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[Federal Register: November 2, 2001 (Volume 66, Number 213)]
[Proposed Rules]
[Page 55608-55609]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02no01-28]


[[Page 55608]]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 1, 41 and 190

RIN 3038-AB71 and 3038-AB76

SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 240 and 242

[Release No. 34-44996; File Nos. S7-16-01 and S7-17-01]
RIN 3235-AI22 and 3235-AI32


Customer Margin Rules Relating to Security Futures; Applicability
of CFTC and SEC Customer Protection, Recordkeeping, Reporting, and
Bankruptcy Rules and the Securities Investor Protection Act of 1970 to
Accounts Holding Security Futures Products

AGENCIES: Commodity Futures Trading Commission and Securities and
Exchange Commission.

ACTION: Joint proposed rules; extension of comment periods.

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SUMMARY: The Commodity Futures Trading Commission ("CFTC") and
Securities and Exchange Commission ("SEC") (collectively, the
"Commissions") are extending the comment periods for the customer
margin rules relating to security futures contained in proposed Release
No. 34-44853 (September 26, 2001), 66 FR 50719 (October 4, 2001) and
the rule relating to the applicability of CFTC and SEC customer
protection, recordkeeping, reporting, and bankruptcy rules and the
Securities Investor Protection Act of 1970 to accounts holding security
futures products proposed in Release No. 34-44854 (September 26, 2001),
66 FR 50785 (October 4, 2001). The original comment periods for these
proposals are scheduled to end on November 5, 2001. The new deadline
for submitting public comments on both of the above releases is
December 5, 2001.

DATES: Public comments are due on or before December 5, 2001.

ADDRESSES: Comments should be sent to both agencies at the addresses
listed below.
    CFTC: Comments should be sent to the Commodity Futures Trading
Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington,
DC 20581, Attention: Office of the Secretariat. Comments may be sent by
facsimile transmission to (202) 418-5521, or by e-mail to
[email protected]. Reference should be made to "Customer Margin for
Security Futures" or "Proposed Rule 41.42--Treatment of Customer
Funds." All comment letters will be posted, as submitted, on the
CFTC's Internet web site (http://www.cftc.gov).
    SEC: Persons wishing to submit written comments should send three
copies to Jonathan G. Katz, Secretary, Securities and Exchange
Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. Comments
also may be submitted electronically at the following e-mail address:
[email protected]. All comment letters should refer to File No. S7-
16-01 (relating to customer margin for security futures) or S7-17-01
(relating to treatment of customer funds); this file number should be
included on the subject line if e-mail is used. Comment letters
received will be available for public inspection and copying in the
SEC's Public Reference Room, 450 Fifth Street, NW, Washington, DC
20549-0102. Electronically submitted comment letters will be posted on
the SEC's Internet web site (http://www.sec.gov). The SEC does not edit
personal identifying information, such as names or e-mail addresses,
from electronic submissions. Submit only the information you wish to
make publicly available.

FOR FURTHER INFORMATION CONTACT: CFTC: Regarding Customer Margin Rules
Relating to Security Futures, Phyllis P. Dietz, Special Counsel,
Division of Trading and Markets, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581.
Telephone: (202) 418-5000. E-mail: ([email protected]).
    Regarding Applicability of CFTC and SEC Customer Protection,
Recordkeeping, Reporting, and Bankruptcy Rules and the Securities
Investor Protection Act of 1970 to Accounts Holding Security Futures
Products, Helene D. Schroeder, Special Counsel, Division of Trading and
Markets, Commodity Futures Trading Commission, Three Lafayette Centre,
1155 21st Street, NW, Washington, DC 20581. Telephone: (202) 418-5430.
E-mail: ([email protected]).
    SEC: Regarding Customer Margin Rules Relating to Security Futures,
Jennifer Colihan, Special Counsel, at (202) 942-0735, Division of
Market Regulation, Securities and Exchange Commission, 450 Fifth
Street, NW, Washington, DC 20549-1001.
    Regarding Applicability of CFTC and SEC Customer Protection,
Recordkeeping, Reporting, and Bankruptcy Rules and the Securities
Investor Protection Act of 1970 to Accounts Holding Security Futures
Products Bonnie L. Gauch, Attorney, at (202) 942-0765, Office of Risk
Management and Control; and with respect to Exchange Act Rule 10b-10,
Catherine McGuire, Chief Counsel, or Theodore R. Lazo, Special Counsel,
at (202) 942-0073, Division of Market Regulation, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-1001.

SUPPLEMENTARY INFORMATION: On October 4, 2001, the Commissions
published for comment proposed rules governing customer margin for
security futures. The proposed rules would apply to margin arrangements
between brokers, dealers, and members of national securities exchanges
and their customers with respect to security futures, subject to
certain exclusions. Also on October 4, 2001, the Commissions published
for comment proposed rules relating to the applicability of the
Commissions' customer protection, recordkeeping, reporting, and
bankruptcy rules and the Securities Investor Protection Act of 1970 to
accounts holding security futures products. These proposing releases
established a deadline of November 5, 2001 for submitting public
comment.
    The Commissions have received a request from the Securities
Industry Association ("SIA") and Futures Industry Association
("FIA") to extend the deadline on each release by an additional 30
days so that their members have an adequate opportunity to review these
proposals and provide thoughtful comment.\1\ The SIA and FIA explained
that, in light of the tragic events of September 11, the securities and
futures industries need more time to provide meaningful comments. They
stated their belief that such extensions would not have any adverse
consequences, recognizing that such extensions could delay commencement
of trading of security futures on other than a principal-to-principal
basis between eligible contract participants beyond December 21,
2001.\2\ In letters to the leadership of the Senate Committee on
Banking, Housing and Urban Affairs and the House Committees on
Financial Services and Agriculture, the SIA and

[[Page 55609]]

FIA further pointed out that "the tragic events of September 11, 2001
have severely strained the systems, personnel and related operational
resources of the firms, exchanges and clearing organizations that
provide the infrastructure for the U.S. capital markets." \3\
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    \1\ See letter to Jean A. Webb, Secretary, CFTC, and Jonathan G.
Katz, Secretary, SEC, from the SIA and FIA, dated October 16, 2001
("SIA/FIA Extension Request").
    \2\ Section 6(g)(5) of the Securities Exchange Act of 1934
("Exchange Act") permits security futures products to commence
trading on the later of December 21, 2001 or such date that a
futures association registered under Section 17 of the Commodity
Exchange Act has met the requirements set forth in Section 15A(k)(2)
of the Exchange Act. 15 U.S.C. 78f(g)(5).
    \3\ See letters to The Honorable Paul S. Sarbanes, Chairman,
Senate Committee on Banking, Housing and Urban Affairs, The
Honorable Michael G. Oxley, Chairman, House Committee on Financial
Services, and The Honorable Larry Combest, Chairman, House Committee
on Agriculture, from the SIA and FIA, dated October 10, 2001
(attached to the SIA/FIA Extension Request). The Commissions also
note that the House Committees on Financial Services and Agriculture
support an extension of the public comment period by joint letter to
Chairmen Newsome and Pitt. See letter to The Honorable James E.
Newsome, Chairman, CFTC, and The Honorable Harvey Pitt, Chairman,
SEC, from The Honorable Michael G. Oxley, Chairman, House Committee
on Financial Services, and The Honorable Larry Combest, Chairman,
House Committee on Agriculture, dated October 15, 2001.
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    The Commissions are extending the comment periods for the proposed
rules until December 5, 2001, even if, as noted by Chairmen Oxley and
Combest, granting such extension would mean that security futures would
not commence trading on other than a principal-to-principal basis
between eligible contract participants until after December 21, 2001,
because they believe that an additional 30-day comment period is
appropriate for the reasons described above and will facilitate more
meaningful comments from the public.

    By the Commodity Futures Trading Commission.

    Dated: October 25, 2001.
Jean A. Webb,
Secretary.
    By the Securities and Exchange Commission.

    Dated: October 29, 2000.
Jonathan G. Katz,
Secretary.
[FR Doc. 01-27523 Filed 11-1-01; 8:45 am]
BILLING CODE 8010-01-P
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