Federal Register / Vol. 66, No. 98 / Monday, May 21, 2001 / Rules and Regulations 27859

1Commission rules referred to herein are found

at 17 CFR Ch. I (2000). 2 52 FR 28990, 29001 (August 5, 1987).

TABLE 1.—REPRESENTATIVE AVERAGE UNIT COSTS OF ENERGY FOR FIVE RESIDENTIAL ENERGY SOURCES (2001)

Type of energy In commonly used terms As required by DOE test procedure Dollars per

million Btu 1

Electricity ................................................. 8.29¢/kWh 2 3 ........................................... $0.0829/kWh ........................................... $24.30

Natural Gas ............................................. 83.7¢/therm 4 or $8.63/MCF 5 6 ................ 0.00000837/Btu ....................................... 8.37

No. 2 heating oil ...................................... $1.23/gallon 7 ........................................... 0.00000886/Btu ....................................... 8.86

Propane ................................................... $1.03/gallon 8 ........................................... 0.00001128/Btu ....................................... 11.28

Kerosene ................................................. $1.27/gallon 9 ........................................... 0.00000941/Btu ....................................... 9.41

1Btu stands for British thermal unit.

2 kWh stands for kiloWatt hour.

3 1 kWh = 3,412 Btu.

4 therm = 100,000 Btu. Natural gas prices include taxes.

5 MCF stands for 1,000 cubic feet.

6For the purposes of this table, 1 cubic foot of natural gas has an energy equivalence of 1,031 Btu.

7For the purposes of this table, 1 gallon of No. 2 heating oil has an energy equivalence of 138,690 Btu.

8For the purposes of this table, 1 gallon of liquid propane has an energy equivalence of 91,333 Btu.

9For the purposes of this table, 1 gallon of kerosene has an energy equivalence of 135,000 Btu.

* * * * *

By direction of the Commission.

Donald S. Clark,

Secretary,

[FR Doc. 01–12676 Filed 5–18–01; 8:45 am]

BILLING CODE 6750–01–M

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Part 30

Foreign Futures and Options

Transactions

AGENCY: Commodity Futures Trading

Commission.

ACTION: Order.

SUMMARY: The Commodity Futures

Trading Commission (‘‘Commission’’ or

‘‘CFTC’’) is granting an exemption to

firms designated by the Winnipeg

Commodity Exchange (‘‘WCE’’) from the

application of certain of the

Commission’s foreign futures and

option rules based on substituted

compliance with certain comparable

regulatory and self-regulatory

requirements of a foreign regulatory

authority consistent with conditions

specified by the Commission, as set

forth herein. This Order is issued

pursuant to Commission Rule 30.10,

which permits specified persons to file

a petition with the Commission for

exemption from the application of

certain of the rules set forth in Part 30

and authorizes the Commission to grant

such an exemption if such action would

not be otherwise contrary to the public

interest or to the purposes of the

provision from which exemption is

sought.

EFFECTIVE DATE: May 21, 2001.

FOR FURTHER INFORMATION CONTACT:

Lawrence B. Patent, Esq., Associate

Chief Counsel, Susan A. Elliott, Esq.,

Staff Attorney, or Andrew V. Chapin,

Esq., Staff Attorney, Division of Trading

and Markets, Commodity Futures

Trading Commission, 1155 21st Street,

NW., Washington, DC 20581.

Telephone: (202) 418–5430.

SUPPLEMENTARY INFORMATION: The

Commission has issued the following

Order:

Order Under CFTC Rule 30.10 Exempting

Firms Designated by the Winnipeg

Commodity Exchange From the Application

of Certain of the Foreign Futures and Option

Rules the Later of the Date of Publication of

the Order Herein in the Federal Register or

After Filing of Consents by Such Firms and

the Regulatory or Self-Regulatory

Organization, as Appropriate, to the Terms

and Conditions of the Order Herein.

Commission rules governing the offer

and sale of commodity futures and

option contracts traded on or subject to

the rules of a foreign board of trade to

customers located in the U.S. are

contained in Part 30 of the

Commission’s rules.1 These rules

include requirements for intermediaries

with respect to registration, disclosure,

capital adequacy, protection of customer

funds, recordkeeping and reporting, and

sales practice and compliance

procedures, that are generally

comparable to those applicable to

transactions on U.S. markets.

In formulating a regulatory program to

govern the offer and sale of foreign

futures and option products to

customers located in the U.S., the

Commission, among other things,

considered the desirability of

ameliorating the potential

extraterritorial impact of such a program

and avoiding duplicative regulation of

firms engaged in international business.

Based upon these considerations, the

Commission determined to permit

persons located outside the U.S. and

subject to a comparable regulatory

structure in the jurisdiction in which

they were located to seek an exemption

from certain of the requirements under

Part 30 of the Commission’s rules based

upon substituted compliance with the

comparable regulatory requirements of

the foreign jurisdiction.

Appendix A to Part 30, ‘‘Interpretative

Statement With Respect to the

Commission’s Exemptive Authority

Under 30.10 of Its Rules’ (‘‘Appendix

A’’), generally sets forth the elements

the Commission will evaluate in

determining whether a particular

regulatory program may be found to be

comparable for purposes of exemptive

relief pursuant to Rule 30.10.2 These

elements include: (1) Registration,

authorization or other form of licensing,

fitness review or qualification of

persons through whom customer orders

are solicited and accepted; (2) minimum

financial requirements for those persons

who accept customer funds; (3)

protection of customer funds from

misapplication; (4) recordkeeping and

reporting requirements; (5) sales

practice standards; (6) procedures to

audit for compliance with, and to take

action against those persons who

violate, the requirements of the

program; and (7) information sharing

arrangements between the Commission

and the appropriate governmental and/

or self-regulatory organization to ensure

Commission access on an ‘‘as needed’’

basis to information essential to

maintaining standards of customer and

market protection within the U.S.

Moreover, the Commission

specifically stated in adopting Rule

30.10 that no exemption of a general

nature would be granted unless the

persons to whom the exemption is to be

applied: (1) consensually submit to

jurisdiction in the U.S. by designating

an agent for service of process in the

27860 Federal Register / Vol. 66, No. 98 / Monday, May 21, 2001 / Rules and Regulations

3 52 FR 28980, 28981 and 29002.

4See, e.g., Sections 2(a)(1)(C) and (D) of the

Commodity Exchange Act.

5See, e.g., 17 CFR Part 18 (2000).

6See, e.g., 17 CFR Parts 17 and 21 (2000).

7See 64 FR 50248, 50251 (September 16,

1999)(permitting designated members of the

Singapore Exchange Derivatives Trading Limited to

solicit and accept orders from customers located in

the U.S. for otherwise permitted transactions on

Eurex Deutschland).

U.S. with respect to transactions subject

to Part 30 and filing a copy of the

agency agreement with the National

Futures Association (‘‘NFA’’); (2) agree

to provide access to their books and

records in the U.S. to Commission and

Department of Justice representatives;

and (3) notify NFA of the

commencement of business in the U.S.3

By letter dated June 29, 2000 and

subsequent correspondence through

September 26, 2000, the WCE petitioned

the Commission on behalf of certain

firms located and doing business in

Manitoba for an exemption from the

application of the Commission’s Part 30

rules to those firms. In support of its

petition, the WCE states that granting

such an exemption with respect to firms

that it has authorized to conduct foreign

futures and options transactions on

behalf of customers located in the U.S.

would not be contrary to the public

interest or to the purposes of the

provisions from which the exemption is

sought because such firms are subject to

a regulatory framework comparable to

that imposed by the Commodity

Exchange Act (‘‘Act’’) and the rules

thereunder.

Based upon a review of the petition,

supporting materials filed by the WCE

and the recommendation of the

Commission’s staff, the Commission has

concluded that the standards for relief

set forth in Rule 30.10 and, in

particular, Appendix A thereof, have

generally been satisfied and that

compliance with applicable Manitoba

and Canadian law and WCE rules may

be substituted for compliance with

those sections of the Act and rules

thereunder more particularly set forth

herein.

By this Order, the Commission hereby

exempts, subject to specified conditions,

those firms identified to the

Commission by the WCE as eligible for

the relief granted herein from:

—Registration with the Commission for firms

and for firm representatives;

—The requirement in Commission Rule

30.6(a) and (d), 17 CFR 30.6(a) and (d), that

firms provide customers located in the U.S.

with the risk disclosure statements in

Commission Rule 1.55(b), 17 CFR 1.55(b)

and Commission Rule 33.7, 17 CFR 33.7,

or as otherwise approved under

Commission Rule 1.55(c), 17 C.F.R.

§ 1.55(c);

—Those sections of Part 1 of the

Commission’s financial rules that apply to

foreign futures and options sold in the U.S.

as set forth in Part 30; and

—Those sections of Part 1 of the

Commission’s rules relating to books and

records which apply to transactions subject

to Part 30,

based upon substituted compliance by such

persons with the applicable statutes and

regulations in effect in the province of

Manitoba.

This determination to permit

substituted compliance is based on,

among other things, the Commission’s

finding that the regulatory scheme

governing persons in Manitoba who

would be exempted hereunder provides:

(1) A system of qualification or

authorization of firms who deal in

transactions subject to regulation under Part

30 that includes, for example, criteria and

procedures for granting, monitoring,

suspending and revoking licenses, and

provisions for requiring and obtaining access

to information about authorized firms and

persons who act on behalf of such firms;

(2) Financial requirements for firms

including, without limitation, a requirement

that all firms immediately notify WCE if the

firms’ adjusted net capital falls below a

specified level and daily mark-to-market

settlement and/or accounting procedures;

(3) A system for the protection of customer

assets that is designed to preclude the use of

customer assets to satisfy house obligations

and requires separate accounting for such

assets, augmented by a compensation scheme

designed to compensate customers whose

assets are segregated and who have suffered

a loss as a result of fraud and/or insolvency

of a firm;

(4) Recordkeeping and reporting

requirements pertaining to financial and

trade information including, without

limitation, order tickets, trade confirmations,

monthly customer account statements,

customers’ segregation records, accounting

records for customer and proprietary trades

and discretionary account documentation;

(5) Sales practice standards for authorized

firms and persons acting on their behalf that

include, for example, a requirement that

authorized persons know their customers,

required disclosures to prospective

customers and prohibitions on misleading

advertising and improper trading activities;

(6) Procedures to audit for compliance

with, and to redress violations of, customer

protection and sales practice requirements

including, without limitation, an affirmative

surveillance program designed to detect

trading activities that take advantage of

customers, and the existence of broad powers

of investigation relating to sales practice

abuses; and

(7) Mechanisms for sharing of information

between the Commission, the WCE, and the

MSC on an ‘‘as needed’’ basis including,

without limitation, confirmation data, data

necessary to trace funds related to trading

futures products subject to regulation in

Manitoba, position data, and data on firms’

standing to do business and financial

condition.

This Order does not provide an

exemption from any provision of the

Act or rules thereunder not specified

herein, for example, without limitation,

the antifraud provision in Rule 30.9.

Moreover, the relief granted is limited to

brokerage activities undertaken on

behalf of customers located in the U.S.

with respect to transactions on or

subject to the rules of the WCE for

products that customers located in the

U.S. may trade.4 The relief does not

extend to rules relating to trading,

directly or indirectly, on U.S.

exchanges. For example, a firm trading

in U.S. markets for its own account

would be subject to the Commission’s

large trader reporting requirements.5

Similarly, if such a firm were carrying

a position on a U.S. exchange on behalf

of foreign clients, it would be subject to

the reporting requirements applicable to

foreign brokers.6 The relief herein is

inapplicable where the firm solicits or

accepts orders from customers located

in the U.S. for transactions on U.S.

markets. In that case, the firm must

comply with all applicable U.S. laws

and regulations, including the

requirement to register in the

appropriate capacity.

The relief also does not extend to

trading, directly or indirectly, on any

other non-U.S. exchanges. Should the

WCE seek to extend the Rule 30.10 relief

set forth herein to permit designated

members to solicit and accept orders

from customers located in the U.S. for

otherwise permitted transactions on any

other non-U.S. exchange, it must apply

for and receive prior approval from the

Commission. In a petition to extend the

relief set forth herein to other non-U.S.

exchanges, the WCE must: (1) Represent

that local law prohibits its members

from intermediating otherwise

permitted transactions for customers

located in the U.S. on unapproved

foreign exchanges as set forth therein,

and must specify which exchanges are

authorized by local law; (2) represent

that member firms with customers

located in the U.S. will comply with all

the terms and conditions of this Order

with respect to transactions entered into

on or subject to the rules of a foreign

exchange located outside its

jurisdiction; and (3) confirm that it has

the authority and the ability to enforce

its laws, rules and/or regulations with

respect to those transactions to the same

extent that it conducts such activities on

an exchange located within its

jurisdiction.7

Federal Register / Vol. 66, No. 98 / Monday, May 21, 2001 / Rules and Regulations 27861

8 62 FR 47792, 47793 (September 11, 1999).

Among other duties, the Commission authorized

NFA to receive requests for confirmation of Rule

30.10 relief on behalf of particular firms, to verify

such firms’ fitness and compliance with the

conditions of the appropriate Rule 30.10 Order and

to grant exemptive relief from registration to

qualifying firms.

The eligibility of any firm to seek

relief under this exemptive Order is

subject to the following conditions:

(1) The regulatory or self-regulatory

organization responsible for monitoring the

compliance of such firms with the regulatory

requirements described in the Rule 30.10

petition must represent in writing to the

CFTC that:

(a) Each firm for which relief is sought is

registered, licensed or authorized, as

appropriate, and is otherwise in good

standing under the standards in place in

Manitoba; such firm is engaged in business

with customers in Manitoba as well as in the

U.S.; and such firm and its principals and

employees who engage in activities subject to

Part 30 would not be statutorily disqualified

from registration under Section 8a(2) of the

Act, 7 U.S.C. § 12(a)(2);

(b) It will monitor firms to which relief is

granted for compliance with the regulatory

requirements for which substituted

compliance is accepted and will promptly

notify the Commission or NFA of any change

in status of a firm that would affect its

continued eligibility for the exemption

granted hereunder, including the termination

of its activities in the U.S.;

(c) All transactions with respect to

customers made in the U.S. will be made on

or subject to the rules of WCE and the

Commission will receive prompt notice of all

material changes to the relevant laws in

Manitoba, any rules promulgated thereunder

and WCE rules;

(d) Customers located in the U.S. will be

provided no less stringent regulatory

protection than Canadian customers under

all relevant provisions of Manitoba law; and

(e) It will cooperate with the Commission

with respect to any inquiries concerning any

activity subject to regulation under the Part

30 rules, including sharing the information

specified in Appendix A on an ‘‘as needed’’

basis and will use its best efforts to notify the

Commission if it becomes aware of any

information that in its judgment affects the

financial or operational viability of a member

firm doing business in the U.S. under the

exemption granted by this Order.

(2) Each firm seeking relief hereunder

must represent in writing that it:

(a) Is located outside the U.S., its territories

and possessions, and where applicable, has

subsidiaries or affiliates domiciled in the

U.S. with a related business (e.g., banks and

broker/dealer affiliates) along with a brief

description of each subsidiary’s or affiliate’s

identity and principal business in the U.S.;

(b) Consents to jurisdiction in the U.S.

under the Act by filing a valid and binding

appointment of an agent in the U.S. for

service of process in accordance with the

requirements set forth in Rule 30.5;

(c) Agrees to provide access to its books

and records related to transactions under Part

30 required to be maintained under the

applicable statutes and regulations in effect

in Manitoba upon the request of any

representative of the Commission or U.S.

Department of Justice at the place in the U.S.

designated by such representative, within 72

hours, or such lesser period of time as

specified by that representative as may be

reasonable under the circumstances after

notice of the request;

(d) Has no principal, or employee who

solicits or accepts orders from customers

located in the U.S., who would be

disqualified from directly applying to do

business in the U.S. under Section 8a(2) of

the Act, 7 U.S.C. § 12(a)(2), and will notify

the Commission promptly of any change in

that representation based on a change in

control as generally defined in Rule 3.32;

(e) Consents to participate in any NFA

arbitration program that offers a procedure

for resolving customer disputes on the papers

where such disputes involve representations

or activities with respect to transactions

under Part 30, even in circumstances where

the claim involves a matter arising primarily

out of delivery, clearing, settlement or floor

practices, and consents to notify customers

located in the U.S. of the availability of such

a program;

(f) Agrees to maintain, on behalf of

customers located in the U.S., funds

equivalent to the ‘‘foreign futures and foreign

options secured amount’’ described in Rule

1.3(rr), in a separate account as set forth in

Rule 30.7, and to treat those funds in the

manner described by that rule; and

(g) Undertakes to comply with the

applicable provisions of Manitoba laws and

WCE rules that form the basis upon which

this exemption from certain provisions of the

Act and rules thereunder is granted.

As set forth in the Commission’s

September 11, 1997 Order delegating to

NFA certain responsibilities, the written

representations set forth in paragraph

(2) shall be filed with NFA.8 Each firm

seeking relief hereunder has an ongoing

obligation to notify NFA should there be

a material change to any of the

representations required in the firm’s

application for relief.

This Order will become effective as to

any designated WCE member firm the

later of the date of publication of the

Order in the Federal Register or the

filing of the consents set forth in

paragraph (2). Upon filing of the notice

required under paragraph (1)(b) as to

any such firm, the relief granted by this

Order may be suspended immediately

as to that firm. That suspension will

remain in effect pending further notice

by the Commission, or the

Commission’s designee, to the firm and

WCE.

This Order is issued pursuant to Rule

30.10 based on the comparability

representations made and supporting

material provided to the Commission

and the recommendation of the staff,

and is made effective as to any firm

granted relief hereunder based upon the

filings and representations of such firms

required hereunder. Any material

changes or omissions in the facts and

circumstances pursuant to which this

Order is granted might require the

Commission to reconsider its finding

that the standards for relief set forth in

Rule 30.10 and, in particular, Appendix

A, have generally been satisfied.

Further, if experience demonstrates that

the continued effectiveness of this Order

in general, or with respect to a

particular firm, would be contrary to

public policy or the public interest, or

that the systems in place for the

exchange of information or other

circumstances do not warrant

continuation of the exemptive relief

granted herein, the Commission may

condition, modify, suspend, terminate,

withhold as to a specific firm, or

otherwise restrict the exemptive relief

granted in this Order, as appropriate, on

its own motion.

The Commission will continue to

monitor the implementation of its

program to exempt firms located in

jurisdictions generally deemed to have a

comparable regulatory program from the

application of certain of the foreign

futures and option rules and will make

necessary adjustments if appropriate.

Issued in Washington, DC on May 15,

2001.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 01–12696 Filed 5–18–01; 8:45 am]

BILLING CODE 6351–01–P

NATIONAL CRIME PREVENTION AND

PRIVACY COMPACT COUNCIL

28 CFR Chapter IX

[NCPPC 100–F]

Fingerprint Submission Requirements

AGENCY: National Crime Prevention and

Privacy Compact Council.

ACTION: Final rule.

SUMMARY: The Compact Council,

established pursuant to the National

Crime Prevention and Privacy Compact

(Compact), is publishing a rule

interpreting the Compact’s fingerprintsubmission requirements as they relate

to the use of the Interstate Identification

Index (III) for noncriminal justice record

checks during an emergency situation

when the health and safety of a

specified group may be endangered.

Pursuant to the rule, the Compact

Council has approved a proposal from a

state requesting the delayed submission