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[Federal Register Volume 76, Number 72 (Thursday, April 14, 2011)]
[Rules and Regulations]
[Pages 20835-20838]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-9031]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Chapter I

Order of the Commodity Futures Trading Commission Relating to the 
Continuation, Shutdown, and Resumption of Certain Commission Operations 
in the Event of a Lapse in Appropriations

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of order; final order.

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SUMMARY: This order is being issued to provide for the continuation, 
shutdown, and resumption of certain operations of the Commodity Futures 
Trading Commission in the event of a lapse in appropriations, and to 
alert all persons regulated by or engaged in proceedings at the 
Commodity Futures Trading Commission of these provisions.

DATES: This notice and order is effective on April 13, 2011.

FOR FURTHER INFORMATION CONTACT: For market oversight matters contact 
Richard A. Shilts, Acting Director, Division of Market Oversight, 202-
418-5275, rshilts@cftc.gov. For clearing and intermediary matters, 
contact John Lawton, Deputy Director, jlawton@cftc.gov, 202-418-5480; 
Thomas Smith, Deputy Director, tsmith@cftc.gov, 202-418-5495; or Robert 
Wasserman, Associate Director, rwasserman@cftc.gov, 202-418-5092 in the 
Division of Clearing and Intermediary Oversight.

SUPPLEMENTARY INFORMATION:

I. Background

    As of 12:01 a.m. on April 9, 2011, the continuing resolution that 
funds many Federal government activities is set to expire. Unless 
additional appropriations are enacted, Federal departments and agencies 
whose continued operations are dependent upon such funding--including 
the Commodity Futures Trading Commission (the ``Commission'')--will be 
required to execute contingency plans for this lapse in appropriations 
(commonly referred to as a ``shutdown''). Under 31 U.S.C. 1341 (the 
``Anti-Deficiency Act''), the Commission is prohibited from expending 
or obligating any funds in the absence of appropriations, subject to a 
narrow set of exceptions.\1\ One exception that applies to the 
Commission is ``emergencies involving the safety of human life or the

[[Page 20836]]

protection of property.'' \2\ It has been recognized that certain 
commodity market functions may continue during a lapse in 
appropriations.\3\ Thus, the Commission has designated certain 
essential personnel to fulfill its obligation to protect property.
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    \1\ The Anti-Deficiency Act provides that an officer or employee 
of the United States may not:
    (A) Make or authorize an expenditure or obligation exceeding an 
amount in an appropriation or fund for the expenditure or 
obligation;
    (B) Involve [the] government in a contract or obligation for the 
payment of money before an appropriation is made unless authorized 
by law;
    (C) Make or authorize an expenditure or obligation of funds 
required to be sequestered under section 252 of the Balanced Budget 
and Emergency Deficit Control Act of 1985; or
    (D) Involve [the] government in a contract or obligation for the 
payment of money required to be sequestered under section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985.
    \2\ 31 U.S.C. 1342 provides:
    An officer or employee of the United States Government * * * may 
not accept voluntary services for [the] government or employ 
personal services exceeding that authorized by law except for 
emergencies involving the safety of human life or the protection of 
property * * *. As used in this section, the term ``emergencies 
involving the safety of human life or the protection of property'' 
does not include ongoing, regular functions of government the 
suspension of which would not imminently threaten the safety of 
human life or the protection of property.
    \3\ Memorandum from Walter Dellinger, Assistant Attorney 
General, Department of Justice, Office of Legal Counsel, to Alice 
Rivlin, Director, Office of Management and Budget, Aug. 16, 1995, at 
2-3.
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    The Commission's regulations place a number of filing obligations 
on registered entities, intermediaries, market participants and the 
public within specified time frames and also include provisions 
relating to requests for Commission approval and issuance of exemption 
and interpretative relief and guidance with specific time frames for 
Commission action. The Commission has reviewed its rules in light of 
its obligation to protect property to determine which obligations will 
continue to apply during a lapse in appropriation.

A. Tolling and Extension of Certain Procedural Time Limits

    In the event of a lapse in appropriations, the Commission will not 
be officially receiving, processing, or reviewing filings for 
Commission approval or action that are not directly related to the 
protection of property. Matters not directly related to the protection 
of property include rule, rule amendment, and contract certifications, 
except for emergency rules certified pursuant to regulation 40.6(a)(2); 
rules, rule amendments and contracts voluntarily submitted for 
Commission approval; requests for contract market designation and 
derivatives clearing organization and derivatives trade execution 
facilities registration; and other requests for Commission approval or 
relief. The above-mentioned matters do not include any emergency 
notifications that may be required by Commission regulations of 
registered entities and intermediaries, or that are required by any 
rule of a registered entity that has been approved by or self-certified 
to the Commission.
    More specifically, matters not directly related to the protection 
of property include filings under regulation 1.47 and regulation 1.48 
(bona fide hedge requests), part 36 (notification filings and 
information on trading), part 37 (derivatives trading execution 
facility applications, certifications of continued compliance in 
situations of merger or sale, and demonstrations of compliance with the 
core principles), part 38 (designated contract market applications, 
certifications of continued compliance in situations of merger or sale, 
and demonstrations of compliance with the core principles), part 39 
(derivatives clearing organization applications, requests for orders 
regarding competition, and demonstrations of compliance with the core 
principles), part 40 (rule and contract filings (both certifications 
and approvals and requests for confidential treatment of submissions)), 
part 41 (filing of notice-designated contract markets trading security 
futures products), regulations 145.7 and 145.9 requests (requests for 
Commission records, petitions for confidential treatment of information 
submitted to the Commission, and appeals of FOIA decisions), regulation 
140.99 filings (requests for exemptive, no-action and interpretive 
letters), and petitions for grandfather relief under section 734 of the 
Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank Act'') 
pursuant to the Commission's order that became effective on September 
10, 2010.\4\ For matters that are currently pending before the 
Commission pursuant to any of these provisions, all applicable time 
deadlines for Commission action will be tolled until the Commission is 
able to resume full operations.
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    \4\ See Orders Regarding the Treatment of Petitions Seeking 
Grandfather Relief for Exempt Commercial Markets and Exempt Boards 
of Trade, 75 FR 56513, Sep. 16, 2010.
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    Matters not directly related to the protection of property also 
include certain procedural rules associated with Commission 
adjudicatory actions, in particular certain rules under part 3 
(procedure to deny, condition, or suspend, revoke, or place 
restrictions on registration), part 9 (related to review of exchange 
disciplinary, access denial or other adverse actions), part 10 (the 
Commission's rules of practice for adjudicatory proceedings before the 
Commission), part 12 (rules related to reparations proceedings), and 
part 171 (review of National Futures Association decisions). For these 
matters that are currently pending before the Commission pursuant to 
any of these provisions, all applicable time deadlines for Commission 
action will be tolled until the Commission is able to resume full 
operations. Moreover, all applicable time deadlines for parties to an 
adjudicative proceeding that arise during a lapse in appropriations 
will be extended until one business day after the Commission resumes 
its full operations.

B. Continued Operation of Certain Agency Regulations

    The Commission's regulations also impose filing obligations on 
registered entities, intermediaries, market participants and the 
public. The Commission has determined that certain filing requirements 
will remain in effect in order for the Commission to fulfill its 
obligation to protect property even during a lapse of appropriations. 
Accordingly, such filing requirements will continue to be in effect 
during the lapse in appropriations and such filings will continue to be 
received and processed. This category includes regulation 1.10 filings 
(financial reports of futures commission merchants (FCMs) and 
introducing brokers (IBs)), regulation 1.12 filings (notice provisions 
required of FCMs and IBs), regulation 1.17 filings (capital 
requirements (business days would include those days the Commission is 
shutdown for purposes of requirements relating to margin calls and the 
computation of margin) and any notice provision requirements)),\5\ 
regulation 1.32 filings (segregation calculation (business days would 
include those days the Commission is shutdown for purposes of 
requirements related to segregation)), regulation 1.65 filings (notice 
of bulk transfers (a business day would include those days the 
Commission is shutdown)), and regulation 30.7 filings (formal secured 
amount requirements (a business day would include those days the 
Commission is shutdown)). For these regulations, the business day 
requirements will not be affected by a lapse in appropriations. Also in 
this category are part 15 filings (general reporting requirements), 
part 16 filings (clearing member reports), part 17 filings (FCM 
reports), part 18 filings (reports by traders), part 19 filings (bona 
fide hedge position reports), part 21 filings (special call 
provisions), and regulation 40.6 filings (emergency rules of a 
registered entity).
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    \5\ Generally, the Commission's regulations define business day 
to exclude only Saturday, Sunday, and Federal holidays. Thus, the 
shutdown would not affect the operation of these rules.
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    The Commission's regulations require and industry practice provides 
for notification to the Commission and its staff of certain emergency 
situations. Thus registered entities and

[[Page 20837]]

intermediaries should continue to provide the Commission notice of 
emergency situations such as system malfunctions, cyber security 
incidents or financial emergencies throughout a lapse in 
appropriations.

C. Extension of Open Comment Periods on Proposed Regulation and Other 
Matters That May Be Subject to a Request for Comment by the Commission

    Finally, the Commission has proposed a number of rules to implement 
the Dodd-Frank Act for which the comment period may expire while the 
Commission is shutdown. The Commission will be unable to officially 
receive and process comment submissions until it resumes full 
operations. Therefore, the Commission is extending the comment periods 
for such rules, and for any other matters that may be subject to a 
request for comment by the Commission, until one business day after the 
Commission is able to resume full operations. Notice of the lifting of 
a shutdown will be provided on the Commission's Web site.

II. Administrative Compliance

A. Administrative Procedure Act

    To the extent that some of the provisions of this order may be 
subject to notice and comment under the Administrative Procedure Act 
(``APA''),\6\ and may be subject to the provisions of the APA that 
require publication or service of a substantive rule be made not less 
than 30 days before its effective date,\7\ the Commission for good 
cause finds that notice and comment and a delayed effective date are 
impracticable and contrary to the public interest. The Commission may 
be obligated to commence orderly shutdown of its operations at the 
commencement of business on April 11 and has determined that it is in 
the interest of the public and the markets it regulates to have 
established and publicized its procedures for limiting its operations 
to only those that are essential to the protection of property before 
that time.
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    \6\ See 5 U.S.C. 553(b).
    \7\ See 5 U.S.C. 553(d).
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    Moreover, though the tolling of certain procedural time limits will 
delay the Commission's review and approval of certain industry filings, 
the review and approval provisions in the Commission's regulations 
implement review and approval provisions of the Commodity Exchange Act 
(``CEA'') in order to protect the public interest. It would be contrary 
to the CEA, and to the public interest, if these review and approval 
time limits continued to run while the Commission is unable to conduct 
routine business.
    Finally, in order to protect the property interests of the public 
related to the orderly operation of the futures markets, the 
Commissioners will be supported by essential personnel in the 
surveillance of the markets in order to identify any emergency market 
situations that may require action to protect property during a lapse 
in appropriations. It therefore is essential that reporting regulations 
associated with market surveillance and emergency notices continue to 
operate.

B. Paperwork Reduction Act

    The Paperwork Reduction Act provides that an agency may not conduct 
or sponsor, and a person is not required to respond to, a collection of 
information unless it has been approved by the Office of Management and 
Budget (``OMB'') and displays a currently valid control number.\8\ The 
collections of information referenced in this notice and order have 
valid control numbers that are currently in effect. Therefore, the 
Commission is not obligated to seek a control number in connection with 
this order.
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    \8\ 44 U.S.C. 3501 et seq.
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C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires the Commission to 
consider whether a rule it proposes will have a significant economic 
impact on a substantial number of small entities and either provide a 
regulatory flexibility analysis respecting the significant impact or 
certify that the rule will not have such an impact.\9\ The RFA is 
applicable only to a rule for which the Commission publishes a general 
notice of proposed rulemaking pursuant to 5 U.S.C. 553(b).\10\
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    \9\ 5 U.S.C. 601 et seq.
    \10\ 5 U.S.C. 601(2).
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    The Commission is not publishing this order as a general notice of 
proposed rulemaking. Therefore, neither a regulatory flexibility 
analysis nor a certification is required for this rulemaking action. 
Nonetheless, this order will impose no new regulatory obligations on 
any party. Rather, it simply establishes the limited regulatory 
framework under which the Commission will operate during a shutdown in 
order to ensure the protection of property. Accordingly, as permitted 
by 5 U.S.C. 605, the Chairman, on behalf of the Commission, hereby 
certifies that the provisions contained in this order will not have a 
significant economic impact on a substantial number of small entities.

D. Cost Benefit Analysis

    Section 15(a) of the CEA \11\ requires the Commission to consider 
the costs and benefits of its actions before promulgating a regulation 
under the CEA. Section 15(a) specifies that the costs and benefits 
shall be considered against 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. The Commission may give greater weight 
to one or more of the five enumerated considerations to determine, in 
its discretion, that a particular rule is necessary or appropriate to 
protect the public interest or to effectuate any of the provisions or 
accomplish any of the purposes of the CEA.
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    \11\ 7 U.S.C. 19(a).
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    This order imposes the cost of delay on parties with petitions for 
approval, self-certification filings, rights of review, and 
adjudicative matters before the Commission. As the Commission is 
limited by law to function most notably with respect to the protection 
of property, these costs are unavoidable.
    In terms of benefits, this order provides for the limited 
continuation of Commission business. The order also confirms the 
ongoing regulatory obligations of registered entities and 
intermediaries notwithstanding a shutdown, in order to ensure that the 
Commission has available to it all information necessary to identify 
emergency situations and take action to protect property and, hence, to 
protect market participants and the public, the efficiency and 
financial integrity of the futures markets, and price discovery.
    The order also notifies market participants and the public of the 
matters in which the Commission will be engaged, as well as of the 
tolling and extensions of time put in place with respect to filings 
under Commission regulations. Tolling ensures that the Commission will 
have an opportunity to review routine industry filings and take steps 
if necessary to protect the interests of the market and the public 
before those filings are finalized. The extensions of time ensure that 
all persons with filing obligations in certain adjudicative proceedings 
that arise during a shutdown or who wish to submit comments during a 
comment period that will close during a shutdown will not be prejudiced 
by the inability of the Commission to accept those filings or comments.

[[Page 20838]]

III. Order

    In light of the foregoing, the Commodity Futures Trading Commission 
(the ``Commission'') has determined to issue the following Order, 
pursuant to its authority under the provisions of the Commodity 
Exchange Act, 7 U.S.C. 1 et seq., and in compliance with the Anti-
Deficiency Act, 31 U.S.C. 1341 and 1342.
    It is hereby ordered that, in the event of a lapse in 
appropriations (also referred to as ``shutdown'') commencing at 12:01 
a.m. on April 9, 2011, the Commission will commence operating according 
to the procedures set forth in this Order:
    1. Tolling and Extension of Certain Procedural Time Limits. The 
Commission will not officially receive or process any filings, or 
review any matters for Commission approval or action to the extent that 
the matters are not directly related to the protection of property or 
market surveillance. This applies to rule, rule amendment and contract 
certifications, except for emergency rules certified pursuant to 
regulation 40.6(a)(2); rules, rule amendments and contracts voluntarily 
submitted for Commission approval or review; requests for contract 
market designation and derivatives clearing organization and 
derivatives trade execution facilities registration; and other requests 
for Commission approval or other action. Specifically, the time limits 
for Commission action shall be tolled for Sec. Sec.  1.47 and 1.48 of 
the Commission's regulations, and parts 36, 37, 38, 39, 40 and 41. 
Tolling also applies to requests and appeals submitted under Sec. Sec.  
145.7 and 145.9 of the Commission's regulations, and requests submitted 
under Sec.  140.99.
    The time for officially receiving, processing, or reviewing any new 
matters under these provisions of the Commission's regulations shall be 
tolled until the Commission is able to resume full operations. For 
matters that are pending under these provisions when a lapse in 
appropriations occurs, all applicable time deadlines for Commission 
action will be tolled until the Commission is able to resume full 
operations.
    This tolling and extension of time limits also shall apply to 
certain procedural rules associated with Commission adjudicatory 
actions, in particular the time-limited procedural rules under parts 3, 
9, 10, 12, and 171. For matters that are currently pending before the 
Commission under any of these parts, all applicable time deadlines for 
Commission action will be tolled until the shutdown is no longer in 
effect. Moreover, all time deadlines for filings by a party in an 
adjudicative proceeding that arise during a shutdown period will be 
extended until one business day after the Commission resumes its full 
operations. The filing of replies to any filing delayed by a lapse in 
appropriations will have its reply period extended for the same number 
of days.
    2. Procedures and Time Limits Not Extended or Tolled. The 
Commission will continue to receive and process filings required of a 
registered entity or intermediary under certain Commission regulations, 
specifically under Sec. Sec.  1.10, 1.12, 1.17, 1.32, 1.65, 30.7, and 
40.6(a)(2), or any emergency notification to the Commission that may be 
required by any rule of a registered entity that has been approved by 
or self-certified to the Commission. Paragraph 1 also shall not apply 
to filings under parts 15, 16, 17, 18, 19, and 21 of the Commission's 
regulations.
    3. Extension of Open Comment Periods on Proposed Regulation and 
Other Matters that may be Subject to a Request for Comment by the 
Commission. Any comment period for a proposed rulemaking or other 
matter that may be subject to a request for comment by the Commission 
that terminates during the shutdown shall be extended until one 
business day after the Commission resumes its full operations after a 
shutdown.

    Issued in Washington, DC, on April 8, 2011, by the Commission.
David A. Stawick,
Secretary of the Commission.
[FR Doc. 2011-9031 Filed 4-13-11; 8:45 am]
BILLING CODE 6351-01-P
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