7204 Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Rules and Regulations 

* * * * * 

By direction of the Commission. 

Donald S. Clark, 

Secretary. 

[FR Doc. 2016–02744 Filed 2–10–16; 8:45 am] 

BILLING CODE 6750–01–C 

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 

certain member firms designated by the 

Korea Exchange (‘‘KRX’’) from the 

application of certain of the 

Commission’s foreign futures and 

option regulations based upon 

substituted compliance with certain 

comparable regulatory and selfregulatory requirements of a foreign 

regulatory authority consistent with 

conditions specified by the 

Commission, as set forth herein. This 

Order is issued pursuant to Commission 

Regulation 30.10, which permits 

persons to file a petition with the 

Commission for exemption from the 

application of certain of the Regulations 

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. The Commission 

notes that this Order does not pertain to 

any transaction in swaps, as defined in 

Section 1a(47) of the Commodity 

Exchange Act (‘‘Act’’). 

DATES: Effective February 11, 2016. 

FOR FURTHER INFORMATION CONTACT: 

Andrew V. Chapin, Associate Director, 

(202) 418–5465, achapin@cftc.gov, or 

Scott W. Lee, Special Counsel, (202) 

418–5090, slee@cftc.gov, Division of 

Swap Dealer and Intermediary 

Oversight, Commodity Futures Trading 


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Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Rules and Regulations 7205 

1Commission regulations referred to herein are 

found at 17 CFR Chapter I. 

2 ‘‘Foreign Futures and Foreign Options 

Transactions,’’ 52 FR 28290 (Aug. 5, 1987). 

3 52 FR 28990, 29001. 

4 52 FR 28980, 28981 and 29002. 

Commission, 1155 21st Street NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: The 

Commission has issued the following 

Order: 

Order Under CFTC Regulation 30.10 

Exempting Firms Designated by the 

Korea Exchange (KRX) From the 

Application of Certain of the Foreign 

Futures and Option Regulations as of 

the Later of the Date of Publication of 

the Order Herein in the Federal 

Register or After Filing of Consents by 

Such Firms and KRX, as Appropriate, 

to the Terms and Conditions of the 

Order Herein; and Confirming That 

Designated Members of KRX May 

Engage in Limited Marketing Conduct 

With Qualified Customers Located in 

the U.S., as Set Forth in Prior 

Commission Orders 

Commission Regulations governing 

the offer and sale of commodity futures 

and option contracts traded on or 

subject to the regulations of a foreign 

board of trade to customers located in 

the U.S. are contained in Part 30 of the 

Commission’s regulations.1 These 

regulations 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 impact of 

such a program. 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 regulations based upon 

substituted compliance with the 

regulatory requirements of the foreign 

jurisdiction.2

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 Regulation 30.10.3

These elements include: (1) 

Registration, authorization or other form 

of licensing, fitness review or 

qualification of persons that solicit and 

accept customer orders; (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 

Regulation 30.10 that no exemption of a 

general nature would be granted unless 

the persons to whom the exemption is 

to be applied: (1) Submit to jurisdiction 

in the U.S. by designating an agent for 

service of process in the 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 the Commission 

and Department of Justice 

representatives; and (3) notify NFA of 

the commencement of business in the 

U.S.4

On January 23, 2009, KRX petitioned 

the Commission on behalf of its member 

firms, located and conducting a 

financial investment business in the 

Republic of Korea, for an exemption 

from the application of the 

Commission’s Part 30 Regulations to 

those firms. KRX amended its petition 

on May 3, 2013 with additional 

information. In support of its petition, 

KRX stated that granting such an 

exemption with respect to such firms 

that it has authorized to conduct foreign 

futures and option 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 Act and the 

regulations thereunder. 

Based upon a review of the petition 

and supplementary materials filed by 

KRX, the Commission has concluded 

that the standards for relief set forth in 

Regulation 30.10 and, in particular, 

Appendix A thereof, have been met and 

that compliance with applicable Korean 

law and KRX rules may be substituted 

for compliance with those sections of 

the Act and regulations thereunder more 

particularly set forth herein. 

By this Order, the Commission hereby 

exempts, subject to specified conditions, 

those firms identified to the 

Commission by KRX as eligible for the 

relief granted herein from: 

• Registration with the Commission 

for firms and for firm representatives; 

• The requirement in Commission 

Regulation 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 Regulation 1.55(b), 17 CFR 

1.55(b), and Commission Regulation 

33.7, 17 CFR 33.7, or as otherwise 

approved under Commission Regulation 

1.55(c), 17 CFR 1.55(c); 

• The separate account requirement 

contained in Commission Regulation 

30.7, 17 CFR 30.7; 

• Those sections of Part 1 of the 

Commission’s financial regulations 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 regulations 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 

Korea. 

This determination to permit 

substituted compliance is based on, 

among other things, the Commission’s 

finding that the regulatory framework 

governing persons in Korea 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 for a minimum level of 

working capital and daily mark-tomarket settlement and/or accounting 

procedures; 

(3) A system for the protection of 

customer assets that is designed to 


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7206 Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Rules and Regulations 

5See, e.g., Sections 2(a)(1)(C) and (D) of the Act. 

6See, e.g., 17 CFR part 18. 7See, e.g., 17 CFR parts 17 and 21. 

8 62 FR 47792, 47793 (Sept. 11, 1997). Among 

other duties, the Commission authorized NFA to 

preclude the use of customer assets to 

satisfy house obligations and requires 

separate accounting for such assets; 

(4) Recordkeeping and reporting 

requirements pertaining to financial and 

trade information; 

(5) Sales practice standards for 

authorized firms and persons acting on 

their behalf that include, for example, 

required disclosures to prospective 

customers and prohibitions on improper 

trading advice; 

(6) Procedures to audit for compliance 

with, and to redress violations of, the 

customer protection and sales practice 

requirements referred to above, 

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, 

KRX and the Korean regulatory 

authorities on an ‘‘as needed’’ basis 

including, without limitation, 

confirmation data, data necessary to 

trace funds related to trading futures 

products subject to regulation in Korea, 

position data, and data on firms’ 

standing to do business and financial 

condition. 

Commission staff has concluded, 

upon review of the petition of KRX and 

accompanying exhibits, that KRX’s 

regulation of financial futures and 

options intermediaries is comparable to 

that of the U.S. in the areas specified in 

Appendix A of Part 30, as described 

above. 

This Order does not provide an 

exemption from any provision of the 

Act or regulations thereunder not 

specified herein, such as the antifraud 

provision in Regulation 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 entered on or 

subject to the rules of KRX for products 

that customers located in the U.S. may 

trade.5 The relief does not extend to 

regulations relating to trading, directly 

or indirectly, on U.S. exchanges, and 

does not pertain to any transaction in 

swaps, as defined in Section 1a(47) of 

the Act. For example, a KRX member 

trading in U.S. markets for its own 

account would be subject to the 

Commission’s large trader reporting 

requirements.6 Similarly, if such a firm 

were carrying positions on a U.S. 

exchange on behalf of foreign clients 

and submitted such transactions for 

clearing on an omnibus basis through a 

firm registered as a futures commission 

merchant under the Act, it would be 

subject to the reporting requirements 

applicable to foreign brokers.7 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 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 

Regulation 30.10 petition must 

represent in writing to the Commission 

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 

Korea; such firm is engaged in business 

with customers located in Korea 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. 12a(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 located in the U.S. will be 

made subject to the regulations of KRX, 

and the Commission will receive 

prompt notice of all material changes to 

the relevant laws in Korea, any rules 

promulgated thereunder and KRX rules; 

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

be provided no less stringent regulatory 

protection than Korea customers under 

all relevant provisions of Korean law; 

and 

(e) It will cooperate with the 

Commission with respect to any 

inquiries concerning any activity subject 

to regulation under the Part 30 

Regulations, 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 

Regulation 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 

Korea 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 under Section 

8a(2) of the Act, 7 U.S.C. 12a(2), from 

doing business in the U.S.; 

(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, and consents to notify 

customers located in the U.S. of the 

availability of such a program; provided, 

however, that the firm may require its 

customers located in the U.S. to execute 

a consent concerning the exhaustion of 

certain mediation or conciliation 

procedures made available by KRX prior 

to bringing an NFA arbitration 

proceeding; and 

(f) Undertakes to comply with the 

applicable provisions of Korean laws 

and KRX rules that form the basis upon 

which this exemption from certain 

provisions of the Act and regulations 

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 


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Federal Register / Vol. 81, No. 28 / Thursday, February 11, 2016 / Rules and Regulations 7207 

receive requests for confirmation of Regulation 

30.10 relief on behalf of particular firms, to verify 

such firms’ fitness and compliance with the 

conditions of the appropriate Regulation 30.10 

Order and to grant exemptive relief from 

registration to qualifying firms. 

9See 57 FR 49644 (Nov. 3, 1992) (permitted 

limited marketing of foreign futures and foreign 

options products to certain governmental and 

institutional customers located in the U.S.); 59 FR 

42156 (Aug. 17, 1994) (expanding the relief set forth 

in the 1992 release to conduct directed towards 

‘‘accredited investors’’, as defined in the Securities 

and Exchange Commission’s Regulation D issued 

pursuant to the Securities Act of 1933). 

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. 

The Commission also confirms that 

KRX members that receive confirmation 

of relief set forth herein may engage in 

limited marketing conduct with respect 

to certain qualified customers located in 

the U.S. from a non-permanent location 

in the U.S., subject to the terms and 

conditions set forth in prior 

Commission Orders.9 The Commission 

notes that any firm and their employees 

or other representatives which engage in 

marketing conduct pursuant to this 

relief are deemed to have consented to 

the Commission’s jurisdiction over such 

marketing activities by their filing of a 

valid and binding appointment of an 

agent in the U.S. for service of process. 

This Order will become effective as to 

any designated KRX firm the later of the 

date of publication of the Order in the 

Federal Register or the filing of the 

consents set forth in paragraphs (2)(a)– 

(f). 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 KRX. 

This Order is issued pursuant to 

Regulation 30.10 based on the 

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 

Regulation 30.10 and, in particular, 

Appendix A, have been met. 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 regulations and will 

make necessary adjustments if 

appropriate. 

Issued in Washington, DC, on February 8, 

2016, by the Commission. 

Christopher J. Kirkpatrick, 

Secretary of the Commission. 

Appendix to Foreign Futures and 

Options Transactions—Commission 

Voting Summary 

On this matter, Chairman Massad and 

Commissioners Bowen and Giancarlo voted 

in the affirmative. No Commissioner voted in 

the negative. 

[FR Doc. 2016–02795 Filed 2–10–16; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 117 

[Docket No. USCG–2016–0018] 

Drawbridge Operation Regulation; Des 

Allemands Bayou, Des Allemands, LA 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of deviation from 

drawbridge regulation. 

SUMMARY: The Coast Guard has issued a 

temporary deviation from the operating 

schedule that governs the Burlington 

Northern Santa Fe Railroad swing span 

drawbridge across Des Allemands 

Bayou, mile 14.0, at Des Allemands, St. 

Charles and Lafourche Parishes, 

Louisiana. The deviation is necessary to 

perform a swing span change out to the 

bridge. This deviation allows the bridge 

to remain closed-to-navigation 

continuously for 42 days. 

DATES: This deviation is effective from 

February 21, 2016 through April 1, 

2016. 

ADDRESSES: The docket for this 

deviation, [USCG–2016–0018] is 

available at http://www.regulations.gov. 

Type the docket number in the 

‘‘SEARCH’’ box and click ‘‘SEARCH’’. 

Click on Open Docket Folder on the line 

associated with this deviation. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this temporary 

deviation, call or email Donna Gagliano, 

Bridge Specialist, Coast Guard; 

telephone 504–671–2128, email 

Donna.Gagliano@uscg.mil. 

SUPPLEMENTARY INFORMATION: The 

Burlington Northern Santa Fe Railroad 

company requested a temporary 

deviation from the operating schedule 

for the swing span drawbridge across 

Des Allemands Bayou, mile 14.0, at Des 

Allemands, St. Charles and Lafourche 

Parishes, Louisiana. The deviation was 

requested to accommodate a necessary 

swing span replacement. The draw 

currently operates under 33 CFR 

117.440(b). 

For purposes of this deviation, the 

bridge will remain closed to navigation 

from 6 a.m. February 21, 2016 through 

11:59 p.m. April 1, 2016. During this 42- 

day deviation, vessels will not be 

allowed to pass through the bridge. The 

bridge has a vertical clearance of three 

feet above mean high water in the 

closed-to-navigation position and 

unlimited in the open-to-navigation 

position. Navigation on the waterway 

consists of tugs with tows, fishing 

vessels and recreational craft. 

The Coast Guard will also inform the 

users of the waterway through our Local 

and Broadcast Notices to Mariners of the 

change in operating schedule for the 

bridge. The bridge will not be able to 

open for emergencies and there is no 

immediate alternate route for vessels to 

pass. 

In accordance with 33 CFR 117.35(e), 

the drawbridge must return to its regular 

operating schedule immediately at the 

end of the effective period of this 

temporary deviation. This deviation 

from the operating regulations is 

authorized under 33 CFR 117.35. 

Dated: February 5, 2016. 

David M. Frank, 

Bridge Administrator, Eighth Coast Guard 

District. 

[FR Doc. 2016–02778 Filed 2–10–16; 8:45 am] 

BILLING CODE 9110–04–P 


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