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[Federal Register: March 4, 1998 (Volume 63, Number 42)]

[Notices]

[Page 10597]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr04mr98-50]



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COMMODITY FUTURES TRADING COMMISSION





Chicago Board of Trade Supplement to Petition for Exemption From

the Dual Trading Prohibition in Affected Contract Markets



AGENCY: Commodity Futures Trading Commission.



ACTION: Notice of supplement to a petition for exemption from the

prohibition on dual trading for a potentially affected screen-based

traded contract market.



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SUMMARY: Chicago Board of Trade ("CBT" or "Exchange") has submitted

to the Commodity Futures Trading Commission ("Commission") an

additional update of its October 25, 1993 petition for exemption from

the prohibition against dual trading. The supplement requests an

exemption for a screen-based traded contract if the Commission

determines that the contract is an affected contract market subject to

the dual trading prohibition. Copies of the entire file, including any

future submissions, will be available to the public upon request,

except to the extent that the Exchange has requested confidential

treatment.



ADDRESSES: Copies of the file are available from the Office of the

Secretariat, Commodity Futures Trading Commission, Three Lafayette

Centre, 1155 21st Street, NW, Washington, DC 20581. Reference should be

made to the CBT dual trading exemption petition file.



FOR FURTHER INFORMATION CONTACT: Rachel Berdansky, Special Counsel,

Division of Trading and Markets, Commodity Futures Trading Commission,

Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581;

telephone: (202) 418-5490.



SUPPLEMENTARY INFORMATION: Pursuant to Sections 4j(a)(1) and (3) of the

Commodity Exchange Act ("Act") and Regulation 155.5 thereunder, a

board of trade may submit a petition to the Commission to exempt any of

its affected contract markets (markets with an average daily trading

volume equal to or in excess of 8,000 contracts for four consecutive

quarters) from the prohibition against dual trading. Regulation

155.5(d)(6) authorizes the Director of the Division of Trading and

Markets ("Division"), or a designee of the Director, to publish

notice of each exemption petition deemed complete under Regulation

155.5(d) and to make the petition available to the public as required

by Section 4j(a)(5) of the Act.

    CBT originally submitted a petition for dual trading exemption for

ten affected contract markets on October 25, 1993. Subsequently,

pursuant to letters dated March 25 and May 14, 1994, CBT supplemented

its petition to include three additional affected contract markets. On

November 7, 1997, the Commission issued a proposed Order granting CBT

conditional dual trading exemptions for 13 affected contract markets.

    Through a letter dated December 12, 1997, the Exchange notified the

Division that the average daily trading volume for the U.S. Treasury

Bond futures contract ("T-Bonds") traded on the Exchange's screen-

based Project A system exceeded 8,000 contracts for each of four

quarters during the volume year from December 1996 through November

1997. The Exchange requested the opportunity to submit materials by

January 31, 1998, addressing whether a screen-based traded market

should be considered an affected contract market subject to the dual

trading provisions set forth in Section 4j of the Act and Regulation

155.5. On December 16, 1997, the Division granted that request, and

informed CBT that the submission also had to include a complete dual

trading exemption petition for the Project A traded T-Bond futures

contract. On January 31, 1998, the Exchange submitted a petition

supplement requesting an exemption from the dual trading prohibition

for the Project A traded T-Bond futures contract if the Commission

determines that the contract is an affected contract market. The

supplement addressed the applicability of a dual trading prohibition to

an electronic market, as well as the elements of the Exchange's trade

monitoring system as they apply to Project A.

    As noted by the Commission in promulgating Regulation 155.5, a

contract market trading on an exchange floor will be considered

separate from a contract market in the same commodity trading though a

screen-based trading system. The Commission further stated that, while

not excluding electronic trading from the dual trading prohibition, the

Commission was retaining the flexibility to consider the matter

further. See FR 40335 (July 28, 1993). The Commission is currently

considering whether screen-based trading systems, such as Project A,

shall be subject to the dual trading provisions of Section 4j of the

Act and Regulation 155.5.

    Copies of the file containing all these materials and any future

submissions, except to the extent that the Exchange has requested

confidential treatment in accordance with 17 CFR 145.9, are available

for inspection at the Commission's Office of the Secretariat, Three

Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, and may

be obtained by mail at that address or by telephone at (202) 418-5100.

    Petition materials subject to CBT's request for confidential

treatment may be available upon request pursuant to the Freedom of

Information Act ("FOIA") (5 U.S.C. Sec. 552) and the Commission's

regulations thereunder (17 CFR Part 145), except to the extent they are

entitled to confidential treatment as set forth in 17 CFR 145.5 and

145.9. Requests for copies of such materials should be made to FOIA,

Privacy and Sunshine Act Compliance Staff of the Office of the

Secretariat at the above address in accordance with 17 CFR 145.7 and

145.8.

    If the Commission determines that the Project A traded T-Bond

futures contract is subject to Section 4j of the Act and Regulation

155.5, CBT is deemed to have timely submitted its petition supplement

for the purpose of Regulation 155.5(d)(5). Therefore, application of

the dual trading prohibition against Project A trading of the T-Bond

futures contract would be suspended until the petition is acted upon.



    Issued in Washington, DC, on February 26, 1998.

Alan L. Seifert,

Deputy Director, Division of Trading and Markets.

[FR Doc. 98-5596 Filed 3-3-98; 8:45 am]

BILLING CODE 6351-01-P
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