Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Rules and Regulations 10441

1Commission Rule 1.10(h) permits registrants

that are also registered as securities broker-dealers

with the Securities and Exchange Commission to

file a copy of their Financial and Operational

Combined Uniform Single Report (‘‘FOCUS’’) with

the Commission in lieu of Form 1–FR. The

amendments discussed herein are intended to apply

equally to registrants who file Form 1–FR or FOCUS

with the Commission.

2The Commission currently is involved in

discussions with the Chicago Mercantile Exchange

(‘‘CME’’) to obtain the electronic filing software codeveloped by CME and the Chicago Board of Trade

(‘‘CBT’’) and used by CME, CBT and their members.

3 61 FR 55235.

4Approximately two-thirds of introducing

brokers enter into a guarantee agreement with an

FCM and thus are not required to raise their own

regulatory capital or file financial reports.

other such nonsubstantive revisions,

during that period; and

(6) The board of trade has not

instructed the Commission in writing

during the forty-five day review period

to review the application for designation

under the usual procedures under

section 6 of the Act.

(c) Notification of extension of time.

The Commission, within ten days after

receipt of a submission filed under

paragraph (a) of this section, or fortyfive days after receipt of a submission

filed under paragraph (b) of this section,

may notify the board of trade making

the submission that the review period

has been extended for a period of thirty

days where the designation application

raises novel or complex issues which

require additional time for review. This

notification will briefly specify the

nature of the specific issues for which

additional time for review is required.

Upon such notification, the period for

fast-track review of paragraphs (a) and

(b) of this section shall be extended for

a period of thirty days.

(d) Notification of termination of fasttrack procedures. During the fast-track

review period provided under

paragraphs (a) or (b) of this section, or

of the thirty-day extension when the

period has been enlarged under

paragraph (c) of this section, the

Commission shall notify the board of

trade that the Commission is

terminating fast-track review procedures

and will review the proposed rule under

the usual procedures of section 6 of the

Act, if it appears that the proposed

contract may violate a specific provision

of the Act, regulation, or form or content

requirement of Appendix A of this part.

This termination notification will

briefly specify the nature of the issues

raised and the specific provision of the

Act, regulation, or form or content

requirement of Appendix A of this part

that the proposed contract appears to

violate. Within ten days of receipt of

this termination notification, the board

of trade may request that the

Commission render a decision whether

to approve the designation or to

institute a proceeding to disapprove the

proposed application for designation

under the procedures specified in

section 6 of the Act by notifying the

Commission that the exchange views its

application as complete and final as

submitted.

(e) Delegation of authority. (1) The

Commission hereby delegates, until it

orders otherwise, to the Director of the

Division of Economic Analysis or to the

Director’s delegatee, with the

concurrence of the General Counsel or

the General Counsel’s delegatee,

authority to request under paragraphs

(a)(6) and (b)(5) of this section that the

contract market amend the proposed

contract or supplement the application,

to notify a board of trade under

paragraph (c) of this section that the

time for review of a proposed contract

term submitted for review under

paragraphs (a) or (b) of this section has

been extended, and to notify the

contract market under paragraph (d) of

this section that the fast-track

procedures of this section are being

terminated.

(2) The Director of the Division of

Economic Analysis may submit to the

Commission for its consideration any

matter which has been delegated in

paragraph (e)(1) of this section.

(3) Nothing in the paragraph prohibits

the Commission, at its election, from

exercising the authority delegated in

paragraph (e)(1) of this section.

Appendix D—Internal Procedure Regarding

Period for Public Comment

* * * Generally, the Commission will

provide for a public comment period of thirty

days on such applications for designation;

provided, however, that the public comment

period will be fifteen days for those

applications submitted for review under the

fast-track procedures of § 5.1(b) of this part.

* * * * *

Issued in Washington, D.C., this 27th day

of February, 1997, by the Commodity Futures

Trading Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 97–5567 Filed 3–6–97; 8:45 am]

BILLING CODE 6351–01–P

17 CFR Parts 1 and 31

Financial Reports of Futures

Commission Merchants, Introducing

Brokers and Leverage Transaction

Merchants

AGENCY: Commodity Futures Trading

Commission.

ACTION: Final Rules.

SUMMARY: The Commodity Futures

Trading Commission (‘‘CFTC’’ or

‘‘Commission’’) is amending its Rule

1.10(d)(4), which requires that each

Form 1–FR filed with the Commission

contain an oath or affirmation attesting

that, to the best knowledge and belief of

the individual making such oath or

affirmation, the information contained

therein is true and correct. The

amended rule provides that, for the

purposes of making this attestation

when filing a financial report with the

Commission electronically, the use of a

personal identification number (‘‘PIN’’)

will be deemed to be the equivalent of

a manual signature.1 The Commission

also is amending Rule 1.10(c) to account

for the possibility that registrants may

choose to file certain financial reports

electronically using a Commission

issued PIN rather than filing such

reports in paper form with the regional

office of the Commission nearest the

principal place of business of the

registrant. Rule 1.10(c) will permit

electronic filing of financial reports that

are not required to be certified by an

independent public accountant

provided that the Commission obtains

the means to read and process the

electronically transmitted data.2 The

Commission also is adding Rule

1.10(b)(2)(iii) to clarify that certified

financial reports may not be filed

electronically.

In addition, the Commission is

amending Rules 1.10(g) and 31.13(m) to

clarify that certain portions of the

financial reports will be deemed public

and other portions nonpublic, and to

eliminate the requirement that firms

filing financial reports need to

separately bind portions of such reports

generally treated as nonpublic in order

for such portions of the reports to be

accorded nonpublic treatment.

EFFECTIVE DATE: April 7, 1997.

FOR FURTHER INFORMATION CONTACT:

Lawrence B. Patent, Associate Chief

Counsel, or Lawrence T. Eckert,

Attorney Adviser, Division of Trading

and Markets, Commodity Futures

Trading Commission, 1155 21st Street,

N.W., Washington D.C. 20581.

Telephone (202) 418–5450.

SUPPLEMENTARY INFORMATION:

I. Background

On October 25, 1996, the Commission

published for comment proposed

amendments to Rule 1.10 (the

‘‘Proposals’’),3 which sets forth the

financial reporting requirements for

futures commission merchants

(‘‘FCMs’’) and independent introducing

brokers (‘‘IBIs’’).4 Rule 1.10 requires
10442 Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Rules and Regulations

5The Commission recently adopted amendments

to certain of its financial reporting requirements for

FCMs and IBIs, including time requirements for

filing Form 1–FR. See 62 FR 4633 (Jan. 31, 1997).

6See also, CFTC Interpretative Letter 96–21,

[1994–1996 Transfer Binder] Comm. Fut. L. Rep.

(CCH) ¶ 26,633 (Feb. 29, 1996) (no-action letter

issued to the CBT concerning the attestation of

financial reports where an FCM is organized as a

partnership); Advisory 12–96, reprinted as CFTC

Advisory 96–21 in [1994–1996 Transfer Binder]

Comm. Fut. L. Rep. (CCH) ¶ 26,640 (March 8, 1996)

(making relief provided to CBT available to all

FCMs, IBIs and self-regulatory organizations

(‘‘SROs’’)); Advisory 28–96, [1994–1996 Transfer

Binder] Comm. Fut. L. Rep. (CCH) ¶ 26,711 (May

28, 1996) (alerting FCMs, IBs and SROs that to the

extent that any SRO program for electronic filing of

financial reports approved by the Commission does

not require a manual signature for purposes of

attestation, the use of a PIN would be deemed to

be the equivalent of a manual signature for

purposes of attestation under Commission Rule

1.10(d)(4)).

7Commission Rule 1.10(c) provides that financial

reports must be filed with the Commission and the

firm’s designated self-regulatory organization

(‘‘DSRO’’).

8The Commission may determine to require

electronic filing at some later period, but believes

such a requirement would be premature at this

time. The Commission also encourages the industry

to develop a system of electronic filing of financial

reports that will provide for the development of a

uniform database of financial information with the

least burden upon filers, SROs and the Commission.

9 61 FR 55235, at 55236.

generally that FCMs file with the

Commission financial reports on Form

1–FR–FCM each quarter and that IBIs

file financial reports on Form 1–FR–IB

semiannually.5 The Proposals consisted

of several amendments concerning the

electronic filing of such financial

reports, as well as the treatment of the

various portions of financial reports as

either public or nonpublic, whether

filed electronically or in paper form.

Specifically, the Proposals: (1) provide

that for the purposes of making the

attestation under Rule 1.10(d)(4) as to

the truth and correctness of information

contained in electronically filed

financial reports, the use of a PIN would

be deemed to be the equivalent of a

manual signature; 6 (2) account for the

possibility that registrants may choose

to file electronically financial reports

which need not be certified by an

independent public accountant; (3)

clarify that certified financial reports

may not be filed electronically; (4)

clarify that certain portions of the

financial reports will be deemed public

and other portions nonpublic; and (5)

eliminate the requirement that firms

filing financial reports bind separately

the portions of such reports generally

treated as nonpublic in order for such

portions of the reports to be accorded

nonpublic treatment.

The 30-day public comment period on

the Proposals expired on November 25,

1996. The Commission received one

written comment on the Proposals,

submitted by National Futures

Association (‘‘NFA’’). In general, NFA

noted its strong support for the

Commission’s Proposals to allow FCMs

and IBIs to file certain financial reports

electronically, but requested that the

Commission clarify and revise certain

aspects of the proposed amendments.

The Commission has considered

carefully the comments received from

NFA. The Commission has determined

to adopt the amendments as proposed

with one minor modification. Amended

Rule 1.10(c) now clarifies that, while the

Commission intends to permit the

electronic filing of noncertified financial

reports, it will permit such electronic

filing only after such time as the

Commission obtains the necessary

computer software to read and process

the electronically transmitted data. The

Commission also has clarified various

matters relevant to the operation of the

amended rules in the discussion below.

II. Rule Amendments

A. Electronic Filing Issues

The Commission proposed to amend

Rule 1.10(d)(4) such that the use of a

PIN in filing a Form 1-FR pursuant to

Rule 1.10 will be deemed to be the

equivalent of a manual signature under

the rule. The Commission did not

receive any comments concerning the

language of this proposed amendment

and is adopting the provision as

proposed. The amended rule, therefore,

makes clear that the transmission of a

financial report to the Commission or an

SRO under a PIN constitutes a

representation that the person whose

PIN is used in such transmission attests

that, to the best knowledge and belief of

that person, the information contained

in the financial report is true, correct

and complete.7 The Commission hopes

that this amendment will encourage and

facilitate the process of electronic filing

of such reports with the Commission

but notes that, while it encourages the

use of the electronic filing option, the

amendments do not mandate electronic

filing with the Commission.8

In the Proposals, the Commission

noted that it intends to adopt

procedures for issuing PINs to facilitate

electronic filing with the Commission

consistent with the procedure currently

in use by SROs such as CBT and the

CME.9 In this regard, NFA stated in its

comment letter that it fully supports the

use of PINs as described in the

Proposals. However, NFA recommended

that, with respect to those firms that are

members of an SRO, the Commission

should permit the registrant’s SRO to

assign one PIN to be used by the

registrant to file financial reports with

both the Commission and the firm’s

DSRO. Thus, the Commission could

avoid the situation where a registrant

would need to use multiple PINs to file

electronically. NFA stated its belief that

such a situation could be a disincentive

to filing electronically with the

Commission. The Commission has

discussed this issue with CME, which

did not provide a written comment on

this issue, but would be affected along

with the other exchanges by adoption of

NFA’s proposal. CME stated that, for

security reasons, each entity receiving

an electronically filed financial report

should assign a unique PIN to each filer.

If a PIN is too widely known, an issue

arises as to the value of the use of the

PIN for attestation purposes.

Additionally, CME noted that the

software used by FCMs would have to

be modified in order to allow the PIN

number currently used with the

exchange also to be used when filing

with the Commission. Finally, as NFA’s

proposed electronic filing system is

evolving, it appears that there may not

be a need for the Commission to have

a PIN for firms for which NFA is the

DSRO. NFA is proposing to have the

firms for which it is the DSRO file

financial reports directly with NFA.

Under this framework, NFA would then

transmit the electronically filed reports

to the Commission. In light of the

foregoing, the Commission anticipates

that it will issue unique PINs to FCMs

that choose to file their financial reports

with the Commission electronically.

The Commission also proposed to add

new Rule 1.10(b)(2)(iii) and to amend

paragraph (c) of Rule 1.10 to provide

certain clarifications regarding the

Commission’s electronic filing program.

New Rule 1.10(b)(2)(iii), as set forth in

the Proposals, clarified that firms may

not file electronically their certified

financial reports, which must

accompany the application for

registration and be submitted as of each

fiscal year-end following registration.

The amendment to Rule 1.10(c) clarified

that a registrant may file non-certified

financial reports via electronic

transmission using a Commission issued

PIN in accordance with instructions

issued by the Commission. NFA

requested that the Commission delete

the proposed addition of Rule

1.10(b)(2)(iii) as well as the reference in

the proposed amendment to Rule 1.10(c)

with respect to ‘‘reports which need not

be certified * * *.’’ NFA acknowledged

that technology does not yet permit the

electronic filing of a complete certified

report, but recommended that the

Commission include any electronic
Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Rules and Regulations 10443

10Although there are currently no registered

leverage transaction merchants (‘‘LTMs’’), the

Commission is also amending Rule 31.13(m) which

currently provides for a separate binding procedure

similar to that set forth in Rule 1.10(g) with respect

to LTMs submitting financial reports on Form 2-FR.

11 61 FR 66949 (Dec. 19, 1996).

12The Commission has removed and reserved

paragraph (g)(3) and revised paragraph (g)(5) of Rule

1.10. 62 FR 4633, 4637 and n.17, 4640. The

amendments discussed herein do not interfere with

or require further amendment of those earlier

amendments.

13 47 FR 18618–18621 (April 30, 1982).

14See 50 FR 102, 108 n.11 (Jan. 2, 1985).

15See 48 FR 35248, 35275–78 (Aug. 3, 1983).

filing restrictions in the instructions to

the forms to be filed rather than in Rule

1.10 itself, in order to accommodate

future technology. The Commission

believes that references to filing

restrictions in the rules themselves

promote clarity. Should the Commission

wish to permit the filing of certified

financial reports in order to

accommodate new technology as it

becomes available, the Commission

could readily amend Rule 1.10 to

account for such change. Accordingly,

the Commission is adopting new Rule

1.10(b)(2)(iii) as proposed. The

Commission is, however, making one

minor modification to the proposed

amendment to Rule 1.10(c). As adopted,

amended Rule 1.10(c) clarifies that the

Commission’s electronic filing program

will begin only if the Commission can

obtain the computer software necessary

to read and to process the data

contained in the electronically filed

reports. The Commission wishes to

avoid a situation in which registrants

would be required to use software to file

their financial reports with the

Commission that is different from the

software used to file such reports with

their DSRO. As noted above, the

Commission currently is engaged in

discussions with CME in an attempt to

obtain the computer software codeveloped by CME and CBT and used

by CME, CBT and their members as part

of CME’s and CBT’s electronic filing

programs.

The Commission further noted in the

Proposals that, at the outset of its

electronic filing program, firms filing

non-certified financial reports

electronically must continue to file a

paper report with the appropriate

regional office of the Commission. The

Commission explained that, following

some experience with electronic

transmission of financial data (the ‘‘Pilot

Period’’), it may be permissible for firms

to submit non-certified financial reports

to the Commission solely via electronic

transmission. In this regard, NFA

encouraged the Commission to keep its

Pilot Period with respect to its

electronic filing program brief, stating

that firms have little incentive to file

with the Commission electronically if

they also are required to file their

reports in paper form. NFA also

requested that the Commission clarify

that the Pilot Period is intended for the

Commission to gain experience with the

electronic filing program itself and is

not meant to serve as a testing period for

each individual firm’s use of the system.

The Commission shares NFA’s views on

these points and anticipates permitting

firms to file their non-certified financial

reports solely via electronic

transmission as quickly as practicable,

given an adequate time period in which

the Commission can gain experience

with the electronic filing program. At

the conclusion of its Pilot Period, the

Commission intends to change its

instructions regarding filing to eliminate

the requirement that a firm file a paper

copy of its financial report in addition

to filing such report electronically. The

Commission does not anticipate that

additional rulemaking would be

necessary to accomplish this.

B. Freedom of Information Act Issues

In the Proposals, the Commission

noted that, consistent with current

practice, the Commission intends to

respond to a Freedom of Information

Act (‘‘FOIA’’) request for a financial

report that was filed with the

Commission solely by electronic

transmission by printing a paper copy of

the responsive public data and

forwarding it to the requestor. The data

which the Commission would print and

forward to the requestor would be the

public portions of a Form 1–FR.

Commission Rule 1.10(g) provides that

these public portions are, for FCMs and

IBIs, the statement of financial

condition and the statement of the

computation of the minimum capital

requirements, and, in addition, for

FCMs only, the statements concerning

segregation of customer funds and the

secured amount for foreign futures and

option customers. The proposed

amendments to Rule 1.10(g) would

reconfirm the current demarcation as to

which portions of the Form 1-FR are

generally treated as public and

nonpublic and eliminate the need for

firms to use a separate binding

procedure to receive such treatment for

their reports, whether reports are filed

in paper form or electronically. The

Commission received no comments

with respect to the proposed

amendments to Rule 1.10(g) 10 and is

adopting them as proposed.

The Commission has proposed to

clarify, in a separate release, its rules

under FOIA and the Government in the

Sunshine Act (‘‘GINSA’’) in order to,

among other things: (1) reaffirm that

certain portions of the Form 1-FR are

generally public and the remainder are

nonpublic; and (2) state that it will no

longer process petitions for confidential

treatment of the generally public

portions of a Form 1-FR.11 The

amendments to Rule 1.10(g)(1) and(2) 12

are intended to complement these

proposed amendments of the FOIA and

GINSA rules and to eliminate a burden

on firms to bind separately certain

portions of a Form 1-FR to assure

nonpublic treatment.

III. Related Matters

A. Regulatory Flexibility Act

The Regulatory Flexibility Act

(‘‘RFA’’), 5 U.S.C. 601–611 (1988),

requires that agencies, in proposing

rules, consider the impact of those rules

on small businesses. The rules

discussed herein will affect FCMs,

LTMs and IBIs. The Commission

already has established certain

definitions of ‘‘small entities’’ to be used

by the Commission in evaluating the

impact of its rules on such small entities

in accordance with the RFA.13 FCMs

and LTMs 14 have been determined not

to be small entities under the RFA.

With respect to IBIs, the Commission

has stated that it is appropriate to

evaluate within the context of a

particular rule proposal whether some

or all IBs should be considered to be

small entities and, if so, to analyze the

economic impact on such entities at that

time.15 These rule amendments do not

require any IBI to submit financial

reports electronically but only govern

the attestation of the completeness and

accuracy of such reports so filed.

Presumably, an IBI would choose to file

a financial report electronically only if

it were cost-effective to do so. These

rule amendments should impose no

additional burden or requirements on an

IBI and thus would not have a

significant economic impact on a

substantial number of IBIs. Accordingly,

pursuant to Rule 3(a) of the RFA, 5

U.S.C. 605(b), the Chairperson, on

behalf of the Commission, certifies that

these amendments 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), Pub. L. 104–13 (May 13, 1995)

imposes certain requirements on federal

agencies (including the Commission) in

connection with their conducting or

sponsoring any collection of
10444 Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Rules and Regulations

information as defined by the PRA.

While these rule amendments have no

burden, the group of rules (3038–0024)

of which they are a part has the

following burden:

Average Burden Hours Per Response:

128.

Number of Respondents: 3,988.

Frequency of Response: Quarterly,

Monthly or On Occasion.

Copies of the OMB approved

information collection package may be

obtained from Desk Officer, CFTC,

Office of Management and Budget,

Room 10202, NEOB, Washington, DC

20503 (202) 395–7340.

List of Subjects

17 CFR Part 1

Commodity futures; Minimum

financial and related reporting

requirements.

17 CFR Part 31

Leverage transactions; Reporting and

recordkeeping requirements.

In consideration of the foregoing, and

pursuant to the authority contained in

the Commodity Exchange Act, and in

partic ular, Sections 4f, 4g and 8a(5)

thereof, 7 U.S.C. 6f, 6g and 12a(5), the

Commission hereby amends parts 1 and

31 of chapter I of title 17 of the Code

of Federal Regulations as follows:

PART 1—GENERAL REGULATIONS

UNDER THE COMMODITY EXCHANGE

ACT

1. The authority citation for part 1

continues to read as follows:

Authority: 7 U.S.C. 1a, 2, 2a, 4, 4a, 6, 6a,

6b, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6j, 6k, 6l, 6m,

6n, 6m, 6o, 6p, 7, 7a, 7b, 8, 9, 12, 12a, 12c,

13a, 13a–1, 16, 16a, 19, 21, 23 and 24.

2. Section 1.10 is amended by adding

paragraph (b)(2)(iii) and revising

paragraphs (c), (d)(4), (g)(1) and (g)(2) to

read as follows:

§ 1.10 Financial reports of futures

commission merchants and introducing

brokers.

* * * * *

(b) * * *

(2) * * *

(iii) A Form 1–FR required to be

certified by an independent public

accountant in accordance with § 1.16

which is filed by a futures commission

merchant, an introducing broker or an

applicant for registration in either

category, must be filed in paper form

and may not be filed electronically.

* * * * *

(c) Where to file reports. The reports

provided for in this section will be

considered filed when received by the

regional office of the Commission

nearest the principal place of business

of the registrant (except that a registrant

under the jurisdiction of the

Commission’s Western Regional Office

must file such reports with the

Southwestern Regional Office) and by

the designated self regulatory

organization, if any; and reports

required to be filed by this section by an

applicant for registration will be

considered filed when received by the

National Futures Association and by the

regional office of the Commission

nearest the principal place of business

of the applicant (except that an

applicant under the jurisdiction of the

Commission’s Western Regional Office

must file such reports with the

Southwestern Regional Office):

Provided, however, That any report filed

pursuant to paragraphs (b)(1), (b)(2) or

(b)(4) of this section or § 1.12(a) or (b)

which need not be certified in

accordance with § 1.16 may be

submitted to the Commission in

electronic form using a Commissionassigned Personal Identification

Number, and otherwise in accordance

with instructions issued by the

Commission, if the Commission has

obtained the means necessary to read

and to process the information

contained in such report: And, provided

further, That information required of a

registrant pursuant to paragraph (b)(4) of

this section need be furnished only to

the self-regulatory organization

requesting such information and the

Commission, and that information

required of an applicant pursuant to

paragraph (b)(4) of this section need be

furnished only to the National Futures

Association and the Commission: And,

provided further, That any guarantee

agreement entered into between a

futures commission merchant and an

introducing broker in accordance with

the provisions of this section need be

filed only with and will be considered

filed when received by the National

Futures Association.

(d) * * *

(4) Attached to each Form 1–FR filed

pursuant to this section must be an oath

or affirmation that to the best knowledge

and belief of the individual making such

oath or affirmation the information

contained in the Form 1–FR is true and

correct. If the applicant or registrant is

a sole proprietorship, then the oath or

affirmation must be made by the

proprietor; if a partnership, by a general

partner; or if a corporation, by the chief

executive officer or chief financial

officer. In the case of a Form 1–FR filed

via electronic transmission in

accordance with procedures established

by the Commission, such transmission

must be accompanied by the

Commission-assigned Personal

Identification Number of the authorized

signer and such Personal Identification

Number will constitute and become a

substitute for the manual signature of

the authorized signer for the purpose of

making the oath or affirmation referred

to in this paragraph.

* * * * *

(g) Nonpublic treatment of reports. (1)

The following portions of Forms 1–FR

filed pursuant to this section will be

public: the statement of financial

condition, the statement of the

computation of the minimum capital

requirements, the statements (to be filed

by a futures commission merchant only)

of segregation requirements and funds

in segregation for customers trading on

U.S. commodity exchanges and for

customers’ dealer options accounts, and

the statement (to be filed by a futures

commission merchant only) of secured

amounts and funds held in separate

accounts for foreign futures and foreign

options customers in accordance with

§ 30.7 of this chapter. The other

financial statements (including the

statement of income (loss)), footnote

disclosures and schedules of Form 1–

FR, trade secrets and certain other

commercial or financial information on

such other statements and schedules

will be treated as nonpublic for

purposes of the Freedom of Information

Act and the Government in the

Sunshine Act and parts 145 and 147 of

this chapter.

(2) The following portions of copies of

the Financial and Operational

Combined Uniform Single Report under

the Securities Exchange Act of 1934,

Part II or Part IIA filed pursuant to

paragraph (h) of this section, will be

public: The statement of financial

condition, the computations of net

capital and the minimum capital

requirements, the statements (to be filed

by a futures commission merchant only)

of segregation requirements and funds

in segregation for customers trading on

U.S. commodity exchanges and for

customers’ dealer options accounts, and

the statement (to be filed by a futures

commission merchant only) of secured

amounts and funds held in separate

accounts for foreign futures and foreign

options customers in accordance with

§ 30.7 of this chapter. The other

financial statements (including the

statement of income (loss)), footnote

disclosures and schedules of the

Financial and Operational Combined

Uniform Single Report under the

Securities and Exchange Act of 1934,

Part II or Part IIA, trade secrets and

certain other commercial or financial
Federal Register / Vol. 62, No. 45 / Friday, March 7, 1997 / Rules and Regulations 10445

1Letter from Philip McBride Johnson, counsel to

the SFE, to William P. Albrecht, Acting Chairman,

Commission, dated March 11, 1993.

2The term ‘‘non-U.S. exchange’’ refers to a foreign

board of trade which is defined in Commission rule

1.3 (ss), 17 C.F.R. § 1.3(ss) (1996) as:

Any board of trade, exchange or market located

outside the United States, its territories or

possessions, whether incorporated or

unincorporated, where foreign futures or foreign

options transactions are entered into.

Thus, contracts that are traded on a market that

has been designated as a contract market pursuant

to section 5 of the Commodity Exchange Act

(‘‘CEA’’ or ‘‘Act’’) are not within the scope of the

1993 Order and this Supplemental Order.

3These conditions are the following:

1. SFE will carry out its compliance, surveillance

and rule enforcement activities with respect to

solicitations and acceptance of orders by designated

SFE members of U.S. customers for futures business

on Recognized Futures Exchanges, as defined in

section 9(b) of the ACL, other than a contract

market designated as such pursuant to section 5a

of the CEA, to the same extent that it conducts such

activities in regard to SFE business;

2. SFE will cooperate with the Commission with

respect to any inquiries concerning any activity

which is the subject of this [1993 Order], including

sharing the information specified in Appendix A to

the Part 30 rules on an ‘‘as needed’’ basis, on the

same basis as set forth in the Original Order; and

3. Each SFE member firm confirmed for § 30.10

relief seeking to engage in activities which are the

subject of this [1993 Order] must agree to provide

the books and records related to such transactions

required to be maintained under the applicable

Continued

information on such other statements

and schedules will be treated as

nonpublic for purposes of the Freedom

of Information Act and the Government

in the Sunshine Act and parts 145 and

147 of this chapter.

* * * * *

PART 31—LEVERAGE

TRANSACTIONS

3. The authority citation for Part 31

continues to read as follows:

Authority: 7 U.S.C. 12a and 23.

4. Section 31.13 is amended by

revising paragraph (m) to read as

follows:

§ 31.13 Financial reports of leverage

transaction merchants.

* * * * *

(m) The following portions of Form 2–

FR filed pursuant to this section will be

public: The statement of financial

condition, the computation of the

minimum capital requirements pursuant

to § 31.9, the schedule of coverage

requirements and cover provided, and

the schedule of segregation

requirements and funds on deposit in

segregation. The other financial

statements (including the statement of

income (loss)), footnote disclosures and

schedules of Form 2–FR, trade secrets

and certain other commercial or

financial information on such other

statements and schedules, will be

treated as nonpublic for purposes of the

Freedom of Information Act and the

Government in the Sunshine Act and

parts 145 and 147 of this chapter. All

information on such other statements,

footnote disclosures and schedules will,

however, be available for official use by

any official or employee of the United

States or any State, by any selfregulatory organization of which the

person filing such report is a member,

by the National Futures Association in

the case of an applicant, and by any

other person to whom the Commission

believes disclosure of such information

is in the public interest. The

independent public accountant’s

opinion filed pursuant to this section

will be deemed to be public

information.

* * * * *

Issued in Washington, D.C. on February 27,

1997 by the Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 97–5561 Filed 3–6–97; 8:45 am]

BILLING CODE 6351–01–P

17 CFR Part 30

Foreign Futures and Option

Transactions

AGENCY: Commodity Futures Trading

Commission.

ACTION: Order.

SUMMARY: The Commodity Futures

Trading Commission (‘‘Commission’’ or

‘‘CFTC’’), is clarifying the procedures

applicable in its prior Order issued on

April 13, 1993 (‘‘1993 Order’’),

authorizing members of the Sydney

Futures Exchange Limited (‘‘Exchange’’

or ‘‘SFE’’) to solicit and to accept orders

from U.S. customers for otherwise

permitted transactions on all non-U.S.

exchanges where such members are

authorized by the Australian

Corporations Law (‘‘ACL’’) to conduct

futures business for customers.

This Supplemental Order is issued

pursuant to Commission rule 30.10,

which permits the Commission to grant

an exemption from certain provisions of

Part 30 of the Commission’s regulations,

the Commission’s Order dated

November 7, 1988 (‘‘Original Order’’),

granting relief under rule 30.10 to

designated members of the Exchange,

and the 1993 Order.

EFFECTIVE DATE: March 7, 1997.

FOR FURTHER INFORMATION CONTACT: Jane

C. Kang, Esq., or Warren Gorlick, Esq.,

Division of Trading and Markets,

Commodity Futures Trading

Commission, Three Lafayette Centre,

1155 21st Street, N.W., Washington,

D.C. 20581. Telephone: (202) 418–5430.

SUPPLEMENTARY INFORMATION: The

Commission has issued the following

Supplemental Order:

Supplemental Order Clarifying

Conditions Under Which Certain

Members of the Sydney Futures

Exchange Designated for Relief Under

Commission Rule 30.10 May Solicit and

Accept Orders From U.S. Customers for

Otherwise Permitted Transactions on

All Non-U.S. Markets Where Such

Members Are Authorized by Australian

Law to Conduct Futures Business for

Customers

On November 1, 1988, the

Commission issued the Original Order

under rule 30.10 authorizing designated

members of the SFE to offer or sell

certain futures and option contracts

traded on the Exchange to persons

located in the United States. 53 FR

44856 (November 7, 1988). The Original

Order limited the scope of permissible

brokerage activities undertaken by

designated SFE members on behalf of

U.S. customers to transactions ‘‘on or

subject to the rules of the Exchange.’’ 53

FR 44856, 44857.

By letter dated March 11, 1993,

counsel to the SFE petitioned the

Commission to revise the Original Order

to include all non-U.S markets where

SFE members are authorized by the ACL

to conduct futures business for

customers.1 As represented in that

letter, section 1258 of the ACL prohibits

futures brokers (including Exchange

members confirmed for relief under rule

30.10) from dealing on behalf of another

person unless the dealing is effected on

an Australian futures exchange or a

‘‘recognized’’ foreign futures exchange.

The Recognized Futures Exchanges, as

defined in section 9(b) of the ACL as

well as Regulation 8.02.02 thereunder,

appear in Schedule 11 of such

Regulations.

On April 13, 1993, the Commission

issued its 1993 Order authorizing

members of the SFE designated for rule

30.10 relief to solicit and accept orders

from U.S. customers for otherwise

permitted transactions on all non-U.S.

exchanges 2 where such members are

authorized by Australian law to conduct

futures business for customers. See 58

FR 19209 (April 13, 1993). The

expanded rule 30.10 relief, however, is

contingent on the SFE’s and SFE

members’ compliance with the Original

Order and their compliance with certain

specified conditions.3