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[Federal Register Volume 76, Number 56 (Wednesday, March 23, 2011)]
[Notices]
[Pages 16388-16391]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-6821]

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COMMODITY FUTURES TRADING COMMISSION

Fees for Reviews of the Rule Enforcement Programs of Contract 
Markets and Registered Futures Associations

AGENCY: Commodity Futures Trading Commission.

ACTION: FY 2008 and 2009 schedule of fees; establish the FY 2010 
schedule of fees revision.

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SUMMARY: The Commission charges fees to designated contract markets and 
registered futures associations to recover the costs incurred by the 
Commission in the operation of its program of oversight of self-
regulatory organization (SRO) rule enforcement programs (National 
Futures Association (NFA), a registered futures association, and the 
contract markets are referred to as SROs). The calculation of the fee 
amounts to be charged for FY 2010 is based upon an average of actual 
program costs incurred during FY 2007, 2008, and 2009, as explained 
below. The FY 2010 fee includes adjustments to program costs incurred 
in FY 2008 and 2009, which are being revised as a result of an internal 
review of program costs. The FY 2010 fee schedule and the revision of 
FY 2008 and 2009 fees are set forth in the SUPPLEMENTARY INFORMATION 
section. Electronic payment of fees is required.

DATES: The FY 2010 fees for Commission oversight of each SRO rule 
enforcement program must be paid by each of the named SROs in the 
amount specified by no later than May 23, 2011.

FOR FURTHER INFORMATION CONTACT: Mark Carney, Chief Financial Officer, 
Commodity Futures Trading Commission, (202) 418-5477, Three Lafayette 
Centre, 1155 21st Street, NW. Washington, DC 20581. For information on 
electronic payment, contact Jennifer Fleming, Three Lafayette Centre, 
1155 21st Street NW. Washington, DC 20581, (202) 418-5034.

SUPPLEMENTARY INFORMATION:

I. General

    This notice relates to fees for the Commission's review of the rule 
enforcement programs at the registered

[[Page 16389]]

futures associations \1\ and designated contract markets (DCM), which 
are collectively referred to herein as SROs, regulated by the 
Commission.
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    \1\ NFA is the only registered futures association.
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II. Background Information

A. General

    The Commission recalculates the fees charged each year with the 
intention of recovering the costs of operating this Commission program. 
Fees are calculated by extracting direct labor costs for rule 
enforcement reviews from the agency's Budget Programming Accounting 
Codes (BPAC), which captures each employee's time by project, for a 
three-year period. The agency then adds an overhead factor for benefits 
and general administrative costs. The agency uses a three-year rolling 
average to cover fluctuations in the number of hours spent reviewing 
each SRO over time. In recognition of the fact that the cost of 
conducting a review may not correlate directly with the size of a 
particular SRO, the agency also calculates an alternate fee that takes 
the volume into account. The agency charges the SRO the lesser of the 
two fees.
    Subsequent to an internal review, the Commission found that in FY 
2008 and 2009 not all direct program labor costs were captured and that 
some direct costs were misapplied to SRO reviews. As the formula for 
calculating the FY 2010 fee to be charged to the SROs includes actual 
costs incurred in FY 2008 and 2009, the fees for those years are being 
revised, and the FY 2010 fee is being adjusted to account for the 
revisions. In addition, the FY 2009 fee that was assessed on USFE is 
being rescinded,\2\ as USFE ceased operations on December 31, 2008. All 
adjustments are shown in the tables that follow.
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    \2\ See generally 74 FR 46115 (Sep. 8, 2009).
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B. Overhead Rate

    Once the agency determines the direct costs for rule enforcement 
review of each SRO, it applies an overhead rate to cover employee 
benefits and other administrative costs. The overhead rate is 
calculated by dividing total Commission-wide overhead direct program 
labor costs into the total amount of the Commission-wide overhead pool. 
For this purpose, direct program labor costs are the salary costs of 
personnel working in all Commission programs. Overhead costs consist 
generally of the following Commission-wide costs: indirect personnel 
costs (leave and benefits), rent, communications, contract services, 
utilities, equipment, and supplies. This formula has resulted in the 
following overhead rates for the most recent three years (rounded to 
the nearest whole percent): 140 percent for fiscal year 2007, and 144 
percent for fiscal year 2008, and 147 percent for 2009.

C. Calculation of FY 2010 Fees

    Under the formula adopted in 1993 (58 FR 42643, Aug. 11, 1993), 
which appears at 17 CFR part 1 Appendix B, the Commission calculates 
the fee to recover the costs of its rule enforcement reviews and 
examinations based on the three-year average of the actual cost of 
performing such reviews and examinations at each SRO. The cost of 
operation of the Commission's SRO oversight program varies from SRO to 
SRO, according to the size and complexity of each SRO's program. The 
three-year averaging computation method is intended to smooth out year-
to-year variations in cost. Timing of the Commission's reviews and 
examinations may affect costs--a review or examination may span two 
fiscal years and reviews and examinations are not conducted at each SRO 
each year. To provide relief to SROs who may bear a disproportionately 
large share of program costs, the Commission's alternate formula 
provides for a reduction in the assessed fee if an SRO has a smaller 
percentage of United States industry contract volume than its 
percentage of overall Commission oversight program costs. This 
adjustment reduces the costs so that, as a percentage of total 
Commission SRO oversight program costs, they are in line with the pro 
rata percentage for that SRO of United States industry-wide contract 
volume.
    The calculation is made as follows: The fee required to be paid to 
the Commission by each SRO is equal to the lesser of actual costs based 
on the three-year historical average of costs for that SRO or one-half 
of average costs incurred by the Commission for each SRO for the most 
recent three years, plus a pro rata share (based on average trading 
volume for the most recent three years) of the aggregate of average 
annual costs of all SROs for the most recent three years. The formula 
for calculating the second factor is: 0.5a + 0.5 vt = current fee. In 
this formula, ``a'' equals the average annual costs, ``v'' equals the 
percentage of total volume across SROs over the last three years, and 
``t'' equals the average annual costs for all SROs. NFA has no 
contracts traded; hence, its fee is based simply on costs for the most 
recent three fiscal years. The following table summarizes the data used 
in the calculations and the resulting fee for each entity for FY 2010. 
The 3-year average actual cost calculations were derived using the FY 
2008 and 2009 fees as they are revised elsewhere in this notice:

                                                  FY 2010 Fees
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                                                                                            2010 Fee  (lesser of
                                                   3-year average      3-year % of volume   actual or calculated
                                                    actual costs                                    fee)
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Chicago Board of Trade........................              $188,085              0.291273              $188,085
Chicago Mercantile Exchange...................               145,952             55.5839                 145,952
New York Mercantile Exchange..................               572,494             12.5373                 363,321
Kansas City Board of Trade....................                27,303              0.1351                  14,482
ICE Futures U.S...............................               144,847              2.3324                  86,762
Minneapolis Grain Exchange....................               104,706              0.0488                  52,653
HedgeStreet...................................                23,272              0.002                   11,636
Chicago Climate Futures Exchange..............                21,705              0.0205                  10,853
US Futures Exchange...........................                     0              0.0001                       0
OneChicago....................................                 1,157              0.1791                   1,157
                                               -----------------------------------------------------------------
    Subtotal..................................             1,229,521  ....................               847,901
                                               -----------------------------------------------------------------
National Futures Association..................               561,531  ....................               561,531
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[[Page 16390]]

 
        Total.................................             1,791,052  ....................             1,436,432
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    An example of how the fee is calculated for one exchange, the 
Chicago Board of Trade, is set forth here:
    a. Actual three-year average costs equal $188,085
    b. The alternative computation is: (.5) ($188,085) + (.5) (.291273) 
($1,229,521) = $273,105
    c. The fee is the lesser of a or b; in this case $188,085
    As noted above, the alternative calculation based on contracts 
traded is not applicable to NFA because it is not a DCM and has no 
contracts traded. The Commission's average annual cost for conducting 
oversight review of the NFA rule enforcement program during fiscal 
years 2008 through 2010 was $561,531 (one-third of $1,684,592.85). The 
fee to be paid by the NFA for the current fiscal year is $561,531, plus 
the adjustment to the fees that were published for FY 2008 and 2009 in 
the Federal Register.\3\
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    \3\ See 73 FR 44707 (Sep. 29, 2008) and 74 FR 46115 (Sep. 8, 
2009).
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D. Revision of FY 2008 and 2009 Fees

    This year, Commission conducted an internal review of its SRO fee 
process that has resulted in adjustments to the fees owed by several 
SROs and NFA. As a result of the internal review FY 2008 and FY 2009 
fees for the Commission's review of the rule enforcement programs at 
the registered futures associations and SROs regulated by the 
Commission are accordingly revised as follows:

                                             FY 2009 Fee Adjustments
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                         Entity                           2009 Assessment       Adjustment       2009 Revision
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Chicago Board of Trade.................................            $77,371             $6,522            $83,893
Chicago Mercantile Exchange............................            121,071                  0            121,071
New York Mercantile Exchange...........................            197,535            141,670            339,205
Kansas City Board of Trade.............................             10,127             13,210             23,337
ICE Futures U.S........................................             32,683              1,815             34,498
Minneapolis Grain Exchange.............................             62,449           (30,420)             32,029
HedgeStreet............................................             14,375                  8             14,383
Chicago Climate Futures Exchange.......................             12,259                  7             12,266
US Futures Exchange....................................             18,601           (18,601)                  0
OneChicago.............................................              1,157                  0              1,157
National Futures Association...........................            179,641            347,243            526,884
                                                        --------------------------------------------------------
    Total..............................................            727,270            461,453          1,188,723
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                                             FY 2008 Fee Adjustments
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                         Entity                           2008 Assessment       Adjustment       2008 Revision
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Chicago Board of Trade.................................           $146,077            $56,971           $203,048
Chicago Mercantile Exchange............................            124,734                  0            124,734
New York Mercantile Exchange...........................            144,893            104,026            248,919
Kansas City Board of Trade.............................             11,119                174             11,293
ICE Futures U.S........................................             37,662              1,678             39,340
Minneapolis Grain Exchange.............................             28,181           (27,413)                768
HedgeStreet............................................             10,194                 13             10,207
Chicago Climate Futures Exchange.......................              8,306                  3              8,309
US Futures Exchange....................................             14,602                 68             14,670
OneChicago.............................................             15,836                262             16,098
National Futures Association...........................            450,419            (3,045)            447,374
                                                        --------------------------------------------------------
    Total..............................................            992,022            132,737          1,124,760
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E. Final Amounts Due

    To determine the final amount due from each SRO, the adjustments 
for FY 2008 and 2009 must be added to or subtracted from FY 2010 fee. 
For example: Chicago Board of Trade (CBOT) will owe $251,578 which is 
computed as follows, $188,085 (2010 fee) + $6,522 (2009 adjustment 
amount) + $56,971 (2008 adjustment amount) = $251,578. The following 
chart provides the calculation for each SRO:

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               Entity                  2008 Adjustment    2009 Adjustment        2010 Fee             Due
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Chicago Board of Trade..............            $56,971             $6,522           $188,085           $251,578

[[Page 16391]]

 
Chicago Mercantile Exchange.........                  0                  0            145,952            145,952
New York Mercantile Exchange........            104,026            141,670            363,321            609,017
Kansas City Board of Trade..........                174             13,210             14,482             27,866
ICE Futures U.S.....................              1,678              1,815             86,762             90,255
Minneapolis Grain Exchange..........           (27,413)           (30,420)             52,653            (5,180)
HedgeStreet.........................                 13                  8             11,636             11,657
Chicago Climate Futures Exchange....                  3                  7             10,853             10,863
OneChicago..........................                262                  0              1,157              1,419
National Futures Association........            (3,045)            347,243            561,531            905,729
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III. Payment Method

    The Debt Collection Improvement Act (DCIA) requires deposits of 
fees owed to the government by electronic transfer of funds (See 31 USC 
3720). For information about electronic payments, please contact 
Jennifer Fleming at (202) 418-5034 or jfleming@cftc.gov, or see the 
CFTC Web site at http://www.cftc.gov, specifically, http://www.cftc.gov/cftc/cftcelectronicpayments.htm.

    Issued in Washington, DC, on March 14, 2011 by the Commission.
David Stawick,
Secretary of the Commission.
[FR Doc. 2011-6821 Filed 3-22-11; 8:45 am]
BILLING CODE 6351-01-P
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