Submission No. 23-47

April 5, 2023

Mr. Christopher J. Kirkpatrick

Secretary of the Commission

Office of the Secretariat

Commodity Futures Trading Commission

Three Lafayette Centre

1155 21st Street, NW

Washington, DC 20581

Re: Amendments to Conflicts of Interest Provisions for Coffee and Cocoa Grading

Pursuant to Section 5c(c)(1) of the Act and Regulation 40.6(a)

Dear Mr. Kirkpatrick:

Pursuant to Section 5c(c)(1) of the Commodity Exchange Act, as amended (the “Act”),

and Commodity Futures Trading Commission (“Commission”) Regulation 40.6(a), ICE Futures 

U.S., Inc. (“IFUS” or “Exchange”) hereby certifies the amendments to Appendix II of Chapter 8 

(Coffee “C” Futures®) and Cocoa Rule 9.18(c)(ii)(2) (collectively the “Conflicts Rules”), which are

set forth in Exhibit A. 

The Conflicts Rules contain provisions that are designed to mitigate conflicts of interest 

and help ensure the integrity of the grading process for coffee and cocoa that is submitted for 

Exchange delivery. Among other impermissible interests which are identified in the Conflicts 

Rules, graders are disqualified from grading coffee or cocoa shortly before and during the delivery 

period for each product if the grader or the grader’s firm holds a futures position in the expiring 

delivery month for such product. This “disqualification period” currently commences five business 

days before the start of the notice period for each product and applies to graders regardless of 

the size of the position the grader or the grader’s firm holds. As a result, a high percentage of 

licensed graders, who are predominantly employed by commercial firms that use the Exchange’s 

products to hedge, are prohibited from grading during the disqualification period. 

The amendments to the Conflicts Rules: (i) delay the start of the disqualification period 

from five days prior to the First Notice Day (“FND”) to one day prior to FND; and (ii) permit graders 

to grade coffee and cocoa during the disqualification period if they or their firms hold only a de 

minimis futures position in the expiring delivery month. What constitutes a de minimis position 

will be determined by the Exchange each delivery period based on the overall open interest. The 

Exchange believes these changes will significantly increase the number of graders available to 

grade during the delivery period, while still addressing potential conflicts of interest. 

The Exchange certifies that the amendments, which will become effective on April 20, 

2023, comply with the requirements of the Act and the CFTC Regulations promulgated 

thereunder. The Exchange has reviewed the designated contract market core principles ("Core 

Principles") as set forth in the Act and has determined that the amendments comply with the 

following relevant Core Principles:
COMPLIANCE WITH RULES

The amendments will be enforced by the Exchange in accordance with Core Principle 2. 

CONTRACTS NOT READILY SUBJECT TO MANIPULATION & CONFLICTS OF 

INTEREST

The amendments to the Conflicts Rules are designed to minimize constraints that would 

impede grading coffee and cocoa for Exchange delivery consistent with Core Principle 3, 

while maintaining a sufficient process to address potential conflicts of interest as required 

by Core Principle 16. 

AVAILABILITY OF INFORMATION

As required by Core Principle 7, the text of the amended Rules will be codified in the 

Exchange’s Rulebook and made available on the Exchange’s Website. 

The Exchange is not aware of any opposing views with regard to the amendments and 

further certifies that, concurrent with this filing, a copy of this submission was posted on the 

Exchange’s website at https://www.theice.com/futures-us/regulation#rule-filings

If you have any questions or need further information, please contact me at 212-748-4021 

or at jason.fusco@theice.com.

Sincerely,

Jason V. Fusco

Assistant General Counsel

Enc.

cc: Division of Market Oversight

New York Regional Office
EXHIBIT A

COFFEE APPENDIX II

Procedures for Grading Coffee and Issuance of Certificates of Grade

The following procedures must be followed by Members and Licensees in connection with the grading 

of Coffee "C":

****

(n) Impartiality.

 

(2) [No grader may grade coffee if he has an interest in the coffee to be graded.] No licensed grader may 

grade coffee if the grader or an immediate family member: 

(i) directly or indirectly has an ownership interest in, or is a partner or employee of, a Firm which 

has an ownership interest in the coffee submitted for grading; 

(ii) commencing [five] one business day[s] prior to first notice day of the expiring coffee delivery 

month, directly or indirectly holds or controls, a position (other than a de minimis position) in such 

delivery month or is a partner or employee of a Firm which holds or controls a position (other than 

a de minimis position) in such delivery month; 

(iii) directly or indirectly has an ownership interest in, or is an employee of, the warehouse operator 

where the coffee submitted for grading is stored; or 

(iv) has any other business or personal relationship that poses a conflict of interest with respect to 

the grading of coffee under Exchange Futures Contracts.

[REMAINDER OF APPENDIX UNCHANGED]

Rule 9.18. Grading Cocoa for Exchange Delivery

** **

(c) The Growth, Description, Condition, Count, Waste and Grade of Cocoa to be delivered on an 

Exchange Futures Contract must be established by duly licensed graders in accordance with the following:

 

(ii) The cocoa will be graded by a panel of three (3) licensed graders in accordance with 

such procedures as from time to time may be promulgated by the Board of Cocoa Graders.

** **

(2) [The graders selected shall have no interest, beneficial or prejudicial, in the cocoa to be graded.] No 

licensed grader may grade cocoa if such grader or an immediate family member: 

(i) directly or indirectly has an ownership interest in, or is a partner or employee of, a Firm which 

has an ownership interest in the cocoa submitted for grading; 
(ii) commencing [five] one business day[s] prior to first notice day of the expiring cocoa delivery 

month, directly or indirectly holds or controls a position (other than a de minimis position) in 

such delivery month or is a partner or employee of a Firm which holds or controls a position (other 

than a de minimis position) in such delivery month; 

(iii) directly or indirectly has an ownership interest in, or is an employee of, the warehouse operator 

where the cocoa submitted for grading is stored; or 

(iv) has any other business or personal relationship that poses a conflict of interest with respect to 

the grading of cocoa under Exchange Futures Contracts.

[REMAINDER OF RULE UNCHANGED]