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[Federal Register: March 17, 2003 (Volume 68, Number 51)]
[Rules and Regulations]
[Page 12583-12584]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17mr03-5]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 4


Commodity Pool Operators

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rules.

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SUMMARY: The Commodity Futures Trading Commission (the "Commission"
or "CFTC") has adopted amendments to part 4 of its rules, which
governs Commodity Pool Operators ("CPOs") and Commodity Trading
Advisors ("CTAs"). These amendments make clear that certain
Disclosure Documents need only be filed with the National Futures
Association ("NFA") and need not also be filed with the Commission.
The Commission, in a separate Notice and Order published elsewhere in
the Federal Register, has authorized NFA to receive and review these
documents.

EFFECTIVE DATE: March 17, 2003.

FOR FURTHER INFORMATION CONTACT: Kevin P. Walek, Assistant Director,
Audit and Financial Review Section, or Michael A. Piracci, Attorney
Advisor, Compliance and Registration Section, Division of Clearing and
Intermediary Oversight, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581.
Telephone: (202) 418-5430.

SUPPLEMENTARY INFORMATION:

I. Background

    In 1997, the Commission authorized NFA to review Disclosure
Documents that CPOs are required to file, pursuant to Commission rule
4.26(d), with regard to those Disclosure Documents filed for
"privately offered" pools.\1\ In December 2002, the Commission
amended part 4 of its rules, including rule 4.26(d), to make clear
that, as a result of the Commission order issued in 1997, as well as a
Commission order issued in December 2002 that authorized NFA to receive
and review various documents required to be filed with the
Commission,\2\ it was no longer necessary for the Commission to receive
copies of these documents.\3\ Accordingly, the Commission amended the
subject rules to make clear that the required documents need only be
filed with NFA and need not also be filed with the Commission.\4\ As
the Commission would continue to receive and review Disclosure
Documents for publicly-offered pools, rule 4.26(d) was amended by
adding paragraph (d)(3) to make clear that Disclosure Documents for
publicly-offered pools, as well as any subsequent amendments to such
Disclosure Documents, must be filed with the Commission.\5\
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    \1\ See 62 FR 52088 (Oct. 6, 1997). Pursuant to Commission rule
4.24(d)(3)(i), "privately offered" commodity pools are those
offered pursuant to section 4(2) of the Securities Act of 1933, as
amended (15 U.S.C. 77d(2)), or pursuant to Regulation D thereunder
(17 CFR 230.501 et seq.). As discussed herein, "publicly-offered"
commodity pools are pools not offered pursuant to section 4(2) of
the Securities Act of 1933 or pursuant to Regulation D.
    \2\ See 67 FR 77470 (Dec. 18, 2002).
    \3\ See 67 FR 77409 (Dec. 18, 2002).
    \4\ See 67 FR at 77410-11. The Commission rules amended were:
(1) 4.5; (2) 4.7; (3) 4.12; (4) 4.13; (5) 4.14; (6) 4.22; (7) 4.26;
and (8) 4.36.
    \5\ See 67 FR at 77411.
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II. Rule Amendments

    In a separate notice published elsewhere today in the Federal
Register, the Commission is authorizing NFA to receive and review
Disclosure Documents required to be filed by CPOs, pursuant to
Commission rule 4.26(d), with regard to publicly-offered commodity
pools. Accordingly, as the Commission noted regarding Disclosure
Documents filed by CPOs with regard to privately offered pools, it is
not necessary for the Commission to impose upon the persons filing
these documents the burden and cost of having to file the documents
with both NFA and the Commission. The Commission is, therefore,
amending rule 4.26(d) to make clear that the required documents need
only be filed with NFA and need not also be filed with the Commission.

III. Related Matters

A. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 ("PRA") \6\ imposes certain
requirements on federal agencies (including the Commission) in
connection with their conducting or sponsoring any collection of
information as defined by the PRA. The rule amendment does not require
a new collection of information on the part of any entities subject to
the proposed rule amendments. Accordingly, for purposes of the PRA, the
Commission certifies that this rule amendment will not impose any new
reporting or recordkeeping requirements.
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    \6\ 44 U.S.C. 3501 et seq.
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B. Cost-Benefit Analysis

    Section 15(a) of the Act requires the Commission to consider the
costs and benefits of its action before issuing a new regulation under
the Act. By its terms, section 15(a) does not require the Commission to
quantify the costs and benefits of a new regulation or to determine
whether the benefits of the proposed regulation outweigh its costs.
Rather, section 15(a) simply requires the Commission to "consider the
costs and benefits" of its action.
    Section 15(a) further specifies that costs and benefits shall be
evaluated in light of five broad areas of market and public concern:
Protection of market participants and the public; efficiency,
competitiveness, and financial integrity of futures markets; price
discovery; sound risk management practices; and other public interest
considerations. Accordingly, the Commission could in its discretion
give greater weight to any one of the five enumerated areas and could
in its discretion determine that, notwithstanding its costs, a
particular rule was necessary or appropriate to protect the public
interest or to effectuate any of the provisions or to accomplish any of
the purposes of the Act.
    The amendment herein is intended to minimize the filing burdens
imposed upon CPOs by making clear that the subject documents need only
be filed with NFA and not also the Commission. The Commission is
considering the costs and benefits of this rule in light of the
specific provisions of section 15(a) of the Act:
    1. Protection of market participants and the public. While the
amendment is expected to lessen the filing burdens imposed upon CPOs,
it does not reduce the type of information and documents that must be
provided to customers of CPOs. Moreover, these documents will

[[Page 12584]]

continue to be reviewed for compliance with the Act and Commission
rules. Accordingly, the amendment being adopted herein should have no
effect on the Commission's ability to protect market participants and
the public.
    2. Efficiency and competition. The amendment, by requiring that the
subject documents need only be filed with NFA and not also the
Commission, should increase the efficiency with which CPOs comply with
rule 4.26(d).
    3. Financial integrity of futures markets and price discovery. The
amendment should have no effect, from the standpoint of imposing costs
or creating benefits, on the financial integrity or price discovery
function of the futures and options markets.
    4. Sound risk management practices. The amendment being adopted
herein should have no effect on the risk management practices of the
futures and options industry.
    5. Other public interest considerations. The amendment should make
compliance with the Commission rule 4.26(d) more efficient without
imposing any costs to the regulatory oversight of commodity
registrants.
    After considering these factors, the Commission has determined to
adopt the amendment discussed above.

C. Administrative Procedure Act

    The Commission has determined that the amendment discussed herein
relates solely to agency organization, procedure, and practice.
Accordingly, the provisions of the Administrative Procedure Act that
generally require notice of proposed rulemaking and that provide other
opportunities for public participation are not applicable.\7\ The
Commission further finds that, because the amendment relieves a
restriction as to the required filing of documents and the amendment
has no adverse effect upon a member of the public, there is good cause
to make it effective less than thirty days after publication in the
Federal Register.\8\
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    \7\ 5 U.S.C. 553(b)(3)(A) (1994).
    \8\ See 5 U.S.C. 553(d) (1994).
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List of Subjects in 17 CFR Part 4

    Advertising, Customer protection, and Reporting and recordkeeping
requirements.


    For the reasons discussed in the foregoing, the Commission hereby
amends chapter I of title 17 of the Code of Federal Regulations as
follows:

PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS

    1. The authority citation for part 4 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 6b, 6c, 6(c), 6l, 6m, 6n, 6o, 12a,
and 23.


    2. Section 4.26 is amended as follows:
    a. By amending the introductory text of paragraph (d) by removing
"and paragraph (d)(3) of this section"; and
    b. By removing paragraph (d)(3).

    Issued in Washington, DC on March 10, 2003, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 03-6179 Filed 3-14-03; 8:45 am]
BILLING CODE 6351-01-P
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