.6(a)(7)(v) for initial rule 

submissions because section 5c(c) of the 

Act provides staff with ten business 

days to review new rules and rule 

amendments and, if necessary, 

authorizes staff to prevent them from 

becoming effective until staff receives 

adequate information from the 

submitting entity.119 As noted therein, 

the Commission’s staff may request 

additional information at any time 

during the applicable rule review period 

pursuant to existing § 40.6(a)(8). The 

Commission further stated that 

registered entities therefore should have 

sufficient incentives to provide 

adequate explanations of new 

submissions under § 40.6 without the 

provision of actual documentation.120

C. § 40.3—Voluntary Submission of New 

Products for Commission Review and 

Approval 

1. Amendments to § 40.3(a)(4) 

Regulation § 40.3(a)(4) requires that 

when a DCM, SEF or DCO voluntarily 

submits a new product for Commission 

review and approval prior to its listing 

for trading or accepting the product for 

clearing, the DCM, SEF or DCO must 

send the Commission ‘‘an explanation 

and analysis of the product and its 

compliance with applicable provisions 

of the Act, including core principles, 

and the Commission’s regulations 

thereunder.’’ As noted in the NPRM, 

staff relies primarily on the explanation 

and analysis provided pursuant to this 

requirement to analyze the compliance 

of a product submitted for review and 

approval by the Commission, including 

the explanation and analysis of the 

commodity underlying the product. 

The Commission proposed to amend 

§ 40.3(a)(4) to clarify that the regulation 

requires an explanation and analysis 

‘‘that is complete with respect to the 

product’s terms and conditions, the 

underlying commodity and the 

product’s compliance with the 

applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations 

thereunder.’’ 121 As noted in the NPRM, 

this amendment is intended to ensure 

the Commission receives adequate 

information regarding the product and 

the commodity underlying the product 

to analyze the compliance of the 

product’s terms and conditions with the 

applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations thereunder. 

ISDA and FIA supported the 

additional requirements for registered 

entities to provide ‘‘complete’’ 

information regarding a new product’s 

terms and conditions under § 40.3.122

ISDA and FIA stated that it is critical 

that CFTC staff have access to all 

relevant information in its review of 

new product submissions, including for 

new asset classes such as 

cryptocurrency products supporting the 

evolution of digital assets or 

environmental and carbon products to 

support the green transition.123

A16z suggested the final rule would 

benefit from a more fulsome explanation 

of the requirements necessary to satisfy 

the completeness standard under § 40.3, 

or alternatively, further clarification 

regarding what factors could make a 

submission incomplete under § 40.3 

(and what additional activity, burden, 

and costs are necessary to comply with 

the new rule to help stakeholders 

understand what additional 

information, if any, the Commission 

requires).124 A16z requested that the 

Commission provide an example of how 

the new language in § 40.3(a)(4) applies 

to digital assets.125

In response to the request for a more 

fulsome explanation, the Commission 

notes by way of background that when 

a DCM, SEF or DCO voluntarily requests 

that the Commission approve a new 

product pursuant to CEA section 5c(c) 

and § 40.3, the standard of review that 

the Commission applies in reviewing 

the product is set forth in § 40.3(b). 

Regulation § 40.3(b) states that ‘‘[t]he 

Commission shall approve a new 

product unless the terms and conditions 

of the product violate the Act or the 

Commission’s regulations.’’ 126 As noted 

above and in the NPRM, the amendment 

to § 40.3(a)(4) is intended to ensure the 

Commission receives adequate 

information regarding the product and 

the commodity underlying the product 

to analyze whether the terms and 

conditions of the product submitted for 

voluntary Commission review and 

approval violate the CEA or 

Commission regulations. 

Because the DCM, SEF or DCO is 

requesting that the Commission review 

the product for Commission approval 

pursuant to § 40.3, the Commission 

needs more information for § 40.3 


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127By contrast, as discussed above, for § 40.2 selfcertification submissions, the Commission needs to 

receive a concise explanation and analysis that is 

complete with respect to the product’s terms and 

conditions, the underlying commodity, and the 

product’s compliance with applicable provisions of 

the Act, including core principles, and the 

Commission’s regulations thereunder. 

128As registered entities contemplate selecting to 

submit new products for voluntary Commission 

review and approval pursuant to § 40.3 in the 

future, Staff remain available to review drafts of the 

§ 40.3 filings and to offer feedback on what, if any, 

additional information would be required in order 

for a submission to be ‘‘complete.’’ 

129 Including new examples could create a logical 

outgrowth problem under the Administrative 

Procedures Act. 

130The Commission proposed and is adopting 

these changes to enhance readability and address 

some confusion regarding the § 40.3 process. The 

Commission also proposed, and is adopting, 

changes to reorganize § 40.5 to enhance readability 

and, in general, proposed, and is adopting, parallel 

structural changes to §§ 40.3 and 40.5 for 

consistency. 

131As noted in the NPRM, one example of a 

substantive amendment would be changes in the 

delivery grade or characteristics of the underlying 

commodity for a physically settled contract that 

may affect estimated deliverable supply and thus 

position limits for the contract. Another example 

would be a change in the price reference series of 

a new cash-settled contract that settles to a Price 

Reporting Agency source (‘‘PRA’’). Most PRAs have 

various series on the same commodity that differ 

from each other depending on characteristics such 

as geographical location of commodity transaction 

or commodity quality characteristics. PRA 

methodologies for the same commodity can differ 

between PRAs. If an amendment changes a PRA as 

the source, the underlying methodology for the 

price series would need to be examined to 

determine if it is not readily susceptible to 

manipulation. 

132CME Group at 4. 

133Coinbase at 10. Coinbase further stated that 

‘‘Presumably, Commission staff will have carefully 

reviewed and analyzed the original complete 

submission before asking the DCM to take such 

Continued 

submissions than for § 40.2 

submissions—hence the inclusion of the 

word ‘‘concise’’ in § 40.2 and the 

omission of the word ‘‘concise’’ in 

§ 40.3. Specifically, pursuant to § 40.3, 

the Commission needs to receive 

complete information regarding the 

product’s terms and conditions, the 

commodity underlying the product, and 

the product’s compliance with 

applicable provisions of the Act 

(including core principles) and the 

Commission’s regulations to understand 

and assess whether the terms and 

conditions of the product comply with 

the Act (including core principles) and 

the Commission’s regulations.127 The 

products offered for trading and clearing 

by registered entities vary widely, and 

the applicable statutory and regulatory 

requirements that apply to any 

particular product thus also vary 

widely. Each registered entity should be 

familiar with the statutory and 

regulatory requirements that apply for a 

particular product, and therefore should 

be able to determine what information 

is reasonable and appropriate for the 

submission to demonstrate compliance 

with these requirements.128

In response to the request for a digital 

asset example, the Commission notes it 

will not at this time provide guidance 

specifically for digital assets, but that 

registered entities are always welcome 

to reach out to staff if they have any 

questions regarding how the regulations 

apply to products they are 

contemplating.129

The Commission is adopting the 

amendments to § 40.3(a)(4) as proposed. 

2. Amendments to § 40.3(a)(10) 

Regulation § 40.3(a)(10) provides that 

when a DCM, SEF or DCO voluntarily 

submits a contract for Commission 

approval, Commission staff may request 

additional evidence, information or data 

demonstrating that the contract meets, 

initially or on a continuing basis, the 

requirements of the Act, or other 

requirement for designation or 

registration under the Act, or the 

Commission’s regulations or policies 

thereunder. As noted in the NPRM, 

§ 40.3(a)(10) required the registered 

entity to provide the requested 

information by the open of business two 

business days after the date Commission 

staff made such request, or at the 

conclusion of such extended period 

agreed to by Commission staff after 

timely receipt of a written request from 

the registered entity. 

In the NPRM, the Commission 

proposed to remove the two business 

day deadline from § 40.3(a)(10) and 

replace it with ‘‘the time specified by 

the Commission staff’’ to reflect the fact 

that the two business day deadline is 

often not practical and that the amount 

of time a DCM, SEF or DCO needs to 

respond depends on the nature and 

scope of the requested information. The 

Commission received no comments on 

this proposed amendment and is 

amending § 40.3(a)(10) as proposed. 

3. Amendments to §§ 40.3(c), 40.3(d) 

and 40.3(f) 

The Commission is reorganizing and 

amending paragraphs (c) and (d) of 

§ 40.3, which address the Commission’s 

review and determination (i.e., approval 

or non-approval) of products submitted 

for Commission approval. More 

specifically, to enhance the readability 

of § 40.3(c), the Commission is 

reorganizing § 40.3 as proposed so that 

all of the provisions that may affect the 

length of the review period of a product 

submitted for Commission approval 

pursuant to § 40.3 appear together in 

§ 40.3(c).130 The Commission is 

reorganizing § 40.3(d) as proposed to 

address the Commission’s 

determination, including: approval 

through the passage of the applicable 

review period; and non-approval. 

As noted in the NPRM, § 40.3(c) 

provides that all products submitted for 

Commission approval under § 40.3(c) 

shall be deemed approved by the 

Commission 45 days after receipt by the 

Commission, or at the conclusion of an 

extended period as provided under 

§ 40.3(d), ‘‘unless notified otherwise 

within the applicable period;’’ provided 

that the conditions set forth in 

§ 40.3(c)(1) and (2) are satisfied. The 

Commission is moving the notification 

language from the introductory 

paragraph of § 40.3(c) to § 40.3(d)(1). 

The Commission is replacing the phrase 

‘‘unless notified otherwise within the 

applicable period’’ (which provides a 

vague reference to the notification 

involved) with the phrase ‘‘unless the 

Commission issues a notice of nonapproval to the registered entity under 

paragraph (d)(2) of this section within 

the applicable review period.’’ 

In addition, the Commission proposed 

to amend the condition in § 40.3(c)(2) 

(which the Commission is moving to 

§ 40.3(c)(4)) that must be met for the 

deemed approval to be effective. The 

condition in § 40.3(c)(2) requires that 

the submitting entity does not amend 

the terms or conditions of the product 

or supplement the request for approval, 

except as requested by the Commission 

or for correction of typographical errors, 

renumbering or other non-substantive 

revisions, during that period. Any 

voluntary, substantive amendment by 

the submitting entity will be treated as 

a new submission under this section.131

In the NPRM, the Commission proposed 

to revise this condition such that any 

substantive amendment or 

supplementation by the submitting 

entity, including an amendment or 

supplementation requested by the 

Commission, would be treated as a new 

submission under § 40.3. 

The Commission received two 

comment letters responding to proposed 

§ 40.3(c)(4). CME Group opposed the 

proposed amendment, noting that the 

‘‘Commission presumably understands 

the basis for its requested change or 

changes so it should not need an 

additional . . . 45-day review period 

. . . to review the changes it has asked 

for.’’ 132 Coinbase disagreed with the 

review period restarting ‘‘under 

circumstances when [the Commission] 

has also determined that the DCM’s 

original filing satisfies the requirements 

of Regulation § 40.3(a).’’ 133


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action and this is no compelling reason why it 

should need a new 45-day window to complete its 

review of a submission with which it should 

already be familiar. If the new product raises novel 

or complex issues, the Commission has clear 

authority under the rule to extend the review period 

up to an additional 45 days . . . and to extend the 

review period further if the DCM agrees. Building 

in an arbitrary extension mechanism that could 

ensnare a DCM in a chain of potentially endless 

restarts of the clock flies in the face of the timing 

certainty that CEA section 5c(c)(4) is designed to 

provide to DCMs. The justification offered . . . does 

not warrant this dramatic change to Regulation 

§ 40.3.’’ Id. 

134To effectuate this change, the Commission is 

removing the sentence currently in § 40.3(c)(2) that 

states ‘‘Any voluntary, substantive amendment by 

the submitting entity will be treated as a new 

submission under this section.’’ This sentence is 

redundant and its removal makes § 40.3(c)(4) more 

consistent with the analogous provision for rules 

submitted for Commission approval (§ 40.5(c)(4)). 

135See § 40.5(d)(1) (which is being moved to 

§ 40.5(c)(2)). Under both current § 40.5(d)(1) and 

final § 40.5(c)(2), the timely manner standard is 

dependent upon the facts and circumstances. The 

Commission proposed, and is adopting, the same 

timely manner standard for § 40.3(d)(1). 

136The Commission is revising the header of 

§ 40.3(c) from ‘‘Forty-five day review’’ to 

‘‘Commission review’’ to reflect the fact that the 

review period may be extended beyond forty-five 

days due to adjustments so that the review period 

ends on a business day. 

137Section 5c(c)(4)(C) of the Act reads in 

pertinent part that ‘‘the Commission shall take final 

action on the request not later than 90 days after 

submission of the request, unless the person 

submitting the request agrees to an extension of the 

time limitation established under this paragraph.’’ 

138Because an extension to which a registered 

entity may agree under final § 40.3(c)(3) is not 

required to be a specified number of days, 

Commission staff can ensure that the extended 

period ends on a business day. 

139For example, if the end of the initial 45-day 

review period would fall on a Saturday, it would 

be extended by § 40.3(c)(5) to Monday, the next 

business day, for a total of 47 days. Any additional 

extension under § 40.3(c)(2) could not exceed 43 

days (47 + 43 = 90). 

140Regulation § 40.3(d)(2) provided the 

Commission with authority to extend the review 

period with the written agreement of the registered 

entity. The amendment in § 40.3(c)(3) is intended 

to ensure it is clear that the authority also applies 

during any extended review period. 

The Commission considered the 

comments received on the proposed 

amendments to § 40.3(c)(4) and is 

revising the amendments to § 40.3(c)(4) 

such that the review period will not be 

restarted as a result of a DCM, SEF or 

DCO making an amendment or 

supplement in response to a 

Commission request. Specifically, as 

revised and adopted, § 40.3(c)(4) will 

provide that ‘‘[a]ny amendment or 

supplementation made by the registered 

entity to the submission will be treated 

as the filing of a new submission under 

this section and be subject to the initial 

45-day review period in accordance 

with paragraph (c)(1) of this section, 

unless the amendment or 

supplementation is requested by the 

Commission or is made for correction of 

typographical errors, renumbering or 

other non-substantive revisions.’’ 134 As 

revised and adopted, § 40.3(c)(4) is not 

substantively different than current 

§ 40.3(c)(2). 

The Commission also proposed to 

amend § 40.3(d)(1) (which the 

Commission proposed to move to 

§ 40.3(c)(2)) to provide that the 

Commission may extend the initial 45 

day review period for a product 

approval request for up to an additional 

45 days if the submission is incomplete 

or the requestor does not respond 

completely to Commission questions in 

a timely manner. As noted in the NPRM, 

the Commission has the authority to 

extend its review of a request for rule 

approval under § 40.5 if the submission 

is incomplete or the requestor does not 

respond completely to Commission 

questions in a timely manner,135 and the 

Commission believes having the same 

ability to extend reviews of voluntary 

requests for product approval under 

§ 40.3 will better enable the Commission 

to review those products. The 

Commission received no comments on 

this proposed amendment, and is 

adopting the amendment as proposed. 

The Commission is adopting 

§ 40.3(c)(5) as proposed to extend the 

review period under § 40.3(c)(1) when 

the review period would end on a day 

that is not a business day to instead end 

on the next business day.136 In addition, 

the Commission is moving text from 

§ 40.3(d)(1) to § 40.3(c)(2) and revising 

the text to permit an additional 

extension of up to 45 days. By way of 

background, § 40.3(d)(1) provided that 

the Commission may extend the review 

period for an additional 45 days if the 

product raises novel or complex issues 

that require additional time for analysis. 

Under current § 40.3(c) and (d)(1), the 

initial 45-day review period and the 45- 

day extended review period could not 

exceed the 90 days permitted by section 

5c(c)(4)(C) of the CEA,137 absent 

agreement by the requestor to a further 

extension.138 To ensure that the total 

review period will not extend beyond 

90 days after the request is submitted 

under the amended regulations, the 

Commission is changing as proposed 

the extended review period from ‘‘[a]n 

additional 45 days’’ under § 40.3(d)(1) to 

‘‘up to an additional 45 days’’ in 

amended § 40.3(c)(2).139 The 

Commission received no comments on 

these proposed changes. 

The Commission also is making 

explicit in § 40.3(c)(3) as proposed that 

the Commission may at any time extend 

its review period for any period of time 

(including beyond the 90-day review 

period), provided that it does so with 

the written agreement of the registered 

entity.140

Additionally, the Commission is 

redesignating § 40.3(f)(1) as § 40.3(e)(1) 

and making the proposed amendments 

to this provision. Regulation § 40.3(f)(1) 

provided that ‘‘[n]otification to a 

registered entity under paragraph (e) of 

this section of the Commission’s 

determination not to approve a product 

does not prejudice the entity from 

subsequently submitting a revised 

version of the product for Commission 

approval or from submitting the product 

as initially proposed pursuant to a 

supplemented submission.’’ The 

Commission is amending the text by 

replacing the word ‘‘prejudice’’ with 

‘‘prevent’’, replacing the words 

‘‘pursuant to’’ with ‘‘in’’, adding the 

phrase ‘‘the revised or supplemented 

submission will be reviewed without 

prejudice’’ at the end, and inserting two 

commas to help avoid any confusion as 

to the effect of the non-approval. Also, 

the changes to the section will improve 

consistency with §§ 40.5(e)(1) and 

40.6(c)(5)(i). The Commission received 

no comments on these proposed 

changes. 

Finally, the Commission is 

redesignating § 40.3(f)(2) as § 40.3(e)(2) 

and adopting the proposed amendments 

to this provision. Specifically, 

§ 40.3(f)(2) provided that notification to 

a registered entity under paragraph (e) 

of this section of the Commission’s 

refusal to approve a product shall be 

presumptive evidence that the entity 

may not truthfully certify under § 40.2 

that the same, or substantially the same, 

product does not violate the Act or the 

Commission’s regulations thereunder. 

The Commission is amending the text as 

proposed by replacing the words 

‘‘refusal’’ with ‘‘determination not’’, and 

replacing the words ‘‘does not violate 

the Act’’ with ‘‘complies with the Act.’’ 

The Commission believes these 

amendments will have the effect of 

increasing clarity and provide 

consistency with §§ 40.2(a)(3)(iv) and 

40.5(f)(2) (which the Commission is 

renumbering as § 40.5(e)(2)). The 

Commission received no comments on 

these proposed changes. 

D. § 40.4—Amendments to Terms or 

Conditions of Enumerated Agricultural 

Products 

1. Clarification Regarding Scope of 

§ 40.4 and Materiality Under § 40.4 

Regulation § 40.4(a) requires a DCM to 

submit rule changes that would 

materially change a term or condition of 

a contract on an agricultural product 

enumerated in section 1a(9) of the CEA 


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141Regulations 40.4(b)(1) through (4) state that 

the changes covered therein are not material. Thus, 

a DCM filing a change under § 40.4(b)(1) through (4) 

is not required to file a non-materiality explanation. 

In addition to the § 40.6(a) self-certification process 

and the § 40.6(d)(2) notice filing process (which the 

Commission is re-designating as § 40.6(d)), if 

applicable, a DCM may also place a non-material 

rule change into effect without certification or 

notice to the Commission if the conditions 

enumerated in § 40.6(d)(3) (which the Commission 

is re-designating as § 40.6(e)) are satisfied. 

142The amendments include the removal of 

references to a cover sheet, dormant rules, and 

submission to the Secretary of the Commission. 

143FIA/ISDA at 1. 

with open interest for Commission 

approval under the procedures of § 40.5. 

The Commission notes that § 40.4(a) 

applies strictly to rules that materially 

change a product’s economic terms and 

conditions, and does not apply to other 

rules. To ensure this requirement is 

clear, the Commission is adding the 

word ‘‘product’s’’ to the text of § 40.4(a) 

to modify ‘‘term or condition’’ as used 

therein and replacing the words ‘‘should 

not be submitted under this section’’ in 

§ 40.4(b) with the words ‘‘are not 

required by this section to be submitted 

for Commission approval under the 

procedures of § 40.5,’’ each as proposed. 

The Commission did not receive any 

comments responding to any of the 

amendments proposed to § 40.4. 

By way of background, as noted in the 

NPRM, when a registered entity submits 

a change to any terms or conditions of 

a contract on an agricultural product 

enumerated in section 1a(9) of the CEA 

with open interest, the DCM’s 

assessment of materiality affects 

whether the registered entity must 

submit the change for Commission 

approval under § 40.5 (as is required for 

material changes). A DCM may file a 

change that falls within any of the four 

types of discrete changes enumerated in 

§ 40.4(b)(1) through (4) through selfcertification pursuant to § 40.6(a) or 

notice filing pursuant to § 40.6(d), as 

applicable.141 For any other rule that the 

DCM believes to be non-material, 

§ 40.4(b)(5) sets forth a process for the 

DCM to implement the change through 

self-certification pursuant to § 40.6(a). In 

order for a DCM to self-certify the 

change, § 40.4(b)(5) requires the DCM to 

make a non-materiality filing and 

explain why it considers the rule change 

to be ‘‘non-material.’’ 

To assist a DCM in assessing and 

explaining whether a change to the 

terms and conditions of a contract on an 

agricultural product enumerated in 

section 1a(9) of the CEA that has open 

interest is a material change (and thus 

must be filed under § 40.5 pursuant to 

§ 40.4(a)) or is non-material (and thus 

can be implemented through the 

§ 40.6(a) self-certification process, the 

§ 40.6(d) notice process or the § 40.6(e) 

process (as applicable), all in 

accordance with § 40.4(b)(5)), the 

Commission is adding an appendix E to 

part 40 as proposed and including 

therein the criteria that the Commission 

generally considers as evidence that an 

enumerated agricultural product rule 

change is non-material under 

§ 40.4(b)(5) as proposed. Specifically, 

appendix E to part 40 provides that a 

non-material change: should not affect a 

reasonable trader’s decision to enter 

into, or maintain, a position; should not 

affect a reasonable trader’s decision to 

make or take delivery on the contract or 

to exercise an option on the contract; 

and should not have an effect on the 

value of existing positions, including, 

but not limited to, a change affecting the 

price of the contract due to a change in 

the commodity quality characteristics of 

the existing contract, a change to the 

size of the existing contract, or a change 

to a cost of effecting delivery for the 

existing contract. The Commission did 

not receive any comments responding to 

the proposal of new appendix E to part 

40. 

2. Additional Amendments to § 40.4(b) 

The Commission is adopting the 

proposed amendments to § 40.4(b)(1) 

through (5) to enhance the readability, 

consistency and clarity of this 

regulatory text. Specifically, the 

Commission is clarifying that the intent 

of § 40.4(b) is to convey that the rules 

and rule amendments identified as nonmaterial are not required to be 

submitted for Commission approval 

under the procedures of § 40.5. The 

Commission is replacing the word 

‘‘changes’’ in each of § 40.4(b)(1) 

through (4) with ‘‘rules or rule 

amendments’’ so that the text of 

paragraphs (b)(1) through (4) use the 

same language as the text used in the 

introductory paragraph of § 40.4(b). 

Additionally, the Commission is 

replacing the word ‘‘if’’ in each of 

§ 40.4(b)(1), (3) and (4) with the words 

‘‘provided that they are’’ to clarify (and 

avoid confusion) that the 

implementation specified in the 

applicable paragraph (§ 40.4(b)(1), (3) 

and (4)) is a condition that must be 

satisfied in order to rely upon 

§ 40.4(b)(1), (3) or (4), as applicable. 

None of these amendments is intended 

to alter the substance of § 40.4. 

The Commission is removing the 

reference to ‘‘changes in no cancellation 

ranges’’ in § 40.4(b)(3) as proposed. As 

discussed below in section II.F.4, the 

Commission is amending § 40.6(d) to 

allow a registered entity to file rules and 

rule amendments governing changes in 

no cancellation ranges pursuant to the 

notification procedures of § 40.6(d). By 

filing rules and rule amendments 

governing no cancellation ranges 

pursuant § 40.6(d), such rules and rule 

amendments would be non-material 

pursuant to § 40.4(b)(1), making the 

current language ‘‘changes in no 

cancellation ranges’’ in § 40.4(b)(3) 

redundant and unnecessary. 

Additionally, to enhance readability 

of § 40.4(b)(5), the Commission is 

moving from § 40.4(b)(5)(iii) to 

§ 40.4(b)(5)(i) the text requiring that a 

rule or rule amendment filed under 

§ 40.4(b)(5) be submitted pursuant to the 

procedures of § 40.6(a), and is deleting 

redundant text in § 40.4(b)(5)(iii). The 

Commission is adding text to 

§ 40.4(b)(5)(ii) to provide that when a 

DCM provides an explanation as to why 

it considers the rule ‘‘non-material,’’ the 

DCM shall, if applicable, include a 

previously approved rule or rule 

amendment that is, in substance, the 

same as the subject non-material rule or 

rule amendment. The Commission 

believes the copy of the previously 

approved rule or rule amendment will 

provide market participants with 

context and background that will be 

helpful information in understanding 

the subject rule or rule amendment and 

why it is non-material. 

E. § 40.5—Voluntary Submission of 

Rules for Commission Review and 

Approval 

1. Reorganization and Clarification of 

§ 40.5 

The Commission is reorganizing and 

clarifying § 40.5, which addresses the 

submission by registered entities of 

requests for Commission approval of 

new rules and rule amendments and the 

Commission’s review of such rules and 

rule amendments. As amended, 

paragraphs (a) and (b) of § 40.5 remain 

largely unchanged, with the exception 

of the conforming amendments 

previously discussed 142 and the two 

changes discussed below. FIA and ISDA 

stated that they are generally supportive 

of all the clarifications, enhancements 

and reorganizations of § 40.5.143

The Commission proposed to clarify 

that § 40.5(a)(5) requires an explanation 

and analysis ‘‘that is complete with 

respect to’’ the operation, purpose, and 

effect of the proposed rule or rule 

amendment and its compliance with 

applicable provisions of the Act, 

including core principles and the 

Commission’s regulations thereunder 

for the same reasons the language 

regarding completeness was proposed in 

§§ 40.2(a)(3)(v), 40.3(a)(4), and 

40.6(a)(7)(v). As noted in note 47 of the 


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144See NPRM at 61439. See also the 2011 Final 

Rule at 44782 (stating ‘‘The Commission notes that 

the ‘explanation and analysis’ requirement in final 

§ 40.5(a)(5) does not include the qualifier that the 

submission be ‘concise.’ The Commission requires 

registered entities to provide a more detailed 

explanation and analysis of rules voluntarily 

submitted for Commission approval under the 

provisions of § 40.5.’’). 

145A16z at 7. 146 Id. 

147The Commission also is eliminating the word 

‘‘which’’ from the second sentence of § 40.5(a)(6) to 

improve clarity and readability. 

148The Commission is making these changes to 

enhance readability and address some confusion 

regarding the § 40.5 process. Changes to § 40.5(d)(2) 

are discussed below. 

149Because an extension to which a registered 

entity may agree under § 40.5(c)(3) is not required 

to be a specified number of days, Commission staff 

can ensure that the extended period ends on a 

business day. 

150The Commission is revising the header of 

§ 40.5(c) from ‘‘Forty-five- day review’’ to 

‘‘Commission review’’ to reflect the fact that, 

pursuant to § 40.5(c)(6), the review period may be 

extended beyond forty-five days due to adjustments 

so that the review period ends on a business day. 

151The Commission is adding descriptive 

language into § 40.5(c)(5) to provide the reader with 

NPRM, the ‘‘explanation and analysis’’ 

requirement in § 40.5(a)(5), like the 

‘‘explanation and analysis’’ requirement 

in § 40.3(a)(4), does not include the 

qualifier that the submission be 

‘‘concise.’’ 144 A16z suggested that more 

explanation is required regarding what 

additional information is needed for the 

explanation and analysis to be 

‘‘complete’’ in the absence of the 

concise language.145 A16z referenced 

note 47 in the NPRM and suggested 

further explanation is required than the 

statement that the Commission requires 

‘‘a more detailed explanation.’’ 146

In response to the request for 

additional explanation, the Commission 

notes by way of background that 

pursuant to CEA section 5c(c)(5)(A) and 

§ 40.5(b), the Commission shall approve 

a new rule or rule amendment of a 

registered entity that the registered 

entity submits for Commission approval 

pursuant to CEA section 5c(c)(4) and in 

accordance with § 40.5 unless the rule 

or rule amendment is inconsistent with 

the Act or the Commission’s regulations. 

For the Commission to review a new 

rule or rule amendment of a registered 

entity for voluntary approval pursuant 

to this standard, the Commission needs 

to understand the rule or rule 

amendment and the operation, purpose, 

and effect of the rule or rule 

amendment. As noted above and in the 

NPRM, the amendment to § 40.5(a)(5) is 

intended to ensure the Commission 

receives adequate information regarding 

the rule or rule amendment to analyze 

whether the rule or rule amendment 

submitted for voluntary Commission 

review and approval is inconsistent 

with the Act or the Commission’s 

regulations. 

Because the registered entity is 

requesting that the Commission review 

the rule or rule amendment for 

Commission approval pursuant to 

§ 40.5, the Commission needs more 

information for § 40.5 submissions than 

for § 40.6 submissions—hence the 

inclusion of the word ‘‘concise’’ in 

§ 40.6 and the omission of the word 

‘‘concise’’ in § 40.5. Specifically, 

pursuant to § 40.5, the Commission 

needs to receive an explanation and 

analysis that is complete with respect to 

operation, purpose, and effect of the 

proposed rule or rule amendment and 

its compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder, to understand 

and assess whether the rule is 

inconsistent with the CEA or the 

Commission’s regulations. The rules 

and rule amendments implemented by 

registered entities vary widely, and the 

statutory and regulatory requirements 

that apply to any particular rule or rule 

amendment thus also vary widely. Each 

registered entity should be familiar with 

the statutory and regulatory 

requirements that apply for a particular 

rule or rule amendment, and therefore 

should be able to determine what 

information is reasonable and 

appropriate for the submission to 

demonstrate compliance with these 

requirements. The Commission is 

amending § 40.5(a)(5) as proposed to 

clarify that this regulation requires an 

explanation and analysis ‘‘that is 

complete with respect to’’ the operation, 

purpose, and effect of the proposed rule 

or rule amendment and its compliance 

with applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations thereunder. 

Regulation § 40.5(a)(6) provides that 

the registered entity shall certify that it 

posted a notice on its website of the 

pending rule with the Commission. To 

clarify that the reference to the 

‘‘pending rule’’ in § 40.5(a)(6) is 

intended to refer to the request of the 

registered entity for approval by the 

Commission of the new rule or rule 

amendment, the Commission is 

amending the text of § 40.5(a)(6) as 

proposed by replacing the words 

‘‘pending rule with the Commission’’ 

with the words ‘‘a notice of its request 

for Commission approval of the new 

rule or rule amendment.’’ The amended 

language will also use language that is 

consistent with § 40.3(a)(9).147 No 

comments were received in response to 

the proposed amendments to 

§ 40.5(a)(6). 

The Commission proposed to amend 

§ 40.5(c) and (d), which address the 

Commission’s review and determination 

(i.e., approval or non-approval) of new 

rules and rule amendments. To enhance 

readability, the Commission is 

reorganizing § 40.5 so that all of the 

provisions that may affect the length of 

the review period of a rule submitted for 

Commission approval pursuant to § 40.5 

appear together in § 40.5(c)—with the 

exception of expedited approval (which 

is moving to § 40.5(d)(2)).148 The 

Commission is adding § 40.5(c)(6), as 

proposed, to extend the review period 

under § 40.5(c)(1) 149 when the review 

period would end on a day that is not 

a business day to instead end on the 

next business day.150 The Commission 

is moving the text from § 40.5(d)(1) to 

§ 40.5(c)(2)) and revising the text to 

permit an additional extension of up to 

45 days. No comments were received in 

response to any of the proposed 

amendments to § 40.5(c) or (d). 

By way of background, § 40.5(d)(1) 

(which the Commission is moving to 

§ 40.5(c)(2)) provides that the 

Commission may extend the review 

period for an additional 45 days if the 

proposed rule raises novel or complex 

issues that require additional time for 

review or is of major economic 

significance, the submission is 

incomplete or the requestor does not 

respond completely to Commission 

questions in a timely manner. Under 

§ 40.5(c) and (d)(1), the initial 45-day 

review period and the 45-day extended 

review period could not exceed the 90 

days permitted by section 5c(c)(4)(C) of 

the CEA, absent agreement to a further 

extension by the registered entity that 

requested the review. To ensure that the 

total review period will not extend 

beyond 90 days after the request is 

submitted under the amended 

regulations, the Commission is adopting 

the proposed change to the extended 

review period under § 40.5(c)(2), from 

‘‘an additional 45 days’’ to ‘‘up to an 

additional 45 days.’’ For example, if the 

end of the initial 45-day review period 

would fall on a Saturday, and is 

extended by § 40.5(c)(6) to Monday, the 

next business day, for a total of 47 days, 

any additional extension under 

§ 40.5(c)(2) could not exceed 43 days (47 

+ 43 = 90). 

The other changes the Commission is 

adopting to the regulatory text in 

§ 40.5(c) are non-substantive and are not 

intended to alter the length of time the 

Commission has to review a rule 

submitted for Commission approval 

under § 40.5(a).151 As part of these nonVerDate Sep<11>2014 20:40 Nov 06, 2024 Jkt 265001 PO 00000 Frm 00016 Fmt 4701 Sfmt 4700 E:\FR\FM\07NOR3.SGM 07NOR3

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context to better understand the interaction of the 

provisions in §§ 40.4(b)(5) and 40.5(c)(5). The 

descriptive language added to § 40.5(c)(5) is 

consistent with current § 40.5(c)(2). For a 

discussion of the materiality determination under 

§ 40.4(b)(5), see Section II.D above. 

152Regulation § 40.5(d)(2) provides the 

Commission authority to extend the review period 

with the written agreement of the registered entity. 

The amendment in § 40.5(c)(3) will ensure it is clear 

that the authority also applies during any extended 

review period. 

153The Commission is unaware of ever using this 

condition. 

154The Commission is also replacing the word 

‘‘under’’ with ‘‘in compliance with’’ in § 40.5(d)(1) 

to clarify that consideration for approval is 

contingent upon complying with the requirements 

of § 40.5(a). 

155The Commission additionally is nonsubstantively amending § 40.5(f)(1) to include two 

new commas. The Commission believes this will 

improve readability and reduce the risk of 

confusion. 

156These changes also make this language 

consistent with the corresponding language in 

§§ 40.3 and 40.5. 

157The Commission also is amending 

§ 40.6(a)(6)(ii) by adding the words ‘‘or may be 

submitted pursuant to § 40.5’’ to clarify that new 

rules or rule amendments that establish standards 

for responding to an emergency may be either 

certified pursuant to § 40.6(a) or submitted for 

Commission approval pursuant to § 40.5. 

158FIA/ISDA at 1. 

159 2011 Final Rule at 44782–44783. 

substantive amendments, the 

Commission is making explicit in 

§ 40.5(c)(3) that the Commission may at 

any time extend its review period for 

any period of time, provided that it does 

so with the written agreement of the 

registered entity.152

The Commission is reorganizing 

§ 40.5(d) to address the Commission’s 

determination with respect to a 

proposed rule or rule amendment, 

including: approval through the passage 

of the applicable review period; 

expedited approval; and non-approval. 

The Commission is renumbering 

§ 40.5(g), which addresses expedited 

approval of a proposed rule or rule 

amendment, as § 40.5(d)(2) and 

amending it to remove the limitations 

that expedited approval may be used 

only for ‘‘changes to’’ a proposed rule or 

a rule amendment, and the changes to 

the proposed rule or rule amendment 

may only be approved through 

expedited approval if they are 

consistent with ‘‘standards approved or 

established by the Commission.’’ The 

Commission is also removing the 

condition that ‘‘the Commission may, at 

any time, alter or revoke the 

applicability of such a notice to any 

particular product or rule 

amendment.’’ 153 The Commission 

believes that the quoted text that these 

amendments will remove is not 

necessary or could be misconstrued in 

connection with the ability of the 

Commission to approve proposed rules 

and rule amendments that are consistent 

with the CEA and Commission 

regulations on an expedited basis.154

The Commission is also renumbering 

§ 40.5(f), which addresses the impact of 

non-approval, as § 40.5(e). No comments 

were received in response to any of 

proposed § 40.5(e). 

The text of § 40.5(f)(1), which the 

Commission is renumbering as 

§ 40.5(e)(1), provides that ‘‘[n]otification 

to a registered entity under paragraph 

(d)(3) of this section does not prevent 

the registered entity from subsequently 

submitting a revised version of a 

proposed rule or rule amendment for 

Commission review and approval, or 

from submitting the new rule or rule 

amendment as initially proposed in a 

supplemented submission; the revised 

submission will be reviewed without 

prejudice.’’ The revisions or 

supplements under current § 40.5(f)(1) 

and new § 40.5(e)(1) must provide a 

substantive basis to treat the revised 

rule or supplemented submission 

differently from the previously 

submitted rule. To clarify that 

‘‘[n]otification to a registered entity’’ 

means a notification of non-approval by 

the Commission, the Commission is 

amending this text by adding the words 

‘‘of the Commission’s determination not 

to approve a new rule or rule 

amendment’’. The Commission also is 

adding the words ‘‘or supplemented’’ to 

the text to clarify that supplemented 

submissions are ‘‘reviewed without 

prejudice.’’ 155 The Commission believes 

this will help avoid potential confusion 

and make the section more consistent 

with final § 40.5(e)(2) (which was 

previously § 40.5(f)(2)). 

Regulation § 40.5(f)(2), which the 

Commission is renumbering as 

§ 40.5(e)(2), provides that notification to 

a registered entity under paragraph 

(d)(3) of this section of the 

Commission’s determination not to 

approve a proposed rule or rule 

amendment is presumptive evidence 

that the entity may not truthfully certify 

the same, or substantially the same, 

proposed rule or rule amendment under 

§ 40.6(a). To clarify that certification 

under § 40.6(a) is referring to the 

certification that the rule or rule 

amendment complies with the CEA and 

the Commission’s regulations, the 

Commission is amending the text to add 

‘‘complies with the Act and the 

Commission’s regulations thereunder’’ 

and to move ‘‘under § 40.6(a)’’ to earlier 

in the text. The Commission believes 

these changes will enhance clarity and 

improve context.156

F. § 40.6—Self-Certification of Rules 

1. Amendments to 40.6(a) 

Regulation § 40.6(a) sets forth the 

submission requirements for rule 

certifications under CEA section 

5c(c)(1). The Commission is adopting 

various non-substantive amendments to 

§ 40.6(a) as proposed. The nonsubstantive amendments include: 

revising the introductory text of 

§ 40.6(a), including the header, to better 

reflect the content of the regulation; 

moving the requirements for delisting of 

products that do not have any open 

interest from the introductory text to a 

new § 40.6(a)(9); and revising the header 

and ordering of § 40.6(a)(6) to better 

reflect its purposes.157 The Commission 

also is removing references to dormant 

rules, the submission cover sheet, and 

the Secretary of the Commission, as 

previously discussed, and is correcting 

the reference to the statutory definition 

of the term ‘‘commodity’’ in § 40.6(a)(5) 

from ‘‘section 1a(4) of the Act’’ to 

‘‘section 1a(9) of the Act.’’ 

FIA and ISDA stated that they are 

generally supportive of all the 

clarifications, enhancements and 

reorganizations of § 40.6 regarding the 

Commission’s review and approval of 

new rules and amendments submitted 

by DCOs.158

The Commission proposed to replace 

the word ‘‘of’’ in § 40.6(a)(7)(v) with the 

words ‘‘that is complete with respect to’’ 

such that this condition, as amended, 

reads as follows: ‘‘A concise explanation 

and analysis that is complete with 

respect to the operation, purpose, and 

effect of the proposed rule or rule 

amendment and its compliance with 

applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations thereunder.’’ 

As the Commission articulated in 

2011, like the explanation and analysis 

required for new product submissions 

that are self-certified under § 40.2, the 

explanation and analysis of certified 

rules or rule amendments ‘‘should be a 

clear and informative—but not 

necessarily lengthy—discussion of the 

submission, the factors leading to the 

adoption of the rule or rule amendment, 

and the expected impact of the rule or 

rule amendment on the public and 

market participants.’’ 159 Similar to the 

discussion above in section II.B.3 

regarding the explanation and analysis 

that must accompany new contract 

submissions under § 40.2, the 

Commission has found that some new 

rule submissions, while being concise, 

have not provided adequate information 

to enable the Commission to complete 

its analysis of the compliance of the 

rules or rule amendments with 


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160See NPRM at 61440. 161 Id. 

162A16z at 6. 

163Cboe at 2–3. Cboe suggested the Commission 

can achieve the same outcome of requiring 

pertinent information to be included in rule 

certification filings by using the word ‘‘of’’ instead 

of the phrase ‘‘that is complete with respect to.’’ 

Cboe stated it believes that the inclusion of the 

word ‘‘complete’’ can lead to the possibility that 

this standard will be applied in a prescriptive, 

inconsistent, and unreasonable manner (which 

would in turn undermine the utility of the rule 

certification process for registered entities, market 

participants, and the Commission; delay the ability 

to implement rule enhancements that benefit the 

market; and inhibit innovation and competition). 

Cboe further stated that the concept of 

completeness is inherently ambiguous and could be 

applied in a rigid, onerous, arbitrary, and/or 

subjective manner. 

164Cboe at 3. 

165 Id. 

166See CEA sections 5, 5b, 5h and 21, and parts 

37, 38, 39 and 49 of the Commission’s regulations. 

167 2011 Final Rule at 44787. 

168NPRM at 61440 (quoting the 2011 Final Rule 

at 44783 as stating that the Commission, in 

consideration of comments from both CME and 

OCX, has determined to amend § 40.6(a) to make 

rules delisting or withdrawing the certification of 

products effective upon submission to the 

Commission. The Commission agrees that such 

submissions should be exempt from the 10- 

business-day review period in order to avoid 

complicating the delisting of the product by 

providing market participants an opportunity to 

enter into contracts between the time period of 

submission and the effective date of the rule.). 

applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations.160 The 

Commission proposed to add the words 

‘‘that is complete with respect to’’ to 

§ 40.6(a)(7)(v) to ensure that, although 

the explanation be concise, it 

nevertheless must address the 

operation, purpose, and effect of the 

proposed rule or rule amendment and 

its compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations.161

In response to the proposed 

amendments to § 40.6(a)(7)(v), A16z 

requested that the Commission provide 

guidance on how market participants 

can simultaneously satisfy the 

requirements to be ‘‘complete’’ while 

also being ‘‘concise’’.162 Cboe stated that 

the word ‘‘complete’’ should not be 

included, and if it is, Cboe requests at 

a minimum that the Commission clarify 

that the standard of completeness will 

be applied in a sensible and reasonable 

manner.163 Cboe stated that rule 

certifications should focus on key 

points, as reflected by the inclusion of 

the word ‘‘concise’’ in the current and 

proposed regulatory language which 

describes the explanation and analysis 

that is required to be included.164 Cboe 

stated that it is important that the 

application of the rule certification 

provisions focuses on requiring a 

concise description of what is relevant 

with respect to the applicable rule in 

determining what information should be 

included instead of completeness for the 

sake of completeness which can lead to 

the inclusion of unneeded and 

irrelevant information.165

The Commission has considered the 

comments received in response to the 

proposed amendments to § 40.6(a)(7)(v). 

The Commission notes that prior to a 

registered entity self-certifying that a 

rule or rule amendment complies with 

the Act and Commission regulations 

thereunder, the registered entity must 

complete its diligence on the rule or 

rule amendment to ensure the rule or 

rule amendment complies with the 

applicable provisions of the Act, 

including core principles, and the 

Commission’s regulations 

thereunder.166 The registered entity 

relies upon its own diligence when it 

self-certifies that the rule or rule 

amendment complies with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder. The submitted 

explanation and analysis is necessary 

for the Commission’s review of a rule 

certification and should allow the 

Commission to understand the 

operation, purpose, and effect of the 

rule or rule amendment and how the 

registered entity views the rule or rule 

amendment as compliant with the Act 

and Commission regulations 

thereunder. 

In response to the request that the 

Commission provide guidance regarding 

how a registered entity would satisfy the 

‘‘complete’’ requirement while also 

being ‘‘concise,’’ the Commission notes 

that as it articulated in the 2011 Final 

Rule, ‘‘[a] ‘‘concise explanation and 

analysis’’ should be a clear and 

informative—but not necessarily 

lengthy—description of the product or 

rule and its implications for compliance 

with applicable law.’’ 167 As revised to 

include ‘‘complete,’’ the Commission 

continues to believe that the concise 

explanation and analysis required under 

amended § 40.6(a)(7)(v) should be a 

clear and informative description of the 

rule and its compliance with applicable 

law and is not necessarily required to be 

lengthy in order to be ‘‘complete.’’ The 

registered entity must include 

explanation and analysis of the 

operation, purpose, and effect of the 

proposed rule or rule amendment and 

its compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder. Cursory or 

conclusory explanations will not 

suffice. 

The Commission is thus adding the 

word ‘‘complete’’ to § 40.6(a)(7)(v) as 

proposed to confirm that it is essential 

that the registered entity include a 

concise explanation and analysis of the 

operation, purpose, and effect of the 

rule or rule amendment and how and 

why the rule or rule amendment 

complies with the applicable core 

principles and regulations. The term 

‘‘complete’’ is intended to denote the 

scope of the explanation and analysis. A 

complete explanation and analysis in 

scope will cover all core principles and 

the Commission’s regulations 

thereunder that are relevant to the 

specific rule or rule amendment. The 

core principles and regulations that 

apply to a particular rule or rule 

amendment vary depending on the facts 

and circumstances surrounding the rule 

or rule amendment. 

As noted in the NPRM, the 

introductory text to § 40.6(a) includes a 

provision that was intended to enable a 

registered entity to delist, or withdraw 

a certification of, a product that does not 

have any open interest immediately 

upon a submission provided that the 

submission complied with the 

submission and certification 

requirements in § 40.6(a)(1), (2) and 

(7).168 Because the introductory 

provision has not been well understood, 

the Commission proposed to clarify it 

by moving it and adding an explicit 

statement into the regulatory text. The 

Commission received no comments on 

these proposed changes and is adopting 

these changes as proposed. Specifically, 

new § 40.6(a)(9) explicitly states that a 

new rule or a rule amendment that 

delists, or withdraws the certification of, 

a product that does not have any open 

interest may become effective 

immediately upon the filing of the 

submission, provided that the 

submission is made in compliance with 

§ 40.6(a)(1), (2) and (7). 

2. Amendments to § 40.6(b) 

Regulation § 40.6(b) sets forth the 

Commission’s review period for a rule 

certification under § 40.6(a). The 

regulation provides the Commission 

with a 10-business day review period 

after which the rule is deemed certified, 

unless the rule is stayed by the 

Commission during the review period. 

The Commission proposed to amend 

§ 40.6(b) to provide that any substantive 

amendment or supplementation of the 

rule submission will be deemed a new 

submission and restart the 10-business 

day review period, unless the 

amendment or supplementation is made 

for correction of typographical errors, 


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169CME Group at 3–4; ICE at 2–3. 

170CME Group at 4. 

171 ICE at 3. 

172The Commission also is changing the 

reference in § 40.6(c)(3) from ‘‘proposed 

certification’’ to ‘‘certification.’’ 

173CME Group at 3; ICE at 2. 

174Cboe at 3–4. 

175Cboe at 4. 

176For example, if a DCM has a quarterly listing 

cycle of three years for a contract (March, June, 

September and December), the DCM could elect to 

add the nearest two serial listing months on a 

rolling basis where an additional serial month is 

listed once a preceding serial month expires (e.g. 

April and May in between March and June; then 

July and August in between June and September). 

However, the DCM could not expand the quarterly 

listing cycle beyond the nearest three years through 

§ 40.6(d)(2)(ix). 

renumbering or other non-substantive 

revisions. Under proposed § 40.6(b), a 

substantive amendment or 

supplementation of a rule submission 

made in response to a Commission 

request would be deemed a new 

submission. 

CME Group and ICE commented on 

proposed § 40.6(b) and stated that the 

review period should not be restarted 

for amendments requested by the 

Commission.169 CME Group noted that 

the ‘‘Commission presumably 

understands the basis for its requested 

change or changes so it should not need 

an additional . . . 10-day review period 

. . . to review the changes it has asked 

for.’’ 170 Additionally, ICE requested 

§ 40.6(b) be amended to provide for no 

restarting of the review period for 

amendments or supplemental filings 

made with the consent of Commission 

Staff.171

The Commission considered the 

comments received on the proposed 

amendments to § 40.6(b) and is revising 

the amendments to § 40.6(b) to provide 

that the review period will not be 

restarted for amendments or 

supplements requested by the 

Commission. Specifically, as revised 

and adopted, § 40.6(b) will provide that 

any amendment or supplementation 

made by the registered entity to the 

submission will be treated as the filing 

of a new submission under this section 

and be subject to the initial 10-business 

day review period in accordance with 

paragraph (b)(1) of this section, unless 

the amendment or supplementation is 

requested by the Commission or is made 

for correction of typographical errors, 

renumbering or other non-substantive 

revisions. The Commission notes that it 

retains the authority to stay a 

certification of a new rule or rule 

amendment submitted pursuant to 

§ 40.6(a) if, among other reasons, the 

certification is accompanied by an 

inadequate explanation, or is potentially 

inconsistent with the Act or the 

Commission’s regulations thereunder. 

3. Amendments to § 40.6(c) 

Regulation § 40.6(c), together with 

sections 5c(c)(2) and (3) of the Act, set 

forth the Commission’s procedures for 

staying a submission pursuant to 

§ 40.6(a). The Commission is adding the 

phrase ‘‘and can be implemented’’ to 

§ 40.6(c)(3) as proposed in order to make 

clear that upon the expiration of a stay 

(without Commission objection), the 

registered entity may opt to implement 

the rule at a later time.172

The Commission is amending § 40.6 

by adding a new § 40.6(c)(5) as proposed 

to address the effect of a Commission 

objection to a rule submitted pursuant 

to § 40.6(a). The provision is based on 

the similar provision in § 40.5(f) (which 

is being moved to § 40.5(e)). Regulation 

§ 40.6(c)(5)(ii) as amended provides that 

a Commission objection to a rule 

certification pursuant to § 40.6(c)(3) is 

presumptive evidence that the entity 

may not truthfully certify that the same, 

or substantially the same, rule complies 

with the Act and the Commission’s 

regulations. As adopted, § 40.6(c)(5)(i) 

provides that a Commission objection 

does not, however, prevent the 

registered entity from subsequently 

submitting a revised or supplemented 

version of the proposed rule or rule 

amendment for review and approval or 

for certification. The revisions or 

supplements under new § 40.6(c)(5)(i) 

must provide a substantive basis to treat 

the revised rule differently from the 

previously submitted rule. The 

Commission received no comments in 

response to the proposed changes to 

§ 40.6(c). 

4. Amendments to § 40.6(d) 

Regulation § 40.6(d)(2) sets forth 

various categories of rules that may be 

implemented by a registered entity 

without certification, provided that the 

registered entity complies with the 

weekly notification requirements in 

§ 40.6(d)(1). The Commission proposed 

to add the following new categories of 

rules to § 40.6(d)(2): updates to email 

addresses or other contact information 

that market participants use to submit 

block trades; amendments to existing 

trading months; with respect to a 

contract for the purchase or sale of a 

commodity for future delivery or an 

option on such a contract or an option 

on a commodity (other than a swap), 

payment or collection of commodity 

options premiums or margins and 

changes to no cancellation ranges; and 

with respect to a swap, payment or 

collection of option premiums or 

margins. The Commission believes that 

these categories are not substantive for 

compliance purposes and to the extent 

rules are addressing these categories, 

such rules need not be subject to selfcertification and Commission review 

requirements of § 40.6(a). 

ICE and CME Group stated that they 

support the amendments proposed to 

§ 40.6(d)(2).173 Cboe stated that it is 

unclear regarding what is meant by the 

requirement to submit weekly 

notifications of rule amendments for an 

amendment to existing trading months 

in connection with proposed 

§ 40.6(d)(2)(ix).174 Cboe stated that ‘‘If 

this provision is referencing an 

amendment to a DCM’s or SEF’s rule 

provisions regarding its contract listing 

parameters, Cboe agrees that these 

amendments should be able to be made 

through a weekly notification of rule 

amendments.’’ 175 In response to Cboe’s 

comment, the Commission notes that an 

amendment to existing trading months 

in connection with § 40.6(d)(2)(ix) (as 

proposed and as amended) includes an 

addition or removal of contract month 

listings, provided that they are within 

the exchange’s existing listing rule.176

As discussed above in section II.A.5, 

the Commission believes that registered 

entities should be able to submit rules 

or rule amendments governing the 

payment or collection of commodity 

options premiums or margins and 

option premiums or margins (which are 

currently within the definition of terms 

and conditions in § 40.1) through 

weekly notices to the Commission 

pursuant to § 40.6(d)(2)(xiii) as these 

rules or rule amendments are generally 

operational rather than economic in 

nature and this change will lower the 

burden for registered entities and still 

provide sufficient notice to the 

Commission. The Commission also 

believes that registered entities should 

be able to submit rules or rule 

amendments that change no 

cancellation ranges or amend existing 

trading months through weekly notices 

to the Commission pursuant to 

§ 40.6(d)(2) as this will lower the burden 

for registered entities to implement such 

changes and still provide sufficient 

notice to the Commission. The 

Commission is adopting the 

amendments to § 40.6(d)(2) as proposed. 

Regulation § 40.6(d)(3) set forth 

various categories of rules that may be 

implemented without certification or 

notice to the Commission. The 

Commission is renumbering § 40.6(d)(3) 

as § 40.6(e) and making corresponding 


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177The Commission believes the current 

numbering is inconsistent with the introductory 

text of § 40.6(d). 

178 ICE at 2. 

179 Id. 

180Cboe at 4. 

181 Id. The Commission clarifies that it did not 

propose any substantive changes to 

§ 40.6(d)(3)(ii)(H)—which is being redesignated as 

§ 40.6(e)(2)(viii). 

182Eurex at 2–3. 

183 Id. 

184Regulation § 40.7(a)(5) provides that if the 

Commission determines that a rule submitted by a 

DCM pursuant to § 40.4(b)(5) is not material, the 

rule ‘‘may be reported pursuant to the provisions 

of § 40.6(d).’’ However, § 40.4(b)(5) itself provides 

that if a rule is deemed not material pursuant to the 

regulation, it may be filed pursuant to § 40.6(a). 

185The delegation is not intended to and does not 

affect any substantive authority including, for 

example, the Commission’s authority to bring an 

enforcement action based on a person’s violation of 

a registered entity’s position limit rules pursuant to 

CEA section 4a(e). 186CME Group at 3. 

non-substantive numbering changes to 

the paragraphs of the regulation.177 The 

Commission is amending 

§ 40.6(d)(3)(ii)(v)(E)(1) (which is 

redesiganted as § 40.6(e)(2)(v)(A)) to add 

the words ‘‘per contract’’ so that it reads 

‘‘Are less than $1.00 per contract; or’’ to 

be consistent with the corresponding 

provision in § 40.6(d)(2)(v)(A). 

The Commission also requested 

comment on whether there are other 

categories of rules that should be added 

to § 40.6(d)(2) or (3). ICE requested the 

Commission also amend § 40.6(d)(2) to 

allow a DCM to promptly implement 

changes to price and volatility control 

mechanism levels in response to 

prevailing market conditions through 

the § 40.6(d)(2) weekly notice 

process.178 ICE specifically listed the 

following metrics it would like to be 

able to change through weekly notices 

to promptly address disorderly market 

conditions or mitigate disruptions: 

maximum order size, reasonability limit 

levels, price bands, circuit breaker 

trigger levels, and the duration of a 

market pause in periods of heightened 

market volatility.179 Because these 

suggested additions have not been 

included in a proposal on which the 

public has had the opportunity to 

provide comment, the Commission 

cannot consider adopting them here, but 

the Commission may consider 

proposing them in a future rulemaking. 

Cboe requested that the Commission 

clarify that DCMs and SEFs may list 

additional contract listings for a product 

subsequent to the initial contract 

listings for that product without any 

rule submission to the Commission, 

provided that the additional contract 

listings are within the parameters of the 

contract previously established through 

a rule or product submission to the 

Commission.180 Cboe suggested the 

Commission effectuate this change by 

expanding the scope of new 

§ 40.6(e)(2)(viii) to include the 

subsequent listing of trading months 

which are within the currently 

established cycle of trading months.181

Because these suggested additions have 

not been included in a proposal on 

which the public has had the 

opportunity to provide comment, the 

Commission cannot consider adopting 

them here, but the Commission may 

consider proposing them in a future 

rulemaking. 

Eurex Clearing recommended that the 

Commission expand the categories of 

rules covered by § 40.6(d)(3) to include 

rules and rule changes that are 

unrelated to the DCO’s activities that are 

subject to the Commission’s 

oversight.182 This proposed category 

would cover a DCO rule or rule change 

that: (i) applies to any product class for 

which it provides clearing services that 

is outside the scope of the DCO’s order 

of registration with the Commission; (ii) 

does not affect any product class cleared 

within the scope of the DCO’s order of 

registration with the Commission; and 

(iii) does not affect the DCO’s general 

operations.183 Because this suggested 

addition has not been included in a 

proposal on which the public has had 

the opportunity to provide comment, 

the Commission cannot consider 

adopting it here, but the Commission 

may consider proposing it in a future 

rulemaking. 

G. § 40.7—Delegations 

1. Amendments to § 40.7 

Regulation § 40.7 sets forth 

delegations of the Commission’s 

authority to take various actions under 

the provisions of part 40. In the NPRM, 

the Commission proposed to amend 

§ 40.7 to enhance the regulation’s clarity 

and utility and to add three new 

delegations. 

The Commission is amending the text 

of § 40.7(a)(5) as proposed, which 

delegates the Commission’s authority to 

determine if a proposed rule is material 

under § 40.4(b)(5). The amendments 

streamline and simplify the text of the 

regulation by eliminating text that is not 

relevant to the delegation and an 

inconsistent reference to § 40.6(d).184

The Commission is amending 

§ 40.7(b)(3) as proposed by adding the 

words ‘‘or relate to’’ to clarify that this 

delegation includes authority to approve 

rules or rule amendments of a registered 

entity that relate to, but do not establish 

or amend, speculative limits or position 

accountability provisions.185

The Commission proposed to delegate 

under proposed § 40.7(a)(1)(iv) and (v) 

the authority in proposed §§ 40.3(c)(3) 

and 40.5(c)(3) to extend the applicable 

review period set forth in §§ 40.3(c) and 

40.5(c), respectively, for the period of 

time agreed to in writing by the 

registered entity. The Commission did 

not receive any comments on the 

proposed amendments to §§ 40.3(c)(3) 

and 40.5(c)(3). The Commission has 

determined not to adopt the two 

delegations proposed as § 40.7(a)(1)(iv) 

and (v) at this time. 

Finally, as discussed above, the 

Commission is adopting § 40.7(e) to 

delegate the Commission’s authority to 

specify the format and manner of filing 

under these regulations to the Directors 

of the Division of Clearing and Risk and 

the Division of Market Oversight, as 

proposed. CME Group commented in 

support of this delegation, noting that 

their DCMs, DCO and SEF collectively 

submit hundreds of filings each 

calendar year and that they are 

confident that the heads of the Divisions 

will endeavor to make the filing formats 

as uniform as possible.186 Given that 

technology is used for the Commission 

to receive submissions from the 

registered entities under these 

regulations and the speed at which 

technology evolves, the Commission 

believes it is useful for staff to have the 

ability to specify the format and manner 

of filings under these regulations to 

facilitate the regulations remaining 

current with technological advances 

that registered entities and the 

Commission may use in the future. 

H. § 40.10—Special Certification 

Procedures for Submission of Rules by 

SIDCOs 

1. Definition of ‘‘Materiality’’ in § 40.10 

Regulation § 40.10(a), which 

implements section 806(e) of the DoddFrank Act, requires a SIDCO to provide 

notice to the Commission not less than 

60 days in advance of any proposed 

change to its rules, procedures, or 

operations that could ‘‘materially affect 

the nature or level of risks presented’’ 

by the SIDCO. ‘‘Materially affect the 

nature or level of risks presented’’ is 

further defined in § 40.10(b). The 

Commission proposed to revise this 

definition to provide greater specificity 

regarding the types of changes that 

would require advance notice under 

§ 40.10(a), including, but not limited to, 

material changes to the SIDCO’s default 

management plan or default rules or 

procedures under §§ 39.16 or 39.35, 

program of risk analysis and oversight 


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187FIA/ISDA at 1. 

188FIA/ISDA at 1–2. 

189See, e.g., ‘‘CFTC Seeks Public Comment on 

Proposed Changes to Chicago Mercantile Exchange 

Inc. Rules Regarding Direct Funding Participants,’’ 

at https://www.cftc.gov/PressRoom/PressReleases/ 

7661-17. 

190Public Law 111–203, title VII, section 734(a), 

July 21, 2010, 124 Stat. 1718 (2010). 

191 5 U.S.C. 601 et seq. 

192Policy Statement and Establishment of ‘‘Small 

Entities’’ for purposes of the Regulatory Flexibility 

Act, 47 FR 18618 (Apr. 30, 1982). 

193 Id. at 18618, 18619. 

194New Regulatory Framework for Clearing 

Organizations, 66 FR 45604, 45609 (Aug. 29, 2001). 

195Core Principles and Other Requirements for 

Swap Execution Facilities, 78 FR 33476, 33548 

(June 4, 2013). 

196Swap Data Repositories, 75 FR 80898, 80926 

(Dec. 23, 2010). 

197For the previously approved estimates for 

OMB Collection 3038–0093, see ICR Reference No. 

202312–3038–001, (conclusion date Feb. 9, 2024), 

available at https://www.reginfo.gov/public/do/ 

PRAViewICR?ref_nbr=202312-3038-001. 

required under § 39.18, or recovery and 

wind down plans required under 

§ 39.39; the adoption of a new or 

materially revised margin methodology; 

the establishment of a cross-margining 

program or similar arrangement with 

another clearing organization; and 

material changes to its approach to the 

stress testing required under 

§§ 39.13(h)(3), 39.36(a), or 39.36(c). 

FIA and ISDA supported the revised 

definition, noting that the nonexhaustive list provides useful guidance 

to SIDCOs as to when proposed changes 

require advance notice.187 The 

Commission did not receive any 

comments opposing the change. 

The Commission is adopting the 

amendment to § 40.10(b) as proposed. 

As the Commission noted in the NPRM, 

the ‘‘may include, but are not limited 

to’’ language means that the examples 

listed in the new definition are not 

exhaustive, and a proposed change that 

is not specifically mentioned 

nevertheless may be subject to advance 

notice if it meets the standard in 

§ 40.10(a). 

FIA and ISDA also noted that the 

Commission should provide a public 

comment period under § 40.10 when a 

SIDCO submits a rule for Commission 

review that the Commission believes 

raises novel or complex issues.188 FIA 

and ISDA noted this would align the 

§ 40.10 process for SIDCOs with the selfcertification process for all registered 

entities in § 40.6. The Commission notes 

that the statutory bases for these 

processes are different; § 40.6(c) codifies 

the requirement in section 5c(c)(3)(C) of 

the CEA for public comment when the 

Commission determines to stay a rule 

certification, while § 40.10 codifies 

section 806(e) of the Dodd-Frank Act, 

which does not provide for public 

comment. Further, the change that FIA 

and ISDA suggest would be outside the 

scope of this final rule. The Commission 

notes that even if Commission 

regulations do not require a public 

comment period, the Commission may 

still request public comment if the 

Commission determines it is 

appropriate, as it has done in the 

past.189

2. SIDCO Submission Under § 40.10 of 

Rules Otherwise Required To Be 

Submitted Under § 40.5 

The Commission is adopting as 

proposed new § 40.10(i), which requires 

that where any provision of the 

Commission’s regulations requires a 

DCO to file rules for approval under 

§ 40.5, a SIDCO would be required 

instead to file those rules under § 40.10, 

if the rules could materially affect the 

nature or level of risks presented by the 

SIDCO. Without this change, a 

requirement for DCOs to file rules 

pursuant to § 40.5 could be 

misinterpreted as relieving a SIDCO 

from having to file those same rules 

pursuant to § 40.10, or as creating a 

duplicative requirement for SIDCOs to 

submit rules under both §§ 40.5 and 

40.10. The Commission did not receive 

any comments on this aspect of the 

proposal. 

3. Technical Corrections to § 40.10 

The Commission proposed to revise 

the first sentence of § 40.10(a), which 

references ‘‘[a] registered [DCO] that has 

been designated by the Financial 

Stability Oversight Council as a 

systemically important [DCO],’’ to refer 

to the definition of ‘‘systemically 

important derivatives clearing 

organization’’ in § 39.2. The 

Commission also proposed to revise 

§ 40.10(d) and (h)(3) to remove 

references to ‘‘the purposes of the DoddFrank Act’’ that are no longer necessary. 

The Commission did not receive any 

comments on these proposed changes. 

The Commission is adopting these 

technical amendments as proposed. 

I. Technical Correction to Authority 

Section of Part 40 

The Commission is removing as 

proposed the reference to section 7a of 

the CEA, which was repealed by the 

Dodd-Frank Act,190 from the authority 

section for part 40. 

III. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) 

requires agencies to consider whether 

the rules they issue will have a 

significant economic impact on a 

substantial number of small entities 

and, if so, provide a regulatory 

flexibility analysis with respect to such 

impact.191 The Commission has 

previously established certain 

definitions of ‘‘small entities’’ to be used 

by the Commission in evaluating the 

impact of its regulations on small 

entities in accordance with the RFA.192

The amendments to part 40 set forth 

herein impact DCMs, DCOs, SEFs and 

SDRs. The Commission has previously 

determined that DCMs,193 DCOs,194

SEFs,195 and SDRs 196 are not small 

entities for purposes of the RFA. 

Therefore, the Chairman, on behalf of 

the Commission, pursuant to 5 U.S.C. 

605(b), hereby certifies that the 

amended rules will not have a 

significant economic impact on a 

substantial number of small entities. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(‘‘PRA’’) 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. Under the PRA, an agency 

may not conduct or sponsor, and a 

person is not required to respond to, a 

collection of information unless it 

displays a currently valid control 

number from the Office of Management 

and Budget (‘‘OMB’’). The PRA is 

intended, in part, to minimize the 

paperwork burden created for 

individuals, businesses, and other 

persons as a result of the collection of 

information by Federal agencies, and to 

ensure the greatest possible benefit and 

utility of information created, collected, 

maintained, used, shared, and 

disseminated by or for the Federal 

Government. The PRA applies to all 

information, regardless of form or 

format, whenever the Federal 

Government is obtaining, causing to be 

obtained, or soliciting information, and 

includes required disclosure to third 

parties or the public, of facts or 

opinions, when the information 

collection calls for answers to identical 

questions posed to, or identical 

reporting or recordkeeping requirements 

imposed on, ten or more persons. 

The final rulemaking modifies an 

existing collection of information 

previously approved by OMB, for which 

the Commission has received OMB 

control number 3038–0093, part 40, 

Provisions Common to Registered 

Entities (OMB Collection 3038–0093) 

(‘‘part 40 Information Collection’’).’’ 197

The responses to this collection are 

mandatory. The Commission is revising 


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198 Id. 

199A16z at 7–8; Coinbase at 8. The A16z 

comment noted an apparent inconsistency between 

the CBC and PRA analyses in the NPRM, in that the 

PRA recognized a cost associated with the 

completeness requirement for product and rule 

submissions under part 40, but the CBC did not. As 

discussed in note 74 of the NPRM, the amendments 

clarify the Commission’s expectations for the 

content of submissions, which some registered 

entities had not been meeting in their recent filings. 

See NPRM at 61443 n.74. Although the Commission 

views the amendments as clarifying filing 

requirements rather than new requirements, for 

practical PRA purposes, the amendments will 

increase some registered entities’ reporting burden 

compared to their current inadequate filing 

practices. However, relative to the baseline of what 

registered entities already should be doing, the 

burden has not changed. The A16z comment 

regarding the relationship between the PRA burden 

estimate and the CBC cost estimate is also 

addressed in the CBC analysis in section 

III.C.4(c)(ii) and III.C.4(e)(ii) below. Because A16z 

did not make any specific comments about the PRA 

estimates, but only noted an apparent inconsistency 

with the CBC, the Commission has not made any 

changes to its PRA estimates in response to the 

A16z comment. 

200Some registered entities have been providing 

the required level of detail in their part 40 filings. 

They will not experience an increased burden as 

compared to their current practices. For PRA 

purposes however, the Commission’s burden 

estimates are spread across all reporting entities 

covered by part 40. 

201Coinbase at 8, 11. 

202The 3-year average of total responses for 

§§ 40.2 and 40.3 submissions combined was 848 

responses, calculated by taking the annual total 

submissions received under §§ 40.2 and 40.3 

combined from all entities and averaging them for 

the years of 2020, 2021 and 2022. The estimated 

number of reports per respondent is calculated as 

848 responses divided by 70 respondents (848 

responses/70 respondents = 12 responses per 

respondent). 

203The aggregate number of hours per report for 

§§ 40.2 and 40.3 adds 1 hour to the existing burden 

estimate of 21 hours, for a total of 22. 

204The estimated gross annual reporting burden 

(hours) is calculated by multiplying the estimated 

number of respondents times the estimated number 

of reports per respondent times the average number 

of hours per report (70 respondents × 12 reports per 

respondent × 22 hours per report = 18,480 hours). 

205While the amendments require that § 40.5 

submissions provide an explanation and analysis 

that is complete with respect to the operation, 

purpose, and effect of the proposed rule or rule 

amendment, § 40.5 submissions are very infrequent 

(an average of 5 per year over the past 3 years) and 

most submissions already provide considerable 

detail. Accordingly, the Commission anticipates 

that the requirement that such submissions be 

‘‘complete’’ will not result in a measurable increase 

in filing burdens associated with § 40.5 

submissions. 

206The estimated number of 70 respondents 

includes 16 active DCMs, 23 registered SEFs, 15 

registered DCOs, 5 provisionally registered SDRs, 

plus pending applications for those entities. 

207As noted above, the amendment increases the 

burden only for § 40.6 filings (and not for § 40.5 

filings). However, the Commission aggregates 

§§ 40.5 and 40.6 for PRA purposes. The 3-year 

average of total responses for §§ 40.5 and 40.6 

submissions combined was 1,412 responses, 

calculated by taking the annual total submissions 

received under §§ 40.5 and 40.6 combined from all 

entities and averaging them for the years of 2020, 

2021 and 2022. The estimated number of reports 

per respondent is calculated as 1,412 responses 

its total burden estimates for this 

clearance to reflect the final rulemaking. 

The part 40 Information Collection 

encompasses the reporting burdens 

associated with §§ 40.2 and 40.3 

(product submissions); §§ 40.5 and 40.6 

(rule submissions); and § 40.10 (SIDCO 

submissions).198 The Commission 

received two comments on its burden 

analysis under the PRA in the 

proposal.199 These comments and the 

Commission’s response are discussed 

below. 

Burden Estimates 

The amendments to §§ 40.2(a)(3)(v), 

40.3(a)(4), 40.5(a)(5), and 40.6(a)(7)(v) 

require registered entities to provide 

complete information. 

For the amendments addressing 

§§ 40.2, 40.3, 40.5, and 40.6, the 

Commission is retaining its PRA burden 

estimates discussed in the NPRM. As 

discussed in the NPRM, the 

Commission anticipates that these 

amendments are likely to modestly 

increase the reporting burden for 

registered entities, although some 

registered entities are already providing 

the information required under the final 

rule.200

Accordingly, the Commission 

estimates the revised information 

collection burdens for the part 40 

Information Collection associated with 

the final rule as follows: 

Product Submissions (§§ 40.2 and 40.3) 

Under §§ 40.2 and 40.3 as finalized, 

product submissions will be required 

include complete information. While 

this is not intended to expand or 

otherwise alter the scope of the 

explanation or analysis required in the 

current regulation, the Commission 

conservatively estimates some reporting 

entities may expend some additional 

time to ensure the completeness of their 

submissions. The number of 

respondents remains 70. The 

Commission estimates that the 

amendments to §§ 40.2(a)(3)(v) and 

40.3(a)(4) may add an additional average 

1 hour of burden (for a new total of 22 

hours). As set out in the previously 

approved part 40 Information 

Collection, the Commission estimates 

that reporting entities are likely to 

submit on average an aggregate of 848 

reports annually. 

One commenter stated that the 

proposed revision to § 40.2 ‘‘could 

significantly expand a DCM’s regulatory 

costs for preparing certified product 

filings.’’ 201 Although this commenter 

did not expressly reference the 

Commission’s PRA burden estimates, 

the Commission is addressing this 

comment here as part of its PRA burden 

analysis. As stated above in section 

II.B.3 above, the Commission does not 

anticipate that the new requirement for 

‘‘complete’’ § 40.2 submissions will 

constitute a significant expansion in 

regulatory costs because the registered 

entities, through their due diligence, 

will have already collected the 

information that they will now provide 

in their § 40.2 filings. Additionally, the 

new submissions do not necessarily 

need to be lengthy. Thus, the 

Commission continues to estimate an 

increase of one burden hour per product 

filing, averaged across all filers. 

Accordingly, the aggregate annual 

estimate for the reporting burden 

associated with product submissions 

(§§ 40.2 and 40.3), as amended by the 

final rules, is as follows: 

Estimated number of respondents: 70. 

Estimated number of reports per 

respondent: 12.202

Average number of hours per report: 

22.203

Estimated gross annual reporting 

burden (hours): 18,480.204

Rule Submissions (§§ 40.5 and 40.6) 

Under § 40.6 as finalized, rule 

submissions will be required to include 

complete information to enable the 

Commission to perform its analysis of 

the submissions. While this is not 

intended to expand or otherwise alter 

the scope of the explanation or analysis 

required in the current regulation, the 

Commission conservatively estimates 

some reporting entities may expend 

some additional time to ensure the 

completeness of their submissions. The 

number of respondents remains 70. 

Although the final rulemaking only 

increases reporting burden for § 40.6 

submissions,205 the Commission 

averages §§ 40.5 and 40.6 for PRA 

purposes. Based on an updated review 

of recent submission data from 2020– 

2022, the Commission estimates that 

respondents submit on average 1,412 

reports per year. Further, the 

Commission estimates that each 

respondent will spend approximately 

2.5 hours to prepare and submit the 

required reports. Accordingly, the 

aggregate annual estimate for the 

reporting burden is as follows: 

Estimated number of respondents: 

70.206

Estimated number of reports per 

respondent: 20.207


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divided by 70 respondents (1,412 responses/70 

respondents = 20 responses per respondent). 

208The aggregate number of hours per report for 

§§ 40.5 and 40.6 adds 0.5 hours to the existing 

burden of 2 hours per report, for a total of 2.5. 

209The estimated gross annual reporting burden 

(hours) is calculated by multiplying the estimated 

number of respondents times the estimated number 

of reports per respondent times the average number 

of hours per report (70 respondents × 20 reports per 

respondent × 2.5 hours per report = 3,500 hours). 

210See supra n.197. As set out in the NPRM and 

the PRA renewal, the estimated gross annual 

reporting burden for SIDCO submissions under 

§ 40.10 is 100 hours, which is calculated by 

multiplying the estimated number of respondents 

times the estimated number of reports per 

respondent times the average number of hours per 

report (2 respondents × 1 report per respondent per 

year × 50 hours per report = 100 hours per year). 211 7 U.S.C. 19(a). 

Average number of hours per report: 

2.5.208

Estimated gross annual reporting 

burden (hours): 3,500.209

SIDCO Submissions (§ 40.10) 

The Commission is retaining its 

existing burden estimates for SIDCO 

submissions under § 40.10 because the 

burden for SIDCO submissions is 

unaffected by the amendments. Section 

40.10(a) requires a SIDCO to provide 

notice to the Commission not less than 

60 days in advance of any proposed 

change to its rules, procedures, or 

operations that could ‘‘materially affect 

the nature or level of risks presented’’ 

by the SIDCO. The Commission is 

revising the definition of ‘‘materially 

affect the nature or level of risks 

presented’’ in § 40.10(b), but does not 

anticipate that this clarification will 

alter submission requirements for 

SIDCO filers, increase the burdens 

associated with such filings, or affect 

the frequency or number of such filings. 

Accordingly, the Commission is 

retaining the burden estimates adopted 

under § 40.10, as approved by OMB 

during the most recent renewal of OMB 

Collection 3038–0093.210

The Commission believes that the 

other changes to reporting in the final 

rule will not increase the burden on the 

registered entities, and in some cases, 

may reduce reporting burden. The 

Commission anticipates that the 

following changes will not result in any 

increase in reporting burden: 

Dormancy (§ 40.1). Registered entities 

are no longer required to make 

submissions to revive dormant rules or 

products under §§ 40.2, 40.3, 40.5, or 

40.6, other than when required to do so 

in connection with reinstating a 

dormant registered entity’s registration 

or designation. Accordingly, the change 

does not add any burden on registered 

entities, but may reduce burdens. 

Margin methodology rules (§§ 40.1, 

40.5, 40.6, 40.10). This provision adds 

‘‘margin methodology’’ to the definition 

of ‘‘rule’’ and thus requires the 

corresponding rule submissions. 

However, registered entities already 

have been submitting margin-related 

rule changes under the current 

requirements. The change only clarifies 

existing filing requirements and does 

not add new reporting burdens. 

Terms and conditions; weekly 

notification (§§ 40.1, 40.2, and 

40.6(d)(2)). The changes to the 

definition of ‘‘terms and conditions’’ 

remove certain categories of 

information, such as payments and 

collections of certain margins and 

premiums that registered entities must 

submit to the Commission as part of 

their rule submissions under § 40.6(a). 

Instead, the information will be filed as 

rules under the less burdensome weekly 

notification requirements of § 40.6(d)(2). 

Contact information for block trades and 

amendments to ‘‘no cancellation 

ranges’’ will also be added to the lessburdensome weekly notification 

category under § 40.6(d)(2). 

Cover sheet (§§ 40.2, 40.3, 40.5, 40.6 

and appendix D). The final rulemaking 

will remove the requirement for filers to 

submit a cover sheet. The Commission’s 

electronic portal now collects the 

required information and generates a 

cover-sheet automatically, allowing the 

cover-sheet requirement to be removed 

and reducing burden to the registered 

entities. 

Time period for submitting additional 

materials for product approvals 

(§ 40.3(a)(10)). The final rule will 

provide Commission staff greater 

flexibility to set deadlines for 

submission of any additional 

information requested by the 

Commission for voluntary product 

approval by registered entities. 

Currently, the regulation requires an 

initial two-business-day limit after the 

Commission requests the information. 

The greater staff discretion to set more 

flexible deadlines may reduce the need 

for registered entities to submit 

extension requests, thereby reducing 

their burden. 

Non-materiality criteria (§ 40.4(b)(5)). 

This provision will provide guidance to 

registered entities about the nonmateriality determination required for 

certain products. It will not change the 

submission requirements, but rather 

help registered entities understand 

Commission requirements for their 

submissions. The Commission 

anticipates that these clarifications are 

likely to reduce burden for reporting 

entities by providing more specificity 

about submission requirements. 

Materiality; submission of related 

rules (§ 40.4(b)(5)(ii)). The final 

rulemaking requires that non-materiality 

submissions include a copy of a 

previously approved rule or rule 

amendment that is, in substance, the 

same as the subject non-material rule or 

rule amendment that supports nonmateriality. This could impose 

additional research, information 

collection, and filing burdens. However, 

according to Commission data, fewer 

than one non-materiality submission is 

made annually. Accordingly, the 

Commission anticipates that this 

requirement is unlikely to impose any 

material increase in reporting burden for 

covered entities. 

Resubmission (§ 40.6(c)(5)(ii)). This 

provision describes how an objection by 

the Commission to a registered entity’s 

certification of a proposed rule or rule 

amendment would affect any future 

filings by the registered entity of the 

proposed rule or rule amendment to 

which the Commission objected. 

Because objections are infrequent, the 

Commission anticipates that the burden 

of this provision is unlikely to result in 

increased burden for reporting entities. 

Materiality standard (§ 40.10(b)). 

Under the amendments, the definition 

‘‘materially affect the nature or level of 

risks presented’’ for SIDCO rule 

submissions will be revised to provide 

more useful guidance to registered 

entities. This change will not affect the 

reporting burden. 

SIDCO submission under § 40.10 of 

rules otherwise required to be submitted 

under § 40.5. This amendment will 

clarify filing requirements, but will not 

result in a substantive change to filing 

obligations. The Commission also 

anticipates that this clarification may 

reduce burden by eliminating mistaken 

duplicate filings. 

‘‘Referenced contract’’ data element 

(Appendix D). Submissions for new 

products will include a new structured 

data element in the online portal 

indicating whether the product is a 

‘‘referenced contract.’’ This information 

will be the same as the ‘‘reference 

contract’’ determination set out in 

§ 150.1 and appendix C to part 150. 

Accordingly, this is a non-substantive 

revision that will have de minimis 

impact on reporting burden. 

C. Cost Benefit Considerations 

1. CEA Section 15(a) 

Section 15(a) of the CEA requires the 

Commission to consider the costs and 

benefits of its actions before issuing 

regulations under the CEA.211 By its 

terms, section 15(a) does not require the 

Commission to quantify the costs and 


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212See §§ 40.2 through 40.6. 

213See 2011 Final Rule; Repeal of the Exempt 

Commercial Market and Exempt Board of Trade 

Exemptions, 80 FR 59575 (October 2, 2015); and 

Position Limits for Derivatives, 86 FR 3236 (January 

14, 2021). 214See, e.g., 7 U.S.C. 2(i). 

benefits of a new rule or to determine 

whether the benefits of the adopted rule 

outweigh its costs. Rather, section 15(a) 

requires the Commission to ‘‘consider 

the costs and benefits’’ of a subject rule. 

Section 15(a) further specifies that the 

costs and benefits of the Commission’s 

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 futures markets; (3) 

price discovery; (4) sound risk 

management practices; and (5) other 

public interest considerations. 

Collectively, these five factors are 

referred to herein as section 15(a) factors 

and they are addressed below. In 

conducting its analysis, the Commission 

may, in its discretion, give greater 

weight to any one of the five 

enumerated areas of concern and may 

determine that, notwithstanding its 

costs, a particular rule 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 this release, the Commission is 

adopting amendments that may impose 

costs. Some of the amendments, 

however, are format, organizational, and 

non-substantive changes, which will 

have no costs. The Commission has 

endeavored to assess the expected costs 

and benefits of the amendments in 

quantitative terms, including PRA 

related costs, where possible. In 

situations where the Commission is 

unable to quantify the costs and 

benefits, the Commission identifies and 

considers the costs and benefits of the 

applicable amendments in qualitative 

terms. 

2. Statutory and Regulatory Background 

Part 40 of the Commission’s 

regulations implements section 5c(c) of 

the CEA and requirements and 

procedures for registered entities, 

including DCMs, DCOs, SEFs, SDRs, 

and SIDCOs, to submit their rules and 

products to the Commission prior to 

implementing rules, listing products for 

trading, or accepting products for 

clearing. Part 40 generally provides two 

means for registered entities to submit 

rules and products to the Commission. 

There is a self-certification process and 

a Commission-approval process.212

With two exceptions, the Commission 

last amended the part 40 regulations in 

2011.213 After years of experience with 

registered entities following the 

processes set forth in the part 40 

regulations, the Commission is adopting 

amendments to clarify, simplify, and 

enhance the utility of the part 40 

regulations for registered entities and 

the Commission. Changes include 

amendments to: § 40.1 to simplify the 

determination of whether a registered 

entity is deemed dormant and to remove 

the terms ‘‘dormant rule’’ and ‘‘dormant 

contract or dormant product’’; §§ 40.2, 

40.3, 40.4, 40.5 and 40.6 and appendix 

D to part 40 to reflect the development, 

evolution and use of the Commission’s 

online portal for the filing of rule and 

product submissions; §§ 40.2, 40.3, 40.5 

and 40.6 to confirm that the registered 

entity must include a complete 

explanation and analysis when 

submitting its product or rule filing; add 

a new appendix E to part 40 to provide 

guidance regarding criteria the 

Commission considers as evidence that 

an enumerated agricultural product rule 

is non-material; §§ 40.5 and 40.6 to 

reorganize and enhance the regulations’ 

utility; and § 40.7 to delegate certain 

authorities of the Commission to the 

Director of the Division of Clearing and 

Risk and the Director of the Division of 

Market Oversight. The Commission also 

is amending § 40.10 to provide 

meaningful guidance to SIDCOs 

regarding filing instructions for rules 

that could materially affect the nature or 

level of risks presented by the SIDCO. 

3. Baseline 

The Commission identified and 

considered the benefits and costs of the 

proposed amendments relative to a 

baseline standard of those generated by 

the current statutory and regulatory 

framework, i.e., the status quo. The 

baseline for the Commission’s 

consideration of the costs and benefits 

of this rulemaking is the existing 

statutory and regulatory framework 

applicable to DCMs, DCOs, SDRs, and 

SEFs, in 17 CFR part 40. Current part 40 

provides substantive and procedural 

regulatory requirements for the 

submission of registered entities’ selfcertifications, and requests for approval, 

of new products for trading and clearing 

and of new rules and rule amendments. 

Current part 40 also establishes 

guidelines for the Commission’s review 

and processing of registered entities’ 

submissions. Current part 40 regulations 

explain what information must be made 

publicly available in relation to the 

application to become a DCM, DCO, 

SDR, or SEF, and when registered 

entities file submissions for new 

products, new rules and rule 

amendments. There are also special 

requirements for certain rules submitted 

by SIDCOs. 

The Commission notes that this costbenefit consideration is based on its 

understanding that the derivatives 

market regulated by the Commission 

functions internationally with: (1) 

transactions that involve U.S. entities 

occurring across different international 

jurisdictions; (2) some entities organized 

outside of the United States that are 

registered with the Commission; and (3) 

some entities that typically operate both 

within and outside the United States 

and that follow substantially similar 

business practices wherever located. 

Where the Commission does not 

specifically refer to matters of location, 

the discussion of costs and benefits 

below refers to the effects of the 

regulations on all relevant derivatives 

activity, whether based on their actual 

occurrence in the United States or on 

their connection with, or effect on U.S. 

commerce.214

4. Amendments 

a. Amendments to § 40.1 Regarding 

Dormant Registered Entities, Products, 

Contracts, and Rules 

The Commission is amending its 

regulations to simplify the calculation of 

how long a registered entity is inactive 

and when the period of inactivity 

results in a DCM, DCO, SDR or SEF 

being deemed dormant. The 

amendments to the definitions currently 

located in § 40.1(c) through (f) will 

conform the wording of these sections 

across the different types of registered 

entities such that any registered entity 

would be considered dormant if it is 

inactive for a period of 365 calendar 

days, provided that a DCM, DCO or SEF 

will not become dormant during the 

1,095 calendar days following the 

entity’s initial and original order of 

designation or registration, as 

applicable. The amendments replace the 

current regulatory text that measures 

time periods in months with language 

that measures the equivalent time in 

calendar days and the amendments 

provide for consistent, clear start and 

end dates for measuring inactivity in 

connection with dormancy status. 

In addition, the Commission is 

removing from § 40.1 the definitions 

and related requirements for the 

following terms: ‘‘dormant contract or 

dormant product,’’ and ‘‘dormant rule,’’ 

respectively. As amended, the rules of a 

dormant DCM, dormant SEF, dormant 

DCO, or dormant SDR will still need to 


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215See Cboe at 2 (‘‘Additionally, deleting the 

concepts of a dormant product and rule will reduce 

compliance costs for market participants and 

oversight costs for the Commission.’’) 

216See Cboe at 2 (stating ‘‘In light of the benefits 

to be derived from eliminating the concepts of a 

dormant contract or product and dormant rule and 

that doing so will not result in any reduction in 

market integrity or safety, the Commission should 

remove these concepts from Commission 

regulations.’’). 

be approved and the products will still 

need to be self-certified or approved in 

connection with the entity being 

reinstated as a DCM, SEF, DCO or SDR, 

respectively, but a DCM, SEF, DCO or 

SDR that is not dormant will no longer 

need to certify, or seek approval, of a 

particular rule or product that was 

already approved or certified solely due 

to a lack of implementation of the rule 

or inactivity of the particular product. 

i. Benefits 

The Commission believes that the 

changes to the part 40 dormancy 

regulations will benefit registered 

entities by helping registrants interpret 

dormancy period requirements 

consistently across the relevant 

registration types and more readily 

identify when dormancy applies. 

Additionally, there is a cost-savings 

because the removal of the terms 

‘‘dormant contract or dormant product,’’ 

and ‘‘dormant rule’’ and the associated 

requirements will remove the 

administrative and compliance burdens 

of tracking whether a product or rule 

has become dormant and the potential 

costs of recertifying (or obtaining 

approval of) a dormant contract, 

product, or rule.215 The Commission 

also believes that the amendments to the 

dormancy regulations are beneficial 

because it is unlikely that the changes 

will present concerns regarding market 

integrity or safety. As explained above, 

a registered entity implementing a 

contract, product, or rule has a 

continuing obligation to ensure that the 

rule complies with the CEA and the 

Commission’s regulations thereunder. 

ii. Costs 

The Commission believes that 

registered entities will not incur any 

increased costs related to the 

amendments to the current dormancy 

regulations in part 40. Regarding the 

potential for a cost related to the 

reduction of market oversight, based on 

experience with dormant products and 

rules to date, the Commission believes 

that deleting the definitions will result 

in little, if any, cost to regulatory 

oversight because the Commission has 

observed that registrants typically 

manage products with no trading 

activity or inactive rules and the 

Commission is not aware of any market 

disruptions resulting from the inactivity 

of products or rules.216

b. Amendments to the Definitions of 

Rule and Terms and Conditions in 

§ 40.1 

The Commission is amending the 

definition of the term ‘‘rule’’ in § 40.1(i) 

by including ‘‘margin methodology’’ in 

the list of specific items that are 

considered a ‘‘rule,’’ thereby making 

explicit what is already understood by 

current DCOs as implicitly included in 

the definition and codifying the current 

practice of DCOs submitting margin 

methodologies as rules to the 

Commission. The Commission also is 

amending the definition of the term 

‘‘terms and conditions’’ in current 

§ 40.1(j) by removing from the list of 

terms that are considered ‘‘terms and 

conditions’’ payments or collections of 

certain premiums or margins from 

current § 40.1(j)(1)(xi) and (j)(2)(xi). The 

Commission is adding the payments or 

collections of such premiums or 

margins, as well as changes to the no 

cancellation ranges, to the categories of 

rules that may be submitted without 

certification in a weekly notice filing 

pursuant to § 40.6(d)(2). 

i. Benefits 

The § 40.6(d) process permits a 

registered entity to implement a rule 

immediately and without selfcertification provided that the entity 

files a summary notification within a 

week of the rule amendment. The 

Commission believes that by adding 

margin methodology to the list of items 

considered a rule, the Commission is 

making it clear what type of information 

is considered a rule and codifying a 

current practice. The amendments to the 

definition of ‘‘terms and conditions’’ 

will reduce compliance burdens for 

registered entities for rule amendments 

that address payments or collections of 

certain premiums or margins and 

changes to the no cancellation ranges as 

these could be filed through a weekly 

notification pursuant to § 40.6(d)(2), 

which is a less burdensome, less costly 

process than through the current 

process of filing under § 40.6(a). 

ii. Costs 

The Commission believes that the 

amendment to the definition of ‘‘rule’’ 

to state explicitly that ‘‘margin 

methodology’’ is included in the 

definition will make the term consistent 

with the current DCO practice and 

understanding of implicit requirements 

and therefore will not place any 

additional cost or burden on registered 

entities that submit rules to the 

Commission under part 40. 

The Commission does not expect 

registered entities to incur any 

additional costs or burdens related to 

the changes to the definition of ‘‘terms 

and conditions’’ because the 

amendments reduce the number of 

items of information registered entities 

must submit to the Commission under 

§ 40.6(a). 

c. Amendments to §§ 40.2 and 40.3 

Regarding Instructions for SelfCertification and Approval of Products 

The Commission is amending §§ 40.2 

and 40.3 to update Commission 

processes and filing instructions for 

registered entities’ submission of 

products to the Commission. 

Amendments to §§ 40.2(a)(1) and 

40.3(a)(1) will remove references to the 

Commission Secretary. To reflect the 

fact that registered entities now file 

submissions through the Commission’s 

portal and a cover sheet is no longer 

necessary, changes to §§ 40.2(a)(3) and 

40.3(a)(2) remove the references to a 

cover sheet and replace them with a 

requirement directing registered entities 

to provide the information required by 

appendix D to part 40. 

Changes to § 40.2(a)(3)(v) specify that 

a registered entity’s concise explanation 

and analysis of a product must be 

complete with respect to the product’s 

terms and conditions, the underlying 

commodity, and the product’s 

compliance with the CEA and 

associated regulations. Changes to 

§ 40.3(a)(4) state that a registered 

entity’s explanation and analysis of a 

product must be complete with respect 

to the product’s terms and conditions, 

the underlying commodity, and the 

product’s compliance with the CEA and 

associated regulations. 

The amendments to § 40.3(a)(10) 

eliminate the two-business day deadline 

for registered entities to respond to 

Commission staff requests for additional 

information with respect to product 

approval requests under § 40.3 and grant 

Commission staff authority to set 

response deadlines. 

Amendments to § 40.3(c) concern the 

length of the review period. The 

amendments to § 40.3(c) will permit the 

Commission to extend for an additional 

45 days if the submission is incomplete 

or if the registered entity doesn’t 

respond completely to Commission 

questions in a timely manner. The 

Commission also is amending 

§ 40.3(c)(5) to provide that if an initial 

45-day review period ends on a nonbusiness day, such review is extended 

to the next business day. 


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217 In the NPRM, the Commission misplaced the 

following comment in the ‘‘Costs’’ section: ‘‘In 

general, the proposed amendments to §§ 40.2 and 

40.3 will provide greater specificity, leaving less 

room for regulatory ambiguity, improve the quality 

of submissions, and reduce any administrative costs 

register entities might incur when determining what 

information must be submitted to the Commission 

for a product self-certification or product approval 

request.’’ NPRM at 61447–448. The Commission 

recognizes that the location of the sentence in the 

NPRM’s ‘‘Cost’’ section might have caused 

confusion and should have been placed in the 

benefits discussion. See a16z at 8 (noting that ‘‘it 

is not clear how this point is a cost of the Proposed 

Rules. . . .’’). 

218 a16z suggested that the Commission 

reevaluate its position on the costs and benefits 

associated with the Commission‘s instruction to 

registered entities to file ‘‘complete’’ analyses, after 

noting an apparent discrepancy in the NPRM 

between the PRA estimates and the cost-benefit 

discussion of the same amendments. a16z at 7–8. 

The Commission acknowledges tension between the 

NPRM’s respective PRA and CBC analyses. To 

address this, the Commission clarifies that while 

the explicit addition of ‘‘completeness’’ to §§ 40.2 

and 40.3 is not intended to expand or otherwise 

alter the scope of the explanation or analysis 

required in the current regulation—therefore not 

engendering additional costs relative to the 

baseline—as a practical matter, some reporting 

entities now may expend additional time to ensure 

their submissions’ compliance. More specifically, 

registered entities that provided incomplete 

information under the current provision will likely 

incur modest costs of one hour per filing associated 

with the new amendment to ensure their 

submissions are ‘‘complete’’ pursuant to §§ 40.2 and 

40.3, as also set out in the PRA section. For a 

discussion on PRA burden estimates, see section 

III.B, herein. Another commenter, Coinbase, asserts 

that ‘‘expanded information and analysis 

requirements on registered entities for certified 

product filings will impose significant, unnecessary 

regulatory costs on DCMs. It can be time consuming 

and costly to prepare lengthy, detailed 

filings. . . .’’ Coinbase at 8. As explained in section 

II.B.3. above, the Commission believes that a 

complete explanation is clear and informative, but 

not necessarily lengthy; and the information to be 

provided leverages due diligence conducted by the 

registered entity prior to certification. 

i. Benefits 

The Commission believes the removal 

of the reference to the Secretary in the 

regulations is beneficial because the 

deletion modernizes the regulation and 

makes it consistent with current 

practices and technologies. For 

example, submitting entities no longer 

send submissions to the Commission’s 

Secretary because they upload 

documents to the Commission’s portal. 

The Commission believes that the 

elimination of the cover sheet 

requirement under §§ 40.2 and 40.3 

removes redundancy because the online 

portal requires registered entities to 

input the same information that is 

required on the coversheet. The 

amendments to § 40.2(a)(3)(v) should 

help achieve improved regulatory 

effectiveness of the self-certification 

processes by resulting in all (rather than 

just some) registered entities explaining 

how and why their products comply 

with the Act and Commission’s 

regulations, thereby enabling the 

Commission to more effectively 

complete its analysis of compliance and 

allowing market participants to 

understand the products being listed for 

trading.217 The Commission believes 

that amending § 40.3(a)(10) to eliminate 

the two business day deadline for 

responding to Commission request for 

additional information and granting 

Commission staff the authority to set a 

deadline based on the nature of the 

requested information may provide 

more flexibility to registered entities to 

respond and better enable the 

Commission to manage its resources and 

conduct more effective oversight over 

registered entities. The changes to 

§ 40.3(c)(2) that the Commission may 

extend the initial 45-day review period 

for up to an additional 45 days if the 

submission is incomplete or if the 

registered entity doesn’t respond 

completely to Commission questions in 

a timely manner will also encourage 

registered entities to be precise and 

consult with Commission staff regarding 

any questions when preparing § 40.3 

submissions. 

ii. Costs 

The Commission believes that, 

relative to the existing §§ 40.2 and 40.3, 

amending §§ 40.2 and 40.3 to expressly 

articulate that registered entities must 

provide a ‘‘complete’’ analysis regarding 

their product submissions will not 

measurably increase compliance costs. 

As mentioned above, after the 

Commission amended part 40 in 2011, 

registered entities submitted 

explanations and analyses when selfcertifying products that were sufficient, 

meaning that the explanations and 

analyses demonstrated to the 

Commission that the products complied 

with the CEA and associated 

regulations. Over time, however, the 

Commission observed a trend of 

receiving new product certifications that 

were incomplete. Accordingly, while 

the Commission foresees no cognizable 

costs relative to the baseline, it does 

acknowledge that, as a practical matter, 

registered entities that have in the past 

failed to file complete analyses of their 

products, will likely have increased 

burdens related to preparing complete 

§ 40.2 self-certification submissions 

moving forward.218 The amendments to 

§ 40.3 enabling the Commission to 

extend the 45-day review period as a 

result of the submission being 

incomplete or the entity not responding 

completely to Commission questions in 

a timely manner may cause registered 

entities to incur costs related to the 

offering of products submitted for 

voluntary Commission approval if the 

extended review period affects productlaunch dates. 

d. Amendments to § 40.4 and Appendix 

E to Part 40, Regarding Terms or 

Conditions for Enumerated Agricultural 

Products 

Regulation § 40.4 requires DCMs to 

submit a rule or rule amendment for 

Commission approval if the rule or rule 

amendment affects a contract on an 

enumerated agricultural product and 

would materially change a term or 

condition of the contract for a delivery 

month with open interest. The 

Commission is adding appendix E to 

part 40 to provide guidance to DCMs 

regarding criteria that the Commission 

considers as evidence that an 

enumerated agricultural product rule 

change is non-material. The 

Commission also is amending 

§ 40.4(b)(5)(ii) to provide that when a 

DCM explains why it considers a rule 

‘‘non-material’’ pursuant to § 40.4(b)(5), 

the DCM will, if applicable, include a 

copy of a previously approved rule or 

rule amendment that is, in substance, 

the same as the non-material rule or rule 

amendment. 

i. Benefits 

The Commission believes that 

appendix E to part 40 will aid DCMs in 

determining whether a change to terms 

and conditions is material. Specifically, 

the guidance offered in appendix E 

should reduce uncertainties and enable 

DCMs to more efficiently determine 

whether a change is material. 

Additionally, by directing DCMs to 

include a copy of a previously approved 

rule or rule amendment with 

submissions to the Commission 

pursuant to § 40.4(b)(5)(ii), the 

Commission believes this effort will 

provide market participants with 

context and background that will help 

them understand the current rule or rule 

amendment and why it is non-material. 

ii. Costs 

The Commission anticipates appendix 

E to part 40 might cause DCMs to incur 

a one-time compliance cost related to 

understanding Appendix E’s guidance 

for assessing whether a rule is material. 

The Commission believes that DCMs 

will incur costs related to researching 

and collecting previously approved 

rules or rule amendments for 

submissions to the Commission. 


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219Regulation § 40.6(d)(2)(xi) will allow 

registered entities to submit rules to allow updates 

of email addresses and contact information that 

market participants use to submit block trades. 

Regulation § 40.6(d)(2)(xii) will allow registered 

entities to submit rules that make changes to no 

cancellation ranges on contracts for the purchase or 

sale of a commodity for future delivery or an option 

on such a contract or an option on a commodity 

(other than a swap). Regulation § 40.6(d)(2)(xiii) 

will allow registered entities to submit rules that set 

or amend the payment or collection of commodity 

options premiums or margins for the purchase or 

sale of a commodity for future delivery or an option 

on such a contract or an option on a commodity 

(other than a swap). Regulation § 40.6(d)(2)(xiii) 

will allow registered entities to submit rules that set 

or amend the payments or collections of option 

premiums or margins for a swap. 

e. Amendments to §§ 40.5, 40.6, and 

40.10 Regarding Filing Instructions for 

Rules 

The Commission is updating 

processes and outlining submission 

procedures for a registered entity to 

voluntarily submit its rules for 

Commission approval and for a 

registered entity to self-certify that its 

rules comply with the Act and 

Commission regulations. Amendments 

to §§ 40.5(a)(1) and 40.6(a)(1) remove 

references to the Commission Secretary. 

Amendments to §§ 40.5(a)(2) and 

40.6(a)(7)(i) remove the references to the 

cover sheet and replace these with 

references to the ‘‘information required 

by Appendix D’’ to part 40. 

The amendments to §§ 40.5(a)(5) and 

40.6(a)(7) describe the scope of the 

explanation and analysis that registered 

entities must submit by adding that the 

explanation and analysis needs to also 

be ‘‘complete’’ and explain the rule or 

rule amendment, its operation, purpose 

and effect and how and why it complies 

with the Act and the Commission’s 

regulations thereunder. The 

Commission is moving certain language 

from the introductory paragraph of 

§ 40.6(a) to become § 40.6(a)(9) and to 

state more clearly therein that a new 

rule or a rule amendment that delists, or 

withdraws the certification of, a product 

that does not have any open interest 

may become effective immediately upon 

the filing of the submission, provided 

that the submission is made in 

compliance with § 40.6(a)(1), (2) and (7). 

In addition, the amendments in 

§ 40.6(b)(2) provide that if a registered 

entity amends or supplements its initial 

rule submission under § 40.6(a), the 

Commission will treat the amendment 

as a new submission and restart the 

Commission’s 10-day review period, 

unless the amendments or 

supplementation is requested by the 

Commission or is for non-substantive 

revisions. 

The amendments in § 40.6(c)(5) make 

it clear that if the Commission stays and 

ultimately objects to a rule certification, 

the registered entity may re-submit a 

revised version or a supplemented 

submission with a substantive basis for 

treating the revised rule differently and 

that the revised or supplemented 

submission will be reviewed without 

prejudice. In addition, the objection by 

the Commission will be treated as 

presumptive evidence that the 

registered entity may not truthfully 

certify that the same proposed rule or 

substantially the same rule complies 

with CEA and the Commission’s 

regulations. 

The amendments to § 40.6(d)(2) 

expand the categories of rules that may 

be implemented without a certification 

to include a number of new categories 

of rules. The new categories include 

rule amendments updating email 

addresses or contact information that 

market participants use to submit block 

trades; rules amending existing trading 

months; rules changing the price ranges 

within which a trade will not be 

cancelled; and rules governing the 

payment or collection of option 

premiums or margins.219 Registered 

entities may implement rules within 

these categories by notifying the 

Commission of the rule changes on a 

weekly basis pursuant to § 40.6(d)(2). 

The amendments to § 40.6(d)(2) align 

with the Commission’s removal of a 

subset of the same categories of rules 

from the definition of ‘‘terms and 

conditions’’ in § 40.1. 

For SIDCOs certifying rules that could 

materially affect the nature or level of 

risks presented by the SIDCO, the 

Commission is revising the definition in 

§ 40.10(b) to specify that changes that 

require advance notice under § 40.10 

may include, but are not limited to, 

material changes to the SIDCO’s default 

management plan or default rules or 

procedures under § 39.16 or 39.35, 

program of risk analysis and oversight 

required under § 39.18, or recovery and 

wind down plans required under 

§ 39.39; the adoption of a new or 

materially revised margin methodology; 

the establishment of a cross-margining 

program or similar arrangement with 

another clearing organization; and 

material changes to its approach to the 

stress testing required under 

§ 39.13(h)(3), 39.36(a), or 39.36(c). 

Finally, the Commission is amending 

§ 40.10 to expressly state that where any 

provision of the Commission’s 

regulations requires a DCO to file rules 

for approval under § 40.5, a SIDCO will 

be required instead to file those rules 

under § 40.10, if the rules could 

materially affect the nature or level of 

risks presented by the SIDCO. 

i. Benefits 

The Commission believes the removal 

of the reference to the Secretary 

modernizes the regulation and makes it 

consistent with current practices and 

technologies. Submitting entities no 

longer send submissions to the 

Secretary with a cover sheet because 

they instead file submissions through 

uploading documents to, and entering 

information into, the Commission’s 

portal. The Commission also believes 

that the elimination of the cover sheet 

requirement in the text of §§ 40.5 and 

40.6 removes redundancy because the 

online portal requires registered entities 

to input into the online portal the same 

information that is required on the cover 

sheet. 

The Commission believes the 

amendments to § 40.5(a)(5) requiring 

complete submissions and § 40.6(a)(7) 

stating that a registered entity must 

provide a concise explanation and 

analysis that is complete with respect to 

the operation, purpose, and effect of a 

certified rule or rule amendment and its 

compliance with applicable provisions 

of the Act, including core principles, 

and the Commission’s regulations 

thereunder should reinforce the need for 

registered entities’ filings to 

demonstrate such compliance. The 

amendments to § 40.6(a)(7) should help 

achieve improved regulatory 

effectiveness of the rule self-certification 

processes by resulting in all (rather than 

just some) registered entities 

demonstrating how and why their rules 

comply with the Act and Commission’s 

regulations, thereby enabling the 

Commission to more effectively 

complete its analysis of compliance. 

The amendment to § 40.6(a)(9) will 

benefit registered entities by providing 

certainty that a registered entity may 

immediately delist, or withdraw a 

certification of, a product that does not 

have any open interest upon making a 

§ 40.6(a) submission. 

The amendments to § 40.6(b)(2) that 

provide that the review period of a rule 

restarts under circumstances that are 

enumerated therein should encourage 

registered entities to be thorough when 

filing their initial submissions. The 

amendments to § 40.6(c)(5) provide 

clarity regarding the impact of an 

objection by the Commission to a 

registered entity’s certification of a rule 

or rule amendment on the grounds that 

the rule or rule amendment is 

inconsistent with the Act or the 

Commission’s regulations. Specifically, 

under the amendment, if a registered 

entity wishes to resubmit through selfVerDate Sep<11>2014 20:40 Nov 06, 2024 Jkt 265001 PO 00000 Frm 00027 Fmt 4701 Sfmt 4700 E:\FR\FM\07NOR3.SGM 07NOR3

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88620 Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Rules and Regulations 

220As discussed in the Paperwork Reduction Act 

discussion above, § 40.5 submissions are infrequent, 

and most submitters already provide considerable 

detail about their submissions. Consequently, the 

Commission does not anticipate that the addition of 

the term ‘‘complete’’ in § 40.5 will practically 

impact submitters. 

221As explained in the Paperwork Reduction Act 

discussion, above, the Commission acknowledges a 

tension between the NPRM’s respective PRA and 

CBC analyses. To address this, the Commission 

clarifies that while the explicit addition of 

‘‘completeness’’ to § 40.6 (as well as § 40.5) is not 

intended to expand or otherwise alter the scope of 

the explanation or analysis required in the current 

regulation—therefore not engendering additional 

costs relative to the baseline—as a practical matter 

some reporting entities now may expend additional 

time to ensure their § 40.6 submissions’ 

compliance. See a16z at 8 (noting that the NPRM’s 

PRA section identified an additional burden but the 

CBC section did not). More specifically, as set out 

in the PRA analysis in section III.B above, registered 

entities that provided incomplete information 

under the current § 40.6 will likely incur modest 

costs of 0.5 hour per filing. 222Refer to n.40 for a discussion on Part 150. 

certification a rule or rule amendment 

that the Commission objected to on the 

grounds that the proposed rule or rule 

amendment is inconsistent with the Act 

or the Commission’s regulations, the 

registered entity must first substantively 

change or supplement the proposed rule 

or rule amendment to address the 

Commission’s objection. 

The amendments to § 40.6(d)(2) to 

add new categories of rules that may be 

implemented through a weekly 

notification to the Commission will 

enable registered entities to more 

quickly implement rules that fall within 

these new categories as the registered 

entity may implement these rules 

immediately and file a weekly 

notification of any rule amendments 

within a week of making such 

amendments. The process of drafting a 

weekly notification is less involved than 

the process of submitting rules pursuant 

to § 40.6(a). Amendments to § 40.10(b) 

should aid SIDCOs in making 

determinations regarding the type of 

rules that must be submitted to the 

Commission under § 40.10. Addition of 

§ 40.10(i) also should eliminate 

potentially duplicative regulatory filings 

under current § 40.5, and, as a result, 

SIDCOs will benefit from not having to 

dedicate administrative efforts two 

times for similar submissions. 

ii. Costs 

The Commission believes that, 

relative to the existing §§ 40.5(a) and 

40.6(a)(7)(v), amending §§ 40.5(a) and 

40.6(a)(7)(v) to expressly articulate that 

registered entities submit ‘‘complete’’ 

rule analysis to the Commission 

concerning proposed rule changes will 

not measurably increase compliance 

costs.220 As mentioned above, there are 

registered entities that have filed 

submissions and met the requirements 

under the rules in effect prior to these 

amendments. It is unlikely that these 

registered entities will incur costs as a 

result of the changes to the § 40.6 rulefiling instructions. However, some 

registered entities’ § 40.6(a)(7) 

submission have been deficient, lacking 

a sufficient explanation of rule or rule 

amendment, its operation, purpose and 

effect or how and why it complies with 

the Act and the Commission’s 

regulations thereunder.221 Accordingly, 

while the Commission foresees no 

cognizable costs relative to the baseline, 

it does acknowledge that, as a practical 

matter, registered entities that 

previously have filed deficient 

§ 40.6(a)(7)(v) submissions will likely 

incur some costs, such as reporting 

burdens, related to preparing the 

preparation of material with complete 

information regarding the compliance of 

rules or rule amendments. 

The Commission does not believe that 

there are costs associated with 

amendments to § 40.5(d). The 

Commission does not believe that there 

are costs associated with amendments to 

§ 40.6(b)(2) or 40.6(c)(5). The 

Commission believes that the changes to 

§ 40.10 will not place additional costs or 

burdens on SIDCOs because they 

identify the types of submissions that 

SIDCOs must file under § 40.10 and 

eliminate potential duplication in 

regulatory filings. 

f. Amendments to § 40.7 Regarding 

Delegation of Authority 

The Commission is amending § 40.7 

to enhance the utility and clarity of the 

regulation and add one new delegation. 

As discussed above, the Commission is 

adding § 40.7(e) to delegate the 

Commission’s authority to specify the 

format and manner of filing under these 

regulations to the Directors of the 

Division of Clearing and Risk and the 

Division of Market Oversight. 

i. Benefits 

The Commission believes that 

delegating authority to the Divisions to 

specify format and manner of filing in 

§ 40.7(e) enhances efficiency. 

ii. Costs 

The Commission expects that there 

will be no costs incurred by registered 

entities by the amendments amending 

the authorities delegated to Commission 

staff under part 40. 

g. Amendments to Appendix D to Part 

40 

With the development and use of the 

Commission’s online portal for the filing 

of rule and product submissions, the 

Commission is amending appendix D to 

part 40 that sets forth instructions to 

registered entities on what information 

must be submitted together with part 40 

filings. The Commission also is adding 

a new requirement that DCMs and SEFs 

indicate when listing a new product 

whether the new product meets the 

definition of ‘‘referenced contract’’ as 

defined in § 150.1 and described in 

appendix C to part 150 that is titled 

‘‘Guidance Regarding the Definition of 

Reference Contract.’’ 222

i. Benefits 

The Commission believes that the 

amendments to appendix D to part 40 

will provide several benefits. First, the 

changes describe and modernize 

instructions. The text is consistent with 

the current technological practice where 

registered entities upload product and 

rule submissions using the 

Commission’s online portal. Second, the 

amendment to appendix D to part 40 

will require DCMs and SEFs to indicate 

as part of filing the submission whether 

a new product to be listed meets the 

definition of a referenced contract, 

thereby alerting Commission staff when 

contracts that may need to be added to 

the Staff Workbook are being listed and 

enable the Commission to process and 

review the submission more efficiently. 

ii. Costs 

The Commission expects that there 

will be negligible, if any, costs incurred 

by registered entities with respect to the 

amendments to modernize Appendix D 

as registered entities are already 

submitting the covered rules and 

products using the portal. With regards 

to the amendment that DCMs and SEFs 

indicate whether a new product to be 

listed meets the definition of referenced 

contract, the Commission notes that 

DCMs and SEFs will incur costs to make 

these indications. These costs, however, 

will be negligible because DCMs and 

SEFs are already making the analytical 

determinations as to whether contracts 

are referenced contracts to meet their 

obligations under part 150 of the 

Commission’s regulations. 

h. Section 15(a) Factors 

In addition to the discussion above, 

the Commission has evaluated the costs 

and benefits of the amendments to 17 

CFR part 40 in light of the following five 

broad areas of market and public 

concern identified in section 15(a) of the 

CEA: protection of market participants 

and the public; efficiency, 

competitiveness, and financial integrity 

of futures markets; price discovery; 


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223 7 U.S.C. 19(b). 

224CEA Section 3(b). 

225No other amendments proposed in the NPRM 

elicited comments addressing competition. 

226Better Markets at 3. 

227Better Markets at 4. 

228Coinbase at 11. 

229Cboe at 2. 

sound risk management practices; and 

other public interest considerations. 

Protection of market participants and 

the public: The Commission believes 

that the changes to §§ 40.2, 40.3, 40.5 

and 40.6, regarding the requirement for 

complete explanations and analysis for 

product and rule submissions will help 

protect market participants and the 

public by encouraging registered entities 

to submit complete and informative 

filings for product and rule changes 

thereby explaining the new product, 

rule or rule amendment and how and 

why the new product, rule or rule 

amendment complies with the CEA and 

the Commission’s regulations. 

Efficiency, competitiveness, and 

financial integrity of futures markets: 

The improvements to the regulations 

providing for ‘‘complete’’ products and 

rules submissions better ensure that the 

Commission can provide adequate 

oversight with minimal disruption to 

market efficiency. The Commission has 

not identified any effect of the 

regulations on innovation and 

competition. 

Price discovery: The Commission has 

not identified any effect of the 

regulations on price discovery. 

Sound risk management practices: 

The Commission has not identified any 

other effect of the regulations on sound 

risk management practices. 

Other public interest considerations: 

The Commission has not identified any 

effect of the regulations on other public 

interest considerations. 

D. Antitrust Considerations 

Section 15(b) of the CEA requires the 

Commission to ‘‘take into consideration 

the public interest to be protected by the 

antitrust laws and endeavor to take the 

least anticompetitive means of 

achieving the purposes of this Act, in 

issuing any order or adopting any 

Commission rule or regulation 

(including any exemption under section 

4(c) or 4c(b)), or in requiring or 

approving any bylaw, rule, or regulation 

of a contract market or registered futures 

association established pursuant to 

section 17 of this Act.’’ 223

The Commission believes that the 

public interest to be protected by the 

antitrust laws is generally to protect 

competition. The Commission has 

considered whether the amendments to 

part 40 are likely to have 

anticompetitive effects, and if so, 

whether the amendments reflect the 

least anticompetitive means of 

achieving the purposes of this Act.224 In 

doing so, the Commission considered 

the comments received addressing 

competition. 

The Commission received three 

comment letters that identified potential 

effects on competition in connection 

with the proposed addition of 

‘‘complete’’ to § 40.2(a)(3)(v) and one of 

these letters identified potential effects 

on competition in connection with the 

proposed addition of ‘‘complete’’ to 

§ 40.6(a)(6)(v).225 Better Markets stated 

that part 40 ensures that innovation 

takes place within the boundaries of 

market integrity, transparency and the 

protection of market participants, and 

provides a framework for the 

Commission to engage with market 

participants, assess innovations, and 

make informed decisions that contribute 

to the overall health and 

competitiveness of the derivatives 

markets.226 Better Markets stated that 

the proposed addition of ‘‘complete’’ to 

§ 40.2(a)(3) would bolster market 

integrity, protect the interests of market 

participants and ensure the Commission 

can effectively and thoroughly evaluate 

compliance.227 Coinbase cautioned that 

adding ‘‘complete’’ to § 40.2(a)(3) as 

proposed could unnecessarily limit and 

delay the availability of a process to list 

contracts on its DCM after expending 

the time, effort and diligence to develop 

the product in the highly competitive 

global derivatives market.228 Cboe 

commented that if the proposed 

addition of the word ‘‘complete’’ to 

§§ 40.2(a)(3) and 40.6(a)(v) were applied 

in a prescriptive, inconsistent and 

unreasonable manner, it would, among 

other things, inhibit innovation and 

competition.229

The Commission agrees with Better 

Markets’ view that the proposed part 40 

amendments—including, importantly, 

the addition of ‘‘complete’’ to 

§ 40.2(a)(3)—support the overall health 

and competitiveness of derivatives 

markets. The proposed addition of 

‘‘complete’’ should result in a better 

understanding of the product by the 

Commission and market participants, 

that in turn should promote innovation 

and competition. Further, the 

Commission does not construe 

Coinbase’s or Cboe’s generalized 

warnings to raise compelling 

anticompetitive concerns; neither 

comment asserts that, or articulates a 

realistic theory as to how, the addition 

of ‘‘complete’’ to § 40.2(a)(3)(v) or 

40.6(a)(6)(v), would likely be 

anticompetitive—i.e., cause price 

increases or inhibit innovation—in a 

properly defined relevant antitrust 

market to any consequential degree. 

Accordingly, the Commission does 

not anticipate that the amendments to 

part 40 of its regulations would promote 

or result in anti-competitive 

consequences or behavior. Further, even 

accepting, for argument’s sake, that the 

requirement that a DCM or SEF submit 

a concise explanation and analysis that 

is complete with respect to the 

contract’s terms and conditions, the 

underlying commodity, and the 

product’s compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations could hamper innovation to 

some unspecified degree, the 

Commission considers this requirement 

minimal, warranted, necessary and the 

least anticompetitive means to realize 

its critical core interests in market 

integrity, transparency, and protection 

of market integrity. Similarly, even 

accepting, for argument’s sake, that the 

requirement that a registered entity 

submit a concise explanation and 

analysis of a rule to be self-certified that 

is complete with respect to the 

operation, purpose, and effect of the 

proposed rule or rule amendment and 

its compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations could hamper innovation to 

some unspecified degree, the 

Commission considers this requirement 

minimal, warranted, necessary and the 

least anticompetitive means to realize 

its critical core interests in market 

integrity, transparency, and protection 

of market integrity. 

List of Subjects 

17 CFR Part 37 

Banks, banking, Commodity futures, 

Reporting and recordkeeping 

requirements, Swaps. 

17 CFR Part 38 

Commodity futures, Reporting and 

recordkeeping requirements. 

17 CFR Part 40 

Commodity futures, Reporting and 

recordkeeping requirements. 

For the reasons stated in the 

preamble, the Commodity Futures 

Trading Commission amends 17 CFR 

chapter I as follows: 

PART 37—SWAP EXECUTION 

FACILITIES 

■ 1. The authority citation for part 37 

continues to read as follows: 


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88622 Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Rules and Regulations 

Authority: 7 U.S.C. 1a, 2, 5, 6, 6c, 7, 7a– 

2, 7b–3, and 12a, as amended by Titles VII 

and VIII of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, Pub. L. 

111–203, 124 Stat. 1376. 

■ 2. Amend appendix B by revising the 

first sentence of paragraph (a)(1) under 

‘‘Core Principle 8 of Section 5h of the 

Act—Emergency Authority’’ to read as 

follows: 

Appendix B to Part 37—Guidance on, 

and Acceptable Practices in, 

Compliance With Core Principles 

* * * * * 

Core Principle 8 of Section 5h of the Act— 

Emergency Authority 

* * * * * 

(a) * * * 

(1) A swap execution facility should have 

rules that authorize it to take certain actions 

in the event of an emergency, as defined in 

§ 40.1 of this chapter. * * * 

* * * * * 

PART 38—DESIGNATED CONTRACT 

MARKETS 

■ 3. The authority citation for part 38 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 6, 6a, 6c, 6d, 6e, 

6f, 6g, 6i, 6j, 6k, 6l, 6m, 6n, 7, 7a–2, 7b, 7b– 

1, 7b–3, 8, 9, 15, and 21, as amended by the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Pub. L. 111–203, 

124 Stat. 1376. 

■ 4. Amend appendix B by revising the 

third sentence of paragraph (C)(a) under 

‘‘Core Principle 6 of Section 5(d) of the 

Act’’ to read as follows: 

Appendix B to Part 38—Guidance on, 

and Acceptable Practices in, 

Compliance With Core Principles 

* * * * * 

Core Principle 6 of Section 5(d) of the Act: 

* * * 

* * * * * 

(C) * * * 

(a) * * * To address perceived market 

threats, the designated contract market 

should have rules that allow it to take certain 

actions in the event of an emergency, as 

defined in § 40.1 of this chapter, including: 

imposing or modifying position limits, price 

limits, and intraday market restrictions; 

imposing special margin requirements; 

ordering the liquidation or transfer of open 

positions in any contract; ordering the fixing 

of a settlement price; extending or shortening 

the expiration date or the trading hours; 

suspending or curtailing trading in any 

contract; transferring customer contracts and 

the margin or altering any contract’s 

settlement terms or conditions; and, where 

applicable, providing for the carrying out of 

such actions through its agreements with its 

third-party provider of clearing or regulatory 

services. * * * 

* * * * * 

PART 40—PROVISIONS COMMON TO 

REGISTERED ENTITIES 

■ 5. The authority citation for part 40 is 

revised to read as follows: 

Authority: 7 U.S.C. 1a, 2, 5, 6, 7, 8 and 

12, as amended by Titles VII and VIII of the 

Dodd-Frank Wall Street Reform and 

Consumer Protection Act, Public Pub. L. 

111–203, 124 Stat. 1376 (2010). 

■ 5. Revise § 40.1 to read as follows: 

§ 40.1 Definitions. 

As used in this part: 

Business day means the intraday 

period of time starting at 8:15 a.m. and 

ending at 4:45 p.m. Eastern Standard 

Time or Eastern Daylight Savings Time, 

whichever is currently in effect in 

Washington, DC, on all days except 

Saturdays, Sundays, and Federal 

holidays in Washington, DC. 

Dormant designated contract market 

means any designated contract market 

on which no trading has occurred for a 

period of 365 days; provided, however, 

no designated contract market shall be 

considered dormant if its initial and 

original Commission order of 

designation was issued within the 

preceding 1,095 days. 

Dormant derivatives clearing 

organization means any derivatives 

clearing organization registered 

pursuant to section 5b of the Act that 

has not accepted for clearing any 

agreement, contract or transaction that 

is required or permitted to be cleared by 

a derivatives clearing organization 

under sections 5b(a) and 5b(b) of the 

Act, respectively, for a period of 365 

days; provided, however, no derivatives 

clearing organization shall be 

considered dormant if its initial and 

original Commission order of 

registration was issued within the 

preceding 1,095 days. 

Dormant swap data repository means 

any registered swap data repository on 

which no data has resided for a period 

of 365 days. 

Dormant swap execution facility 

means any swap execution facility on 

which no trading has occurred for a 

period of 365 days; provided, however, 

no swap execution facility shall be 

considered dormant if its initial and 

original Commission order of 

registration was issued within the 

preceding 1,095 days. 

Emergency means any occurrence or 

circumstance that, in the opinion of the 

governing board of a registered entity, or 

a person or persons duly authorized to 

issue such an opinion on behalf of the 

governing board of a registered entity 

under circumstances and pursuant to 

procedures that are specified by rule, 

requires immediate action and threatens 

or may threaten such things as the fair 

and orderly trading in, or the 

liquidation of or delivery pursuant to, 

any agreements, contracts, swaps or 

transactions or the timely collection and 

payment of funds in connection with 

clearing and settlement by a derivatives 

clearing organization, including: 

(1) Any manipulative or attempted 

manipulative activity; 

(2) Any actual, attempted, or 

threatened corner, squeeze, congestion, 

or undue concentration of positions; 

(3) Any circumstances which may 

materially affect the performance of 

agreements, contracts, swaps or 

transactions, including failure of the 

payment system or the bankruptcy or 

insolvency of any participant; 

(4) Any action taken by any 

governmental body, or any other 

registered entity, board of trade, market 

or facility which may have a direct 

impact on trading or clearing and 

settlement; and 

(5) Any other circumstance which 

may have a severe, adverse effect upon 

the functioning of a registered entity. 

Rule means any constitutional 

provision, article of incorporation, 

bylaw, rule, regulation, resolution, 

interpretation, stated policy, advisory, 

terms and conditions, trading protocol, 

margin methodology, agreement or 

instrument corresponding thereto, 

including those that authorize a 

response or establish standards for 

responding to a specific emergency, and 

any amendment or addition thereto or 

repeal thereof, made or issued by a 

registered entity or by the governing 

board thereof or any committee thereof, 

in whatever form adopted. 

Terms and conditions means any 

definition of the trading unit or the 

specific commodity underlying a 

contract for the future delivery of a 

commodity or commodity option 

contract, description of the payments to 

be exchanged under a swap, 

specification of cash settlement or 

delivery standards and procedures, and 

establishment of buyers’ and sellers’ 

rights and obligations under the swap or 

contract. Terms and conditions include 

provisions relating to the following: 

(1) For a contract for the purchase or 

sale of a commodity for future delivery 

or an option on such a contract or an 

option on a commodity (other than a 

swap): 

(i) Quality and other standards that 

define the commodity or instrument 

underlying the contract; 

(ii) Quantity standards or other 

provisions related to contract size; 

(iii) Any applicable premiums or 

discounts for delivery of nonpar 

products; 


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(iv) Trading hours, trading months 

and the listing of contracts; 

(v) The pricing basis, minimum price 

fluctuations, and maximum price 

fluctuations; 

(vi) Any price limits, no cancellation 

ranges, trading halts, or circuit breaker 

provisions, and procedures for the 

establishment of daily settlement prices; 

(vii) Speculative position limits, 

position accountability standards, and 

position reporting requirements, 

including an indication as to whether 

the contract meets the definition of a 

referenced contract as defined in § 150.1 

of this chapter, and if so, the name of 

either the core referenced futures 

contract or other referenced contract 

upon which the new referenced contract 

submitted under this part is based. 

(viii) Delivery points and locational 

price differentials; 

(ix) Delivery standards and 

procedures, including fees related to 

delivery or the delivery process; 

alternatives to delivery and applicable 

penalties or sanctions for failure to 

perform; 

(x) If cash settled; the definition, 

composition, calculation and revision of 

the cash settlement price or index; 

(xi) [Reserved]; 

(xii) Option exercise price, if it is 

constant, and method for calculating the 

exercise price, if it is variable; 

(xiii) Threshold prices for an option 

contract, the existence of which is 

contingent upon those prices; and 

(xiv) Any restrictions or requirements 

for exercising an option; and 

(2) For a swap: 

(i) Identification of the major group, 

category, type or class in which the 

swap falls (such as an interest rate, 

commodity, credit or equity swap) and 

of any further sub-group, category, type 

or class that further describes the swap; 

(ii) Notional amounts, quantity 

standards, or other unit size 

characteristics; 

(iii) Any applicable premiums or 

discounts for delivery of nonpar 

products; 

(iv) Trading hours and the listing of 

swaps; 

(v) Pricing basis for establishing the 

payment obligations under, and markto-market value of, the swap including, 

as applicable, the accrual start dates, 

termination or maturity dates, and, for 

each leg of the swap, the initial cash 

flow components, spreads, and points, 

and the relevant indexes, prices, rates, 

coupons, or other price reference 

measures; 

(vi) Any price limits, trading halts, or 

circuit breaker provisions, and 

procedures for the establishment of 

daily settlement prices; 

(vii) Speculative position limits, 

position accountability standards, and 

position reporting requirements, 

including an indication as to whether 

the contract meets the definition of 

economically equivalent swap as 

defined in § 150.1 of this chapter, and, 

if so, the name of either the core 

referenced futures contract or referenced 

contract, as applicable, to which the 

swap submitted under this part is 

economically equivalent. 

(viii) Payment and reset frequency, 

day count conventions, business 

calendars, and accrual features; 

(ix) If physical delivery applies, 

delivery standards and procedures, 

including fees related to delivery or the 

delivery process, alternatives to delivery 

and applicable penalties or sanctions for 

failure to perform; 

(x) If cash settled, the definition, 

composition, calculation and revision of 

the cash settlement price, and the 

settlement currency; 

(xi) [Reserved] 

(xii) Option exercise price, if it is 

constant, and method for calculating the 

exercise price, if it is variable; 

(xiii) Threshold prices for an option, 

the existence of which is contingent 

upon those prices; 

(xiv) Any restrictions or requirements 

for exercising an option; and 

(xv) Life cycle events. 

6. Amend § 40.2 by revising 

paragraphs (a) introductory text, (a)(1), 

(a)(3)(i), (ii), (v), and (vi), and (d) to read 

as follows: 

§ 40.2 Listing products for trading by 

certification. 

(a) A designated contract market or a 

swap execution facility must comply 

with the submission requirements of 

this section prior to listing a product for 

trading that has not been approved 

under § 40.3. A submission shall 

comply with the following conditions: 

(1) The designated contract market or 

the swap execution facility has filed its 

submission electronically in a format 

and manner specified by the 

Commission; 

* * * * * 

(3) * * * 

(i) The information required by 

appendix D to this part; 

(ii) A copy of the rules that set forth 

the contract’s terms and conditions; 

* * * * * 

(v) A concise explanation and 

analysis that is complete with respect to 

the product’s terms and conditions, the 

underlying commodity, and the 

product’s compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder. This 

explanation and analysis shall either be 

accompanied by the documentation 

relied upon to establish the basis for 

compliance with applicable law, or 

incorporate information contained in 

such documentation, with appropriate 

citations to data sources; 

(vi) A certification that the registered 

entity posted a notice of a pending 

product certification with the 

Commission and a copy of the 

submission, concurrent with the filing 

of a submission with the Commission, 

on the registered entity’s website. 

Information that the registered entity 

seeks to keep confidential may be 

redacted from the documents published 

on the registered entity’s website but 

must be republished consistent with any 

determination made pursuant to 

§ 40.8(c)(4); and 

* * * * * 

(d) Class certification of swaps. (1) A 

designated contract market or swap 

execution facility may list or facilitate 

trading in any swap or number of swaps 

based upon an ‘‘excluded commodity,’’ 

as defined in section 1a(19)(i) of the Act, 

not including any security, security 

index, and currency other than the 

United States Dollar and a ‘‘major 

foreign currency,’’ as defined in 

§ 15.03(a) of this chapter, or an 

‘‘excluded commodity,’’ as defined in 

section 1a(19)(ii)–(iv) of the Act, 

provided the designated contract market 

or swap execution facility certifies, 

under paragraphs (a)(1) and (2) and 

(a)(3)(i), (iv), and (vi) of this section, the 

following: 

(i) Each particular swap within the 

certified class of swaps is based upon an 

excluded commodity specified in 

paragraph (d)(1) of this section; 

(ii) Each particular swap within the 

certified class of swaps is based upon an 

excluded commodity with an identical 

pricing source, formula, procedure, and 

methodology for calculating reference 

prices and payment obligations; 

(iii) The pricing source, formula, 

procedure, and methodology for 

calculating reference prices and 

payment obligations in each particular 

swap within the certified class of swaps 

is identical to a pricing source, formula, 

procedure, and methodology for 

calculating reference prices and 

payment obligations in a product 

previously submitted to the Commission 

and certified or approved pursuant to 

this section or § 40.3; and 

(iv) Each particular swap within the 

certified class of swaps is based upon an 

excluded commodity involving an 

identical currency or identical 

currencies. 

(2) The Commission may in its 

discretion require a registered entity to 


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88624 Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Rules and Regulations 

withdraw its certification under 

paragraph (d)(1) of this section and to 

submit each individual swap or certain 

individual swaps within the submission 

for Commission review pursuant to this 

section or § 40.3. 

■ 7. Amend § 40.3 by: 

■ a. Revising paragraphs (a) 

introductory text, (a)(1), (2), (4), (9), and 

(10), (c), and (d); 

■ b. Removing paragraph (e); 

■ c. Redesignating paragraph (f) as 

paragraph (e); and 

■ d. Revising newly redesignated 

paragraph (e). 

The revisions read as follows: 

§ 40.3 Voluntary submission of new 

products for Commission review and 

approval. 

(a) Request for approval. Pursuant to 

section 5c(c) of the Act, a designated 

contract market, a swap execution 

facility, or a derivatives clearing 

organization may request that the 

Commission approve a new product 

prior to listing the product for trading or 

accepting the product for clearing, or if 

a product was initially submitted under 

§ 40.2 or § 39.5 of this chapter, 

subsequent to listing the product for 

trading or accepting the product for 

clearing. A submission requesting 

approval shall: 

(1) Be filed electronically in a format 

and manner specified by the 

Commission; 

(2) Include the information required 

by appendix D to this part; 

* * * * * 

(4) Include an explanation and 

analysis that is complete with respect to 

the product’s terms and conditions, the 

underlying commodity, and the 

product’s compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder. This 

explanation and analysis shall either be 

accompanied by the documentation 

relied upon to establish the basis for 

compliance with the applicable law, or 

incorporate information contained in 

such documentation, with appropriate 

citations to data sources; 

* * * * * 

(9) Certify that the registered entity 

posted a notice of its request for 

Commission approval of the new 

product and a copy of the submission, 

concurrent with the filing of a 

submission with the Commission, on 

the registered entity’s website. 

Information the registered entity seeks 

to keep confidential may be redacted 

from the documents published on the 

registered entity’s website but must be 

republished consistent with any 

determination made pursuant to 

§ 40.8(c)(4); and 

(10) Include, if requested by 

Commission staff, additional evidence, 

information or data demonstrating that 

the contract meets, initially or on a 

continuing basis, the requirements of 

the Act, or other requirement for 

designation or registration under the 

Act, or the Commission’s regulations or 

policies thereunder. The registered 

entity shall submit the requested 

information by the time specified by 

Commission staff, or at the conclusion 

of any extended period agreed to by 

Commission staff after timely receipt of 

a written request from the registered 

entity. 

* * * * * 

(c) Commission review. (1) All 

products submitted for Commission 

approval pursuant to, and in 

compliance with the submission 

requirements of, paragraph (a) of this 

section shall be subject to review by the 

Commission for a period of 45 days after 

receipt by the Commission. 

(2) The Commission may extend the 

initial 45-day review period for up to an 

additional 45 days if the product raises 

novel or complex issues that require 

additional time to analyze, the 

submission is incomplete or the 

requestor does not respond completely 

to Commission questions in a timely 

manner, in which case the Commission 

shall notify the submitting registered 

entity within the initial 45-day review 

period and shall briefly describe the 

nature of the specific issues for which 

additional time for review shall be 

required. 

(3) At any time during its review of a 

proposed product under this section, 

the Commission may extend the review 

period for any period of time to which 

the registered entity agrees in writing. 

(4) Any amendment or 

supplementation made by the registered 

entity to the submission will be treated 

as the filing of a new submission under 

this section and be subject to the initial 

45-day review period in accordance 

with paragraph (c)(1) of this section, 

unless the amendment or 

supplementation is requested by the 

Commission or is made for correction of 

typographical errors, renumbering or 

other non-substantive revisions. 

(5) If the review period described in 

paragraph (c)(1) of this section would 

end on a day that is not a business day, 

such review period shall instead be 

extended to end on the next business 

day. 

(d) Commission Determination—(1) 

Approval. Any product submitted for 

Commission approval in compliance 

with paragraph (a) of this section shall 

be deemed approved by the Commission 

under section 5c(c) of the Act at the 

conclusion of the applicable review 

period under paragraph (c) of this 

section, unless the Commission issues a 

notice of non-approval to the registered 

entity under paragraph (d)(2) of this 

section within the applicable review 

period. 

(2) Notice of non-approval. Any time 

during its review under this section, the 

Commission may notify the registered 

entity that it will not, or is unable to, 

approve the new product. This 

notification will briefly specify the 

nature of the issues raised and the 

specific provision of the Act or the 

Commission’s regulations, including the 

form or content requirements of this 

section, with which the new product is 

inconsistent or appears to be 

inconsistent with the Act or the 

Commission’s regulations. 

(e) Effect of non-approval. (1) 

Notification to a registered entity under 

paragraph (d)(2) of this section of the 

Commission’s determination not to 

approve a product does not prevent the 

entity from subsequently submitting a 

revised version of the product for 

Commission approval, or from 

submitting the product as initially 

proposed, in a supplemented 

submission; the revised or 

supplemented submission will be 

reviewed without prejudice. 

(2) Notification to a registered entity 

under paragraph (d)(2) of this section of 

the Commission’s determination not to 

approve a product shall be presumptive 

evidence that the entity may not 

truthfully certify under § 40.2 that the 

same, or substantially the same, product 

complies with the Act and the 

Commission’s regulations thereunder. 

■ 8. Revise § 40.4 to read as follows: 

§ 40.4 Amendments to terms or conditions 

of enumerated agricultural products. 

(a) Notwithstanding the provisions of 

this part, a designated contract market 

must submit for Commission approval 

under the procedures of § 40.5, prior to 

its implementation, any rule that, for a 

delivery month having open interest, 

would materially change a product’s 

term or condition, as defined in § 40.1, 

of a contract for future delivery in an 

agricultural commodity enumerated in 

section 1a(9) of the Act, or of an option 

on such a contract or commodity. 

(b) The following rules or rule 

amendments are not material and are 

not required by this section to be 

submitted for Commission approval 

under the procedures of § 40.5: 

(1) Rules or rule amendments that are 

enumerated in § 40.6(d)(2) may be 


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implemented without prior approval or 

certification, provided that they are 

implemented pursuant to the 

notification procedures of § 40.6(d); 

(2) Rules or rule amendments that are 

enumerated in § 40.6(e)(2) may be 

implemented without prior approval or 

certification or notification as permitted 

pursuant to § 40.6(e); 

(3) Rules or rule amendments 

governing trading hours may be 

implemented without prior approval, 

provided that they are implemented 

pursuant to the procedures of 

sect; 40.6(a); 

(4) Rules or rule amendments that are 

required to comply with a binding order 

of a court of competent jurisdiction, or 

a rule, regulation or order of the 

Commission or of another Federal 

regulatory authority, may be 

implemented without prior approval, 

provided that they are implemented 

pursuant to the procedures of § 40.6(a); 

or 

(5) Any rule or rule amendment: 

(i) The text of which has been 

submitted pursuant to the procedures of 

paragraph (b)(5) of this section and 

§ 40.6(a) at least ten business days prior 

to its implementation and that has been 

labeled ‘‘Non-Material Agricultural Rule 

Change;’’ 

(ii) For which the designated contract 

market has provided an explanation as 

to why it considers the rule ‘‘nonmaterial,’’ and any other information 

that may be beneficial to the 

Commission in analyzing the merits of 

the entity’s claim of non-materiality 

including, if applicable, a copy of a 

previously approved rule or rule 

amendment that is, in substance, the 

same as the non-material rule or rule 

amendment; and 

(iii) With respect to which the 

Commission has not notified the 

contract market during the review 

period that the rule appears to require 

or does require prior approval under 

this section. 

■ 9. Amend § 40.5 by: 

■ a. Revising paragraphs (a) 

introductory text, (a)(1), (2), (5), (6), and 

(9), and (c)(1); 

■ b. Removing paragraph (c)(2); 

■ c. Redesignating paragraph (d)(1) as 

paragraph (c)(2); 

■ d. Revising newly redesignated 

paragraph (c)(2); 

■ e. Redesignating paragraph (d)(2) as 

paragraph (c)(3); 

■ f. Revising newly redesignated 

paragraph (c)(3); 

■ g. Adding paragraphs (c)(4) through 

(6); 

■ h. Revising paragraphs (d) 

introductory text and (d)(1); 

■ i. Redesignating paragraph (g) as 

paragraph (d)(2); 

■ j. Revising newly redesignated 

paragraph (d)(2); 

■ k. Redesignating paragraph (e) as 

paragraph (d)(3); 

■ l. Revising newly redesignated 

paragraph (d)(3); 

■ m. Redesignating paragraphs (f)(1) and 

(2) as paragraphs (e)(1) and (2) 

respectively; and 

■ n. Revising newly redesignated 

paragraphs (e)(1) and (2). 

The revisions and additions read as 

follows: 

§ 40.5 Voluntary submission of rules for 

Commission review and approval. 

(a) Request for approval of rules. 

Pursuant to section 5c(c) of the Act, a 

registered entity may request that the 

Commission approve a new rule or rule 

amendment prior to implementation of 

the rule, or if the rule or rule 

amendment was initially submitted 

under § 40.2 or 40.6, subsequent to 

implementation of the rule. A request 

for approval shall: 

(1) Be filed electronically in a format 

and manner specified by the 

Commission; 

(2) Include the information required 

by appendix D to this part; 

* * * * * 

(5) Provide an explanation and 

analysis that is complete with respect to 

the operation, purpose, and effect of the 

proposed rule or rule amendment and 

its compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder, including, as 

applicable, a description of the 

anticipated benefits to market 

participants or others, any potential 

anticompetitive effects on market 

participants or others, and how the rule 

fits into the registered entity’s 

framework of self-regulation; 

(6) Certify that the registered entity 

posted a notice of its request for 

Commission approval of the new rule or 

rule amendment and a copy of the 

submission, concurrent with the filing 

of a submission with the Commission, 

on the registered entity’s website. 

Information the registered entity seeks 

to keep confidential may be redacted 

from the documents published on the 

registered entity’s website but must be 

republished consistent with any 

determination made pursuant to 

§ 40.8(c)(4); 

* * * * * 

(9) Identify any Commission 

regulation that the Commission may 

need to amend, or sections of the Act or 

the Commission’s regulations that the 

Commission may need to interpret, in 

order to approve the new rule or rule 

amendment. To the extent that such an 

amendment or interpretation is 

necessary to accommodate a new rule or 

rule amendment, the submission should 

include a reasoned analysis supporting 

the amendment to the Commission’s 

regulation or the interpretation; and 

* * * * * 

(c) * * * 

(1) Any rule submitted for 

Commission approval pursuant to, and 

in compliance with the submission 

requirements of, paragraph (a) of this 

section shall be subject to review by the 

Commission for a period of 45 days after 

receipt by the Commission. 

(2) The Commission may extend the 

initial 45-day review period for up to an 

additional 45 days if the proposed rule 

raises novel or complex issues that 

require additional time for review or is 

of major economic significance, the 

submission is incomplete or the 

requestor does not respond completely 

to Commission questions in a timely 

manner, in which case the Commission 

shall notify the submitting registered 

entity within the initial 45-day review 

period and shall briefly describe the 

nature of the specific issues for which 

additional time for review shall be 

required. 

(3) At any time during its review of a 

proposed rule under this section, the 

Commission may extend the review 

period for any period of time to which 

the registered entity agrees in writing. 

(4) Any amendment or 

supplementation made by the registered 

entity to the submission will be treated 

as the filing of a new submission under 

this section and be subject to the initial 

45-day review period in accordance 

with paragraph (c)(1) of this section, 

unless the amendment or 

supplementation is requested by the 

Commission or is made for correction of 

typographical errors, renumbering or 

other non-substantive revisions. 

(5) If a rule or rule amendment that is 

submitted for Commission approval 

under paragraph (a) of this section is 

also submitted and labeled as a ‘‘NonMaterial Agricultural Rule Change’’ in 

accordance with § 40.4(b)(5), the 

Commission shall commence the 45-day 

review period in paragraph (c)(1) of this 

section ten business days after receiving 

the submission. 

(6) If the review period described in 

paragraph (c)(1) of this section would 

end on a day that is not a business day, 

such review period shall instead be 

extended to end on the next business 

day. 

(d) Commission determination—(1) 

Approval. Any rule submitted for 


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Commission approval in compliance 

with paragraph (a) of this section shall 

be deemed approved by the Commission 

under section 5c(c) of the Act at the 

conclusion of the applicable review 

period under paragraph (c) of this 

section, unless the Commission issues a 

notice of non-approval to the registered 

entity under paragraph (d)(3) of this 

section within the applicable review 

period. 

(2) Expedited approval. 

Notwithstanding the provisions of 

paragraph (c) of this section, a proposed 

rule or rule amendment, including 

changes to terms and conditions of a 

product that are consistent with the Act 

and Commission regulations, may be 

approved by the Commission at such 

time and under such conditions as the 

Commission shall specify in a written 

notification. 

(3) Notice of non-approval. Any time 

during its review under this section, the 

Commission may notify the registered 

entity that it will not, or is unable to, 

approve the new rule or rule 

amendment. This notification will 

briefly specify the nature of the issues 

raised and the specific provision of the 

Act or the Commission’s regulations, 

including the form or content 

requirements of this section, with which 

the new rule or rule amendment is 

inconsistent or appears to be 

inconsistent with the Act or the 

Commission’s regulations. 

(e) Effect of non-approval. (1) 

Notification to a registered entity under 

paragraph (d)(3) of this section of the 

Commission’s determination not to 

approve a new rule or rule amendment 

does not prevent the registered entity 

from subsequently submitting a revised 

version of the proposed rule or rule 

amendment for Commission review and 

approval, or from submitting the new 

rule or rule amendment as initially 

proposed, in a supplemented 

submission; the revised or 

supplemented submission will be 

reviewed without prejudice. 

(2) Notification to a registered entity 

under paragraph (d)(3) of this section of 

the Commission’s determination not to 

approve a proposed rule or rule 

amendment of a registered entity shall 

be presumptive evidence that the entity 

may not truthfully certify under § 40.6 

that the same, or substantially the same, 

proposed rule or rule amendment 

complies with the Act and 17 CFR 

chapter I. 

■ 10. Amend § 40.6 by: 

■ a. Revising paragraphs (a) 

introductory text and (a)(1), (2), and (5) 

through (8); 

■ b. Adding paragraph (a)(9); 

■ c. Revising paragraph (b); 

■ d. Revising paragraphs (c)(2) and (3); 

■ e. Adding paragraph (c)(5); 

■ f. Revising paragraphs (d)(1) and 

(d)(2)(iii), (iv), and (ix); 

■ g. Adding paragraphs (d)(2)(xi) 

through (xiii); 

■ h. Redesignating paragraph (d)(3) as 

paragraph (e); and 

■ i. Revising newly redesignated 

paragraph (e). 

The additions and revisions read as 

follows: 

§ 40.6 Self-certification of rules. 

(a) Submission requirements. A 

registered entity shall comply with the 

certification and submission 

requirements of this section prior to 

implementing any rule that has not 

obtained Commission approval under 

§ 40.5, or that is submitted under 

§ 40.10, except as otherwise provided by 

§ 40.10(a). A submission shall comply 

with the following conditions: 

(1) The registered entity has filed its 

submission electronically in a format 

and manner specified by the 

Commission. 

(2) The registered entity has provided 

a certification that the registered entity 

posted a notice of pending certification 

with the Commission and a copy of the 

submission, concurrent with the filing 

of a submission with the Commission, 

on the registered entity’s website. 

Information that the registered entity 

seeks to keep confidential may be 

redacted from the documents published 

on the registered entity’s website but it 

must be republished consistent with any 

determination made pursuant to 

§ 40.8(c)(4). 

* * * * * 

(5) The rule or rule amendment is not 

a rule or rule amendment of a 

designated contract market that 

materially changes a term or condition 

of a contract for future delivery of an 

agricultural commodity enumerated in 

section 1a(9) of the Act or an option on 

such a contract or commodity in a 

delivery month having open interest. 

(6) Rule certifications implemented in 

response to an emergency. 

(i) Rules or rule amendments 

implemented under procedures of the 

governing board to respond to an 

emergency as defined in § 40.1, shall, if 

practicable, be filed with the 

Commission prior to the 

implementation or, if not practicable, be 

filed with the Commission at the earliest 

possible time after implementation, but 

in no event more than twenty-four hours 

after implementation. Such rules shall 

be subject to the review and stay 

provisions of paragraphs (b) and (c) of 

this section. 

(ii) New rules or rule amendments 

that establish standards for responding 

to an emergency must be submitted 

pursuant to paragraph (a) of this section 

or may be submitted pursuant to § 40.5. 

(7) The rule submission shall include: 

(i) The information required by 

appendix D to this part (‘‘Emergency 

Rule Certification’’ should be noted in 

the Description section in the case of a 

rule or rule amendment that responds to 

an emergency); 

(ii) The text of the rule (in the case of 

a rule amendment, deletions and 

additions must be indicated); 

(iii) The date of intended 

implementation; 

(iv) A certification by the registered 

entity that the rule complies with the 

Act and the Commission’s regulations 

thereunder; 

(v) A concise explanation and 

analysis that is complete with respect to 

the operation, purpose, and effect of the 

proposed rule or rule amendment and 

its compliance with applicable 

provisions of the Act, including core 

principles, and the Commission’s 

regulations thereunder; 

(vi) A brief explanation of any 

substantive opposing views expressed to 

the registered entity by governing board 

or committee members, members of the 

entity or market participants, that were 

not incorporated into the rule, or a 

statement that no such opposing views 

were expressed; and 

(vii) As appropriate, a request for 

confidential treatment pursuant to the 

procedures provided in § 40.8; 

(8) The registered entity shall provide, 

if requested by Commission staff, 

additional evidence, information or data 

that may be beneficial to the 

Commission in conducting a due 

diligence assessment of the filing and 

the registered entity’s compliance with 

any of the requirements of the Act or the 

Commission’s regulations or policies 

thereunder; and 

(9) Notwithstanding the 10 business 

day filing requirement of paragraphs 

(a)(3) and (b)(1) of this section, a 

registered entity may file a submission 

and certification of a new rule or a rule 

amendment that delists, or withdraws 

the certification of, a product that has 

no open interest and may make the 

delisting or withdrawal of the product 

with no open interest effective 

immediately upon filing the submission, 

provided that the submission is made in 

compliance with paragraphs (a)(1), (2) 

and (7) of this section. 

(b) Review by the Commission. (1) The 

Commission shall have 10 business days 

to review the new rule or rule 

amendment before the new rule or rule 

amendment is deemed certified and can 


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be made effective, unless the 

Commission notifies the registered 

entity during the 10-business day 

review period that it intends to issue a 

stay of the certification under paragraph 

(c) of this section. 

(2) Any amendment or 

supplementation made by the registered 

entity to the submission will be treated 

as the filing of a new submission under 

this section and be subject to the initial 

10-business day review period in 

accordance with paragraph (b)(1) of this 

section, unless the amendment or 

supplementation is requested by the 

Commission or is made for correction of 

typographical errors, renumbering or 

other non-substantive revisions. 

(c) * * * 

(2) Public comment. The Commission 

shall provide a 30-day comment period 

within the 90-day period in which the 

stay is in effect as described in 

paragraph (c)(1) of this section. The 

Commission shall publish a notice of 

the 30-day comment period on the 

Commission website. Comments from 

the public shall be submitted as 

specified in that notice. 

(3) Expiration of a stay of certification 

of new rule or rule amendment. A new 

rule or rule amendment subject to a stay 

pursuant to this paragraph (c)(3) shall 

become effective and can be 

implemented, pursuant to the 

certification, at the expiration of the 90- 

day review period described in 

paragraph (c)(1) of this section unless 

the Commission withdraws the stay 

prior to that time, or the Commission 

notifies the registered entity during the 

90-day time period that it objects to the 

certification on the grounds that the 

proposed rule or rule amendment is 

inconsistent with the Act or 17 CFR 

chapter I. 

* * * * * 

(5) Effect of objection. (i) Notification 

to a registered entity under paragraph 

(c) of this section of the Commission’s 

objection to a certification by a 

registered entity on the grounds that the 

proposed rule or rule amendment is 

inconsistent with the Act or the 

Commission’s regulations does not 

prevent the registered entity from 

subsequently submitting a revised 

version of the proposed rule or rule 

amendment for certification or 

Commission review and approval, or 

from submitting the new rule or rule 

amendment as initially proposed, in a 

supplemented submission; the revised 

or supplemented submission will be 

reviewed without prejudice. 

(ii) Notification to a registered entity 

under paragraph (c) of this section of the 

Commission’s objection to a 

certification by a registered entity shall 

be presumptive evidence that the entity 

may not truthfully certify under this 

part that the same, or substantially the 

same, proposed rule or rule amendment 

complies with the Act and the 

Commission’s regulations thereunder. 

(d) * * * 

(1) The registered entity provides to 

the Commission at least weekly a 

summary notice of all rule amendments 

made effective pursuant to this 

paragraph (d)(1) during the preceding 

week. Such notice must be labeled 

‘‘Weekly Notification of Rule 

Amendments’’ and need not be filed for 

weeks during which no such actions 

have been taken. One copy of each such 

submission shall be furnished 

electronically in a format and manner 

specified by the Commission; and 

* * * * * 

(2) * * * 

(iii) Index products. Routine changes 

in the composition, computation, or 

method of selection of component 

entities of an index (other than routine 

changes to securities indexes to the 

extent that such changes are not 

described in paragraph (e)(2)(vi) of this 

section) referenced and defined in the 

product’s terms, 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 information 

and which was not formed solely for the 

purpose of compiling an index for use 

in connection with a futures or option 

product; 

(iv) Option contract terms. Changes to 

option contract rules, which may 

qualify for implementation without 

notice pursuant to paragraph (e)(2)(vii) 

of this section, relating to the strike 

price listing procedures, strike price 

intervals, and the listing of strike prices 

on a discretionary basis; 

* * * * * 

(ix) Trading months. The initial 

listing of trading months, or an 

amendment to existing trading months, 

which may qualify for implementation 

without notice pursuant to paragraph 

(e)(2)(viii) of this section, within the 

currently established cycle of trading 

months; 

* * * * * 

(xi) Contact information. Updates of 

email addresses or other contact 

information that market participants use 

to submit block trades; 

(xii) Changes to no cancellation 

ranges. For a contract for the purchase 

or sale of a commodity for future 

delivery or an option on such a contract 

or an option on a commodity (other than 

a swap), changes to no cancellation 

ranges (which are the price ranges 

within which a trade will not be 

cancelled); or 

(xiii) Option premiums or margins. 

For a contract for the purchase or sale 

of a commodity for future delivery or an 

option on such a contract or an option 

on a commodity (other than a swap), 

payment or collection of commodity 

options premiums or margins; or for a 

swap, payment or collection of option 

premiums or margins. 

* * * * * 

(e) Notification of rule amendments 

not required. Notwithstanding the rule 

certification requirements of section 

5c(c)(1) of the Act and paragraph (a) of 

this section, a registered entity may 

place the following rules or rule 

amendments into effect without 

certification or notice to the 

Commission if the following conditions 

are met: 

(1) The registered entity maintains 

documentation regarding all changes to 

rules; and 

(2) The rule governs: 

(i) Transfer of membership or 

ownership. Procedures and forms for the 

purchase, sale or transfer of membership 

or ownership, but not including 

qualifications for membership or 

ownership, any right or obligation of 

membership or ownership or dues or 

assessments; 

(ii) Administrative procedures. The 

organization and administrative 

procedures of a registered entity 

governing bodies such as a Board of 

Directors, Officers and Committees, but 

not voting requirements, Board of 

Directors or Committee composition 

requirements or procedures, decision 

making procedures, use or disclosure of 

material non-public information gained 

through the performance of official 

duties, or requirements relating to 

conflicts of interest; 

(iii) Administration. The routine, 

daily administration, direction and 

control of employees, requirements 

relating to gratuity and similar funds, 

but not guaranty, reserves, or similar 

funds; declaration of holidays, and 

changes to facilities housing the market, 

trading floor or trading area; 

(iv) Standards of decorum. Standards 

of decorum or attire or similar 

provisions relating to admission to the 

floor, badges, or visitors, but not the 

establishment of penalties for violations 

of such rules; and 

(v) Fees. Fees or fee changes, other 

than fees or fee changes associated with 

market making or trading incentive 

programs, that: 

(A) Are less than $1.00 per contract; 

or 


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(B) Relate to matters such as dues, 

badges, telecommunication services, 

booth space, real time quotations, 

historical information, publications, 

software licenses or other matters that 

are administrative in nature. 

(vi) Securities indexes. Routine 

changes to the composition, 

computation or method of security 

selection of an index that is referenced 

and defined in the product’s rules, and 

which is made by an independent third 

party. 

(vii) Option contract terms. For 

registered entities that are in 

compliance with the daily reporting 

requirements of § 16.01 of this chapter, 

changes to option contract rules relating 

to the strike price listing procedures, 

strike price intervals, and the listing of 

strike prices on a discretionary basis. 

(viii) Trading months. For registered 

entities that are in compliance with the 

daily reporting requirements of § 16.01 

of this chapter, the initial listing of 

trading months which are within the 

currently established cycle of trading 

months. 

■ 11. Amend § 40.7 by revising 

paragraphs (a)(5) and (b)(3) and adding 

paragraph (e) to read as follows: 

§ 40.7 Delegations. 

(a) * * * 

(5) The Commission hereby delegates 

to the Director of the Division of Market 

Oversight, to be exercised by the 

Director or by such employees of the 

Commission that the Director may 

designate from time to time, with the 

concurrence of the General Counsel or 

the General Counsel’s delegate, the 

authority to determine whether a rule or 

rule amendment submitted by a 

designated contract market is material 

under § 40.4(b)(5), and to notify the 

designated contract market of such 

determination. 

(b) * * * 

(3) Establish or amend or relate to 

speculative limits or position 

accountability provisions that are in 

compliance with the requirements of the 

Act and17 CFR chapter I; 

* * * * * 

(e) The Commission hereby delegates, 

until it orders otherwise, to the Director 

of the Division of Clearing and Risk and, 

separately, to the Director of the 

Division of Market Oversight, to be 

exercised by either Director, as 

appropriate, or by such employees of 

the Commission that either Director may 

designate from time to time, the 

authority to specify the format and 

manner to be used by a registered entity 

when filing a submission pursuant to 

this part. 

■ 12. Amend § 40.10 by: 

■ a. Revising paragraphs (a) 

introductory text, (b), (d) introductory 

text, and (h)(3); and 

■ b. Adding paragraph (i). 

The revisions and addition read as 

follows: 

§ 40.10 Special certification procedures for 

submission of rules by systemically 

important derivatives clearing 

organizations. 

(a) Advance notice. A systemically 

important derivatives clearing 

organization, as defined in § 39.2 of this 

chapter, shall provide notice to the 

Commission not less than 60 days in 

advance of any proposed change to its 

rules, procedures, or operations that 

could materially affect the nature or 

level of risks presented by the 

systemically important derivatives 

clearing organization. A notice 

submitted under this section shall be 

subject to the filing requirements of 

§ 40.6(a)(1) and the website publication 

requirements of § 40.6(a)(2). 

* * * * * 

(b) Changes requiring advance notice. 

Changes to a systemically important 

derivatives clearing organization’s rules, 

procedures, or operations that could 

materially affect the nature or level of 

risks presented by the systemically 

important derivatives clearing 

organization may include, but are not 

limited to: material changes to its 

default management plan or default 

rules or procedures required under 

§ 39.16 or 39.35 of this chapter, program 

of risk analysis and oversight required 

under § 39.18 of this chapter, or 

recovery and wind down plans required 

under § 39.39 of this chapter; the 

adoption of a new or materially revised 

margin methodology; the establishment 

of a cross-margining program or similar 

arrangement with another clearing 

organization; and material changes to its 

approach to the stress testing required 

under § 39.13(h)(3) or 39.36(a) or (c) of 

this chapter. If a systemically important 

derivatives clearing organization 

determines that a proposed change 

could not materially affect the nature or 

level of risks it presents and therefore 

does not file an advance notice, the 

Commission may determine otherwise 

and require the systemically important 

derivatives clearing organization to 

withdraw the proposed change and 

provide notice pursuant to this section. 

* * * * * 

(d) Notice of objection. A systemically 

important derivatives clearing 

organization shall not implement a 

change to which the Commission has an 

objection on the grounds that the 

proposed change is not consistent with 

the Act or 17 CFR chapter I, or any 

applicable rules, orders, or standards 

prescribed under section 805(a) of the 

Dodd-Frank Act. The Commission will 

notify the systemically important 

derivatives clearing organization in 

writing of any objection regarding the 

proposed change within 60 days from 

the later of: 

* * * * * 

(h) * * * 

(3) The Commission may require 

modification or rescission of the 

emergency change if it finds that the 

change is not consistent with the Act or 

17 CFR chapter I, or any applicable 

rules, orders, or standards prescribed 

under section 805(a) of the Dodd-Frank 

Act. 

(i) Where in §§ 39.3(g), 39.4(f), 

39.13(i), and 39.15(b)(2) of this chapter 

a derivatives clearing organization is 

required to submit rules for approval 

pursuant to § 40.5, a systemically 

important derivatives clearing 

organization instead shall submit such 

rules pursuant to this section if the rules 

could materially affect the nature or 

level of risks presented by the 

systemically important derivatives 

clearing organization. 

■ 13. Revise appendix D to read as 

follows: 

Appendix D to Part 40—Submission 

Instructions for Rules and Products 

(a) Rule and product submissions shall be 

submitted electronically to the Commission 

by a registered entity in a format and manner 

specified by the Commission, and shall 

include all of the following information: 

1. Date—The date of the filing. 

2. Organization—The name of the 

organization filing the submission (e.g., 

CBOT). 

3. Type of Registered Entity—An indication 

as to whether the rule or product is being 

submitted by a designated contract market 

(DCM), derivatives clearing organization 

(DCO), swap execution facility (SEF), or swap 

data repository (SDR). 

4. Type of Filing—An indication as to 

whether the filing is a new rule, rule 

amendment or new product and the section 

of this part under which the filing is 

submitted. For a new product to be listed by 

a DCM or a SEF, an indication whether the 

new product meets the definition of 

referenced contract as such term is defined 

in § 150.1 of this chapter and is described in 

appendix C to part 150 of this chapter. 

5. Rule Numbers—For rule filings, the rule 

number(s) being adopted or modified in the 

case of rule amendment filings. 

6. Description—For rule or rule 

amendment filings, a description of the new 

rule or rule amendment, including a 

discussion of its expected impact on the 

registered entity, market participants, and the 

overall market. The narrative should describe 

the substance of the submission with enough 


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Federal Register / Vol. 89, No. 216 / Thursday, November 7, 2024 / Rules and Regulations 88629 

1 88 FR 61432 (Sept. 6, 2023). 

2 Kristin N. Johnson, Commissioner, Statement in 

Support of Proposed Amendments to Provisions 

Common to Registered Entities (July 26, 2023), 

Statement of Commissioner Kristin N. Johnson in 

Support of Proposed Amendments to Provisions 

Common to Registered Entities at https://

www.cftc.gov/PressRoom/SpeechesTestimony/ 

johnsonstatement072623b. 

3See FIA Comment Letter on Provisions Common 

to Registered Entities (Nov. 3, 2023) at 1; Better 

Markets Comment Letter on Provisions Common to 

Registered Entities (Nov. 6, 2023) at 4. 

specificity to characterize all material aspects 

of the filing. 

7. Identifier Code (optional)—A registered 

entity Identifier Code, if applicable. Such 

codes are commonly generated by registered 

entities to provide an identifier that is unique 

to each filing (e.g., NYMEX Submission 03– 

116). 

(b) Other Requirements—A submission 

shall comply with all applicable filing 

requirements for proposed rules, rule 

amendments, or products. The entry of the 

information required by paragraph (a) of this 

appendix 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) An indication of ‘‘confidential 

treatment requested’’ 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. 

■ 14. Add appendix E to read as follows: 

Appendix E to Part 40—Guidance on 

Compliance With the Materiality 

Assessment in § 40.4 

This appendix provides guidance on 

complying with the requirement in § 40.4(a) 

that a DCM must submit rule changes that 

would materially change a term or condition 

of a contract on an agricultural product 

enumerated in section 1a(9) of the CEA with 

open interest for Commission approval under 

the procedures of § 40.5. Section 40.4(a) 

applies strictly to rules that materially 

change a product’s economic terms and 

conditions, and does not apply to other rules. 

Guidance is set forth below to assist a DCM 

in assessing whether a change to the terms 

and conditions is material pursuant to 

§ 40.4(a) and in explaining why it considers 

a rule to be non-material when § 40.4(b)(5) is 

applicable. The guidance below can be used 

to demonstrate to the Commission 

compliance with the requirement in 

§ 40.4(b)(5)(ii) that the DCM explain why it 

considers a rule to be non-material when 

applicable. 

Materiality of a Change of a Term or 

Condition 

Any change that is enumerated by the 

Commission in § 40.4(b)(1) through (4) is not 

material for purposes of § 40.4(a) and may be 

submitted under the applicable § 40.6 

provision that is specified in the applicable 

§ 40.4(b). For any other rule that the DCM 

believes to be non-material, § 40.4(b)(5) sets 

forth a process for the DCM to implement the 

change through self-certification pursuant to 

§ 40.6(a). 

In order for a DCM to self-certify a change 

to a term or condition of a contract on an 

agricultural product enumerated in CEA 

section 1a(9) with open interest that the DCM 

believes to be non-material, § 40.4(b)(5) 

requires the DCM to make a non-materiality 

filing and explain why it considers the rule 

change to be ‘‘non-material.’’ To assist an 

exchange in assessing and explaining 

whether a change to the terms and conditions 

is non-material pursuant to § 40.4(b)(5), 

paragraphs (1) through (4) of the following 

paragraph are the criteria that the 

Commission generally considers as evidence 

that an enumerated agricultural product rule 

change is non-material under § 40.4(a) 

pursuant to § 40.4(b)(5). A DCM may address 

these criteria in its assessment and 

explanation to demonstrate compliance with 

§ 40.4(b)(5). 

The Commission considers a change to the 

terms and conditions of a contract on an 

agricultural product enumerated in CEA 

section 1a(9) that has open interest as a nonmaterial change if: 

(1) The change should not affect a 

reasonable trader’s decision to enter into, or 

maintain, a position; 

(2) The change should not affect a 

reasonable trader’s decision to make or take 

delivery on the contract or to exercise an 

option on the contract; and 

(3) The change should not have an effect 

on the value of existing positions, including, 

but not limited to, a change affecting the 

price of the contract due to a change in the 

commodity quality characteristics of the 

existing contract, a change to the size of the 

existing contract, or a change to a cost of 

effecting delivery for the existing contract. 

Issued in Washington, DC, on October 17, 

2024, by the Commission. 

Robert Sidman, 

Deputy Secretary of the Commission. 

Note: The following appendices will not 

appear in the Code of Federal Regulations. 

Appendices to Provisions Common to 

Registered Entities—Commission 

Voting Summary and Commissioner’s 

Statements 

Appendix 1—Commission Voting 

Summary 

On this matter, Chairman Behnam, 

Commissioners Johnson, Goldsmith Romero, 

and Pham voted in the affirmative. 

Commissioner Mersinger voted in the 

negative. 

Appendix 2—Statement of 

Commissioner Kristin N. Johnson 

I support making our rules clearer and 

ensuring that our rules enable the 

Commodity Futures Trading Commission 

(Commission) to effectively address 

innovations regarding products, platforms, 

and technologies. 

Today, the Commission issues final 

amendments to provisions common to 

registered entities set forth in Part 40 of the 

Commission’s regulations (the Final Rule). 

Part 40 implements Section 5c(c) of the 

Commodity Exchange Act (CEA or Act) and 

applies to designated contract markets 

(DCMs), derivatives clearing organizations 

(DCOs), Swap Execution Facilities (SEFs), 

and swap data repositories (SDRs). Notably, 

Part 40 includes the procedures by which 

registered entities list new products and 

implement new rules, along with standards 

for review and approval of the same by the 

Commission. 

As of the date of the proposed rulemaking,1

Part 40 had not been amended 

comprehensively for a decade.2 Over the last 

ten years, our markets and the market 

structures that characterize our markets have 

experienced significant technological 

advancements. Regulation must adapt to 

address emerging developments. 

Today’s Final Rule updates the 

Commission’s regulations governing the 

introduction of new products and new rules. 

The Final Rule includes updates that 

demonstrate the Commission’s commitment 

to ongoing efforts to ensure the clarity and 

relevance of its regulatory requirements—for 

example, updates to reflect the fact that 

registered entities now communicate with 

the Commission via the internet. 

The Final Rule amends Sections 40.2 (selfcertification of products), 40.3 (voluntary 

submission of products for Commission 

approval), 40.5 (voluntary submission of 

rules for Commission approval), and 40.6 

(self-certification of rules) to require that, in 

each case, a registered entity provide a 

submission ‘‘that is complete with respect 

to’’ key information about the product or 

rule. These changes reflect the Commission’s 

commitment to ensure that registered entities 

provide sufficient information to the 

Commission to enable the Commission to 

complete the analysis of compliance required 

under the CEA and the Part 40 regulations. 

Several commenters noted the importance of 

this change in ensuring the Commission 

remains adequately informed about market 

developments.3 And, as the Final Rule notes, 

the regulations retain the word ‘‘concise,’’ 

thus minimizing the burden on registered 

entities, while enabling the Commission to 

receive the information it needs. 

I thank staff in the Division of Clearing and 

Risk and the Division of Market Oversight, 

including Rachel Kaplan, Steven Benton, 

Nancy Markowitz, and Eileen Chotiner, for 

their efforts on this rulemaking. 

[FR Doc. 2024–24388 Filed 11–6–24; 8:45 am] 

BILLING CODE 6351–01–P 


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