1548 Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Rules and Regulations 

§ 9.12 Effective date of disciplinary or 

access denial action. 

(a) Effective date. Any disciplinary or 

access denial action taken by an 

exchange will not become effective until 

at least fifteen days after the written 

notice prescribed by § 9.11 is delivered 

to the person disciplined or denied 

access; Provided, however, That the 

exchange may cause a disciplinary 

action to become effective prior to that 

time if: 

(1) As permitted by part 37, appendix 

B, Core Principle 2, paragraph (a)(14) of 

this chapter or part 38, appendix B, Core 

Principle 13, paragraph (a)(7) of this 

chapter (emergency disciplinary 

actions), the exchange reasonably 

believes, and so states in its written 

decision, that immediate action is 

necessary to protect the best interests of 

the marketplace; or 

(2) As permitted by part 37, appendix 

B, Core Principle 2, paragraph (a)(10)(vi) 

of this chapter or part 38, appendix B, 

Core Principle 13, paragraph (a)(4) of 

this chapter (hearings), the exchange 

determines, and so states in its written 

decision, that the actions of a person 

who is within the exchange’s 

jurisdiction has impeded the progress of 

a disciplinary hearing; or 

(3) As permitted by part 37, appendix 

B, Core Principle 2, paragraph (a)(13) of 

this chapter (summary fines for 

violations of rules regarding timely 

submission of records) or part 38, 

appendix B, Core Principle 13, 

paragraph (a)(6) of this chapter 

(summary fines for violations of rules 

regarding timely submission of records, 

decorum, or other similar activities), the 

exchange determines that a person has 

violated exchange rules relating to 

decorum or attire, or timely submission 

of accurate records required for clearing 

or verifying each day’s transactions or 

other similar activities; or 

(4) The person against whom the 

action is taken has consented to the 

penalty to be imposed and to the timing 

of its effectiveness. 

(b) Notice of early effective date. If the 

exchange determines in accordance 

with paragraph (a)(1) of this section that 

a disciplinary action will become 

effective prior to the expiration of 

fifteen days after written notice thereof, 

it must notify the person disciplined in 

writing, either personally or by email to 

the person’s last known email address, 

stating the reasons for the 

determination. The exchange must also 

immediately notify the Commission by 

email to secretary@cftc.gov. Where 

notice is delivered by email, the time 

within which the person so notified 

may file a petition for stay pursuant to 

§ 9.24(a)(2) will be increased by one 

day. 

■ 13. Revise § 9.13 to read as follows: 

§ 9.13 Publication of notice. 

Whenever an exchange suspends, 

expels or otherwise disciplines, or 

denies any person access to the 

exchange, it must make public its 

findings by disclosing at least the 

information contained in the notice 

required by § 9.11(b). An exchange must 

make such findings public as soon as 

the disciplinary action or access denial 

action becomes effective in accordance 

with the provisions of § 9.12 by posting 

a notice on its website to which its 

members and the public regularly have 

access. Such notice must be maintained 

and readily available on the exchange’s 

website. 

■ 14. In § 9.24, revise paragraph (a)(2) to 

read as follows: 

§ 9.24 Petition for stay pending review. 

(a) * * * 

(2) Within ten days after a notice of 

summary action has been delivered in 

accordance with § 9.12(b) to a person 

who is the subject of a summary action 

permitted by part 37, appendix B, Core 

Principle 2, paragraph (a)(14) of this 

chapter or part 38, appendix B, Core 

Principle 13, paragraph (a)(7) of this 

chapter (emergency disciplinary 

actions), that person may petition the 

Commission to stay the effectiveness of 

the summary action pending completion 

of the exchange proceeding. 

* * * * * 

■ 15. Revise § 9.31 to read as follows: 

§ 9.31 Commission review of disciplinary 

or access denial action on its own motion. 

(a) Request for additional information. 

Where a person disciplined or denied 

access has not appealed the exchange 

decision to the Commission, upon 

review of the notice specified in § 9.11, 

the Division of Market Oversight or the 

Division of Swap Dealer and 

Intermediary Oversight may request that 

the exchange file with the Division the 

record of the exchange proceeding, or 

designated portions of the record, a brief 

statement of the evidence and testimony 

adduced to support the exchange’s 

findings that a rule or rules of the 

exchange were violated and such 

recordings, transcripts and other 

documents applicable to the particular 

exchange proceeding as the Division 

may specify. The exchange must 

promptly advise the person who is the 

subject of the disciplinary or access 

denial action of the Division’s request. 

Within thirty days after service of the 

Division’s request, the exchange must 

file the information requested with the 

Division in the manner requested by the 

Division and, upon request, deliver that 

information to the person who is the 

subject of the disciplinary or access 

denial action. Delivery to the person 

who is the subject of the disciplinary or 

access denial action must be in the 

manner prescribed by § 9.11(c). A 

person subject to the disciplinary action 

or access denial action requesting a 

copy of the information furnished to the 

Division must, if the exchange rules so 

provide, agree to pay the exchange 

reasonable fees for printing the copy. 

(b) Review on motion of the 

Commission. The Commission may 

institute review of an exchange 

disciplinary or access denial action on 

its own motion. Other than in 

extraordinary circumstances, such 

review will be initiated within 180 days 

after the NFA has received the notice of 

exchange action provided for in § 9.11. 

If the Commission should institute 

review on its own motion, it will issue 

an order permitting the person who is 

the subject of the disciplinary or access 

denial action an opportunity to file an 

appropriate submission, and the 

exchange an opportunity to file a reply 

thereto. 

Issued in Washington, DC, on January 9, 

2018, by the Commission. 

Christopher J. Kirkpatrick, 

Secretary of the Commission. 

Note: The following appendix will not 

appear in the Code of Federal Regulations. 

Appendix to Technical Amendments to 

Rules on Registration and Review of 

Exchange Disciplinary, Access Denial 

or Other Adverse Actions—Commission 

Voting Summary 

On this matter, Chairman Giancarlo and 

Commissioners Quintenz and Behnam voted 

in the affirmative. No Commissioner voted in 

the negative. 

[FR Doc. 2018–00467 Filed 1–11–18; 8:45 am] 

BILLING CODE 6351–01–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 9 

Performance of Certain Functions by 

the National Futures Association With 

Respect to the Receipt and Processing 

of Exchange Disciplinary and Access 

Denial Action Information 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice and order; delegation of 

authority. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 


sradovich on DSK3GMQ082PROD with RULES
Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Rules and Regulations 1549 

1 43 FR 59343 (Dec. 20, 1978). 

2 64 FR 39913 (July 23, 1999). 

3 Id. at 39915. 

4The NFA’s BASIC system allows the public to 

access disciplinary information contributed by the 

NFA, CFTC, DCMs, and SEFs pertaining to the 

types of violations committed, penalties imposed, 

the effective date of the action, and summary of the 

disciplinary action. The BASIC system enables the 

public to conduct a search by NFA identification 

number, individual name, or firm name. 

5The Final Part 9 Rules amend the definition of 

‘‘exchange’’ in § 9.2 to include SEFs in addition to 

DCMs. 

6 7 U.S.C. 12a(10) (2014). Further, CEA section 

17(o) provides that the Commission may require a 

registered futures association (‘‘RFA’’) to perform 

Commission registration functions in accordance 

with the Act and the RFA’s rules. 7 U.S.C. 21(o) 

(2014). 

‘‘CFTC’’) is updating the delegation it 

issued in 1999 to the National Futures 

Association (‘‘NFA’’) regarding the duty 

to receive and to process exchange 

disciplinary and access denial action 

information. The delegation is being 

updated to clarify, among other things, 

that designated contract market 

(‘‘DCM’’) and swap execution facility 

(‘‘SEF’’) disciplinary and access denial 

notices must be filed with the NFA 

instead of the Commission. The NFA 

will continue to serve as the official 

custodian of records for exchange 

disciplinary filings. 

DATES: This notice and order takes effect 

on March 13, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Rachel Berdansky, Deputy Director, 

202–418–5429 or rberdansky@cftc.gov; 

David Steinberg, Associate Director, 

202–418–5102 or dsteinberg@cftc.gov; 

Division of Market Oversight, 

Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1151 21st Street NW, Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

In a separate document published 

elsewhere in this issue of the Federal 

Register, the Commission issued final 

rules that update its 17 CFR part 9 rules 

(‘‘Final Part 9 Rules’’), including § 9.11, 

that sets forth the notice requirements 

for an exchange regarding disciplinary 

and access denial actions. Section 9.11 

was first established in 1978 to carry out 

certain mandates of section 8c of the 

Commodity Exchange Act (‘‘Act’’ or 

‘‘CEA’’).1 Section 8c of the Act 

generally: (i) Requires exchanges to 

discipline members and to notify the 

disciplined individuals, the 

Commission, and the public of 

disciplinary actions; and (ii) grants the 

Commission the authority to review 

exchange disciplinary actions. Section 

9.11 sets forth the manner in which an 

exchange is to provide that notice. 

In 1999, the Commission delegated 

authority to the NFA to receive and to 

process exchange disciplinary and 

access denial information (‘‘Part 9 

Delegation’’).2 Consequently, the NFA 

currently serves as the official custodian 

of records for exchange disciplinary 

filings. In 1999, concurrent with the Part 

9 Delegation, the Commission published 

an advisory permitting exchanges to file 

9.11 notices with the Commission or the 

NFA (‘‘Part 9 Advisory’’).3 While 

permitting filing with the Commission, 

the Part 9 Advisory encourages 

exchanges to file the required notice 

with the NFA. The Final Part 9 Rules, 

among other things, codify the Part 9 

Advisory and replace the § 9.11 

requirement that written notice be 

provided to the Commission with a 

requirement that notice be provided to 

the NFA via the NFA’s Background 

Affiliation Status Information Center 

(‘‘BASIC’’) system.4 Moreover, because 

SEFs did not exist when the 

Commission issued the initial 

delegation in 1999, this Notice and 

Order is being updated to reflect that the 

NFA will receive disciplinary and 

access denial action notices from SEFs 

in addition to DCMs.5 For purposes of 

this Notice and Order, the term 

‘‘exchange’’ includes DCMs and SEFs. 

II. Delegation of Duties to the NFA 

A. Processing Regulation 9.11 Filings 

The NFA must process exchange 

§ 9.11 notices in a manner consistent 

with § 9.11. For purposes of this Notice 

and Order, the term ‘‘process’’ generally 

refers to receipt of filings and review of 

filings for compliance with applicable 

requirements. Section 9.11(a) requires 

that whenever an exchange decision, 

pursuant to which a disciplinary or 

access denial action to be imposed has 

become final, the exchange must 

provide written notice of such action to 

the NFA within 30 days. In addition, 

§ 9.11 notices filed with the NFA must 

satisfy all of the content requirements 

set forth in § 9.11(b). Toward that end, 

notices filed with the NFA will be 

deemed certified when an authorized 

exchange employee verifies the 

accuracy of the information entered into 

BASIC. 

B. Commission Access to BASIC and 

Reports 

The NFA must provide the 

Commission with access to the BASIC 

system so that the Commission can 

diligently carry out its legislative 

mandate. This includes access to a 

Management Report that includes the 

following for each disciplinary or access 

denial action: 

• Name of Contributor (i.e., an 

exchange, the NFA, or the Commission); 

• Name of Respondent; 

• Contributor Reference Number (i.e., 

disciplinary case number generated by 

contributor); 

• Date of Decision or Order; 

• Date of Notification of NFA; 

• Total Number of Days for Data to be 

Released into BASIC (i.e., number of 

days from the date of an exchange final 

action until the date of exchange 

verification/certification); and 

• Name of Staff Person Entering Data 

(i.e., initials). 

The Commission currently has access 

to the BASIC system and the ability to 

generate 26 standardized reports that are 

customizable with respect to the 

timeframe selected (e.g., January 1, 2017 

to May 31, 2017), including the 

Management Report. Among other 

things, the Commission is able to 

analyze the data maintained in BASIC 

by: Disciplinary actions against firms or 

individuals resulting in fines, 

suspensions, or expulsions; disciplinary 

actions issued by each exchange; and 

the type of rule violations across all 

exchanges. The Commission generates 

these reports on an as needed basis. As 

the Commission needs these reports for 

effective oversight of the exchanges, the 

NFA must continue to provide the 

Commission with the capability to 

generate each of these reports from 

BASIC. The NFA shall continue 

working with the Commission to 

develop additional query capabilities as 

the Commission deems necessary to 

fulfill its regulatory and oversight 

responsibilities. 

C. BASIC Maintenance 

The NFA shall maintain, and serve as 

the official custodian of, records for 

exchange § 9.11 filings. The NFA shall 

fulfill this obligation by continuing to 

maintain the BASIC system and further 

developing it as necessary to comply 

with the terms of this Notice and Order. 

The NFA shall also implement such 

additional procedures (or modify 

existing procedures) as are necessary to 

reasonably ensure the security and 

integrity of these records. 

III. Authority 

Pursuant to section 8a(10) of the Act, 

the Commission has issued numerous 

orders authorizing the NFA to perform 

various portions of the Commission’s 

registration functions and 

responsibilities under the Act.6 In this 

connection, the Commission has 

previously issued orders authorizing the 


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1550 Federal Register / Vol. 83, No. 9 / Friday, January 12, 2018 / Rules and Regulations 

7See 49 FR 39593 (Oct. 9, 1984). 

8See 48 FR 35158 (Aug. 3, 1983). 

9See 54 FR 19556 (May 8, 1989). 

10See 51 FR 34490 (Sep. 29, 1986). 

11See 58 FR 19657 (Apr. 15, 1993). 

12See 75 FR 55310 (Sep. 10, 2010). 

13See 77 FR 2708 (Jan. 19, 2012). 

1Sec. 701, Public Law 114–74, 129 Stat. 584, 599. 

2Public Law 101–410, 104 Stat. 890 (codified as 

amended at 28 U.S.C. 2461 note). 

3 28 U.S.C. 2461 note, at (4). The Commission 

made its January 2017 adjustment on January 9, 

2017, in Docket No. RM17–9–000. See Civil 

Monetary Penalty Inflation Adjustments, Order No. 

834, 82 FR 8137 (Jan. 24, 2017), FERC Stats. & Regs. 

¶ 31,390 (2017). 

4 Id. (3). 

NFA to perform the full range of 

registration processing functions with 

respect to applicants for and persons 

registered as a: futures commission 

merchant, commodity pool operator, or 

commodity trading advisor; 7

introducing broker; 8 leverage 

transaction merchant; 9 floor broker; 10

floor trader; 11 retail foreign exchange 

dealer; 12 and swap dealer or major swap 

participant (collectively, registrants).13

Additionally, the NFA has adopted, and 

the Commission has approved, rules 

that govern the performance of the 

registration functions. For example, 

NFA Rule 501 pertains to the NFA’s 

authority to deny, condition, suspend, 

and revoke registration for registrants. 

NFA Rule 504 sets forth the procedures 

governing applicants and registrants 

disqualified from registration under 

sections 8a(2), 8a(3), or 8a(4) of the Act. 

In light of NFA’s experience in 

processing and maintaining exchange 

disciplinary and access denial actions 

on behalf of the Commission, the 

Commission has determined that it will 

continue to delegate these functions to 

the NFA. This Notice and Order is in 

accord with the Commission’s previous 

delegations to the NFA to perform 

registration processing functions with 

respect to applicants and registrants, in 

that, an individual’s or firm’s 

disciplinary history clearly is a factor 

that must be considered in any fitness 

determination. Deeming the NFA as the 

custodian of all exchange § 9.11 filings, 

and delegating to the NFA the 

responsibility for processing such filings 

and generating reports with the 

information amassed, should ensure 

that the NFA has the necessary 

information to continue to make 

appropriate registration determinations. 

Further, the Commission believes that 

this delegation order will enhance 

efficiency by permitting the 

Commission to carry out its statutory 

responsibilities under the CEA, while 

also freeing up Commission resources to 

be directed to other parts of its 

regulatory mandate. 

IV. Conclusion and Order 

The Commission has determined, in 

accordance with section 8a(10) of the 

Act, to delegate to the NFA the authority 

to perform the following functions: 

(1) To process exchange disciplinary 

information filed with it by an exchange 

or the Commission for inclusion in the 

BASIC system; 

(2) To provide the Commission with 

access to a Management Report 

summarizing all recent exchange 

disciplinary information and to provide 

the Commission with the capability to 

generate standardized reports on the 

BASIC system; 

(3) To assist the Commission in 

enforcing exchange compliance with 

regulation 9.11 filing requirements; and 

(4) To serve as the official custodian 

of a database containing records of all 

exchange disciplinary and access denial 

actions filed with the NFA for inclusion 

in the BASIC system. 

The NFA is authorized to perform all 

functions specified herein until such 

time as the Commission orders 

otherwise. Nothing in this Notice and 

Order shall affect the Commission’s 

oversight authority of exchange 

disciplinary programs. The Commission 

is retaining all of its oversight authority, 

including its authority to review and to 

modify exchange disciplinary actions 

and to take enforcement or other 

remedial action against exchanges for 

noncompliance with § 9.11. The NFA 

may submit to the Commission for 

clarification any specific matters that 

have been delegated to it, and 

Commission staff will be available to 

discuss with NFA staff issues relating to 

implementation of this Notice and 

Order. 

Issued in Washington, DC, on January 9, 

2018, by the Commission. 

Christopher J. Kirkpatrick, 

Secretary of the Commission. 

Appendix to Performance of Certain 

Functions by the National Futures 

Association With Respect to Regulation 

9.11—Commission Voting Summary 

On this matter, Chairman Giancarlo and 

Commissioners Quintenz and Behnam voted 

in the affirmative. No Commissioner voted in 

the negative. 

[FR Doc. 2018–00468 Filed 1–11–18; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Parts 250 and 385 

[Docket No. RM18–4–000; Order No. 839] 

Civil Monetary Penalty Inflation 

Adjustments 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) is 

issuing a final rule to amend its 

regulations governing the maximum 

civil monetary penalties assessable for 

violations of statutes, rules, and orders 

within the Commission’s jurisdiction. 

The Federal Civil Penalties Inflation 

Adjustment Act of 1990, as amended 

most recently by the Federal Civil 

Penalties Inflation Adjustment Act 

Improvements Act of 2015, requires the 

Commission to issue this final rule. 

DATES: This final rule is effective 

January 12, 2018. 

FOR FURTHER INFORMATION CONTACT: 

Todd Hettenbach, Attorney, Office of 

Enforcement, Federal Energy Regulatory 

Commission, 888 First Street NE, 

Washington, DC 20426, (202) 502–8794 

Todd.Hettenbach@ferc.gov. 

SUPPLEMENTARY INFORMATION: 

Order No. 839 

Final Rule 

1. In this final rule, the Federal 

Energy Regulatory Commission 

(Commission) is complying with its 

statutory obligation to amend the civil 

monetary penalties provided by law for 

matters within the agency’s jurisdiction. 

Background 

2. The Federal Civil Penalties 

Inflation Adjustment Act Improvements 

Act of 2015 (2015 Adjustment Act),1

which further amended the Federal 

Civil Penalties Inflation Adjustment Act 

of 1990 (1990 Adjustment Act),2

required the head of each federal agency 

to issue a rule by July 2016 adjusting for 

inflation each ‘‘civil monetary penalty’’ 

provided by law within the agency’s 

jurisdiction and to make further 

inflation adjustments on an annual basis 

every January 15 thereafter.3

II. Discussion 

3. The 2015 Adjustment Act defines a 

civil monetary penalty as any penalty, 

fine, or other sanction that: (A)(i) Is for 

a specific monetary amount as provided 

by federal law; or (ii) has a maximum 

amount provided for by federal law; (B) 

is assessed or enforced by an agency 

pursuant to federal law; and (C) is 

assessed or enforced pursuant to an 

administrative proceeding or a civil 

action in the federal courts.4 This 


sradovich on DSK3GMQ082PROD with RULES