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[Federal Register: July 15, 1999 (Volume 64, Number 135)]
[Proposed Rules]
[Page 38159-38164]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15jy99-17]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 1


Contract Market Rule Review Procedures

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is
proposing automatically to approve certain exchange rule amendments
upon adoption and to require their subsequent submission to the
Commission in a single summary filing, rather than individually as
currently mandated. In addition, the Commission is proposing to
reorganize in a clearer and more accessible format its rules on
expedited approval procedures of proposed exchange rule amendments. The
proposed comprehensive reorganization of these rules is intended to
further the Commission's overall regulatory reform program by reducing
unnecessary regulatory burdens and costs on United States exchanges
associated with the Commission's review and approval of proposed
exchange rules and rule amendments while maintaining the basic public
protections of the Commodity Exchange Act.

DATES: Comments must be received August 16, 1999.

ADDRESSES: Comments should be mailed to the Commodity Futures Trading
Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington,
DC 20581. Office of the Secretariat; transmitted by facsimile at (202)
418-5521; or transmitted electronically at [[email protected]].

FOR FURTHER INFORMATION CONTACT: Richard H. Shilts, Director, Market
Analysis Section or Kimberly A. Browning, Attorney/Advisor, Division of
Economic Analysis, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581. Telephone
(202) 418-5260. E-mail:[[email protected]] or [[email protected]].

SUPPLEMENTARY INFORMATION:

I. Background

    Over the years the Commission has updated and streamlined its
procedures for reviewing proposed exchange rules. Section 5a(a)(12) of
the Commodity Exchange Act (Act), 7 U.S.C. 7a(a)(12), provides that all
rules of a contract market \1\ which relate to a futures contract's
terms and conditions must be submitted to the Commission for prior
approval.\2\ This requirement is premised on considerable regulatory
experience indicating that Commission review and approval of proposed
exchange rules before their implementation, among other things, is the
preferred way to minimize the possibility of market manipulation or
distortions due to improperly designed contract terms. Moreover, the
proposed amendment of an existing futures contract potentially may
affect adversely traders, producers or commercials. Commission pre-
approval review of such changes enables those persons or entities to
have their views considered.
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    \1\ Commission Rule 1.41(a)(1) defines ``rule'' of a contract
market as follows: Any constitutional provision, article of
incorporation, bylaw, rule regulation, resolution, interpretation,
stated policy, or instrument corresponding thereto, in whatever form
adopted, and any amendment or addition thereto or repeal thereof,
made or issued by a contract market, or by the governing board
thereof or any committee thereof.
    \2\ Section 5a(a)(12) further requires that contract markets
submit all other rules to the Commission except those relating to
setting of margins or that the Commission may specify by rule. Such
other rules may be made effective ten days after Commission receipt
unless, within the ten-day period, the exchange requests Commission
approval of the Commission notifies the exchange that it intends to
review the rules for approval.
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    The Commission, while preserving the important public protections
of prior review, has aggressively sought to reduce unnecessary cost and
regulatory burdens associated with this requirement. For example, the
Commission has long established an expedited review and automatic
approval of proposed exchange rule amendments falling within a number
of categories. In addition, since 1997, the Commission has carried out
a far-

[[Page 38160]]

reaching program of regulatory reform. As part of that on-going
program, the Commission established fast track procedures \3\ for
Commission review and approval of applications for new contracts and
for proposed exchange rules and rule amendments not eligible for
expedited review. These initiatives have modernized and streamlined the
Commission's review processes, reducing unnecessary burdens and their
associated costs to United States exchanges.
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    \3\ See, Commission Rules 5.1 and 1.41(b). 62 FR 10434 (March 7,
1997).
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    Together, the expedited review, automatic approval and fast track
procedures have been uniquely effective in reducing the time for
Commission review and approval of proposed exchange rules and rule
amendments. In fiscal year 1998, the Commission processed 290 changes
to contract terms and conditions, of which 152 were processed under
expedited procedures. Of the 152, 47 were treated as approved upon
exchange adoption and 105 were approved on an expedited basis within 10
days after receipt. Of the remaining 138 that the Commission approved
under non-expedited procedures, seven were approved under the fast
track procedure. Of the 131 that were approved under regular review
procedures, 36 were approved in 10 days of fewer, 101 were approved in
30 days or fewer and all but nine were approved within 60 days.\4\
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    \4\ In addition, the Commission adopted fast track review
procedures for new contract designation applications. Since June
1997, the Commission has approved a total of 70 contracts under fast
track procedures, 36 under the 10-day procedure and 34 under its 45-
day procedure. Forty-two additional contracts were approved under
non-fast-track review procedures.
    Most recently, the Commission revised the rules governing the
designation application itself, replacing over five pages of rules
with three, user-friendly application forms that make extensive use
of checklists and charts. (See, 64 FR 29217 June 1, 1999).
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    In keeping with this record, the Commission continues to innovate
in finding additional ways further to reduce unnecessary burden on
United States exchange, and is proposing herein to expand the types of
exchange rules and rule amendments that it approves automatically upon
exchange adoption, to streamline dramatically the required filing
notice of those rule amendments with the Commission, to add a new
three-day expedited review procedure and to expand the types of
proposed contract terms and conditions which are eligible for such
expedited rule approval.

II. The Proposed Amendments

A. Rule 1.41(b)

    Based upon its experience in administering the current review
procedures, the Commission is proposing to expand the categories of
rules eligible for automatic approval in proposed new Rule 1.41(b)(5).
Exchange rule amendments eligible for approval upon their adoption
include routine changes to an index, other than a stock index, used as
the settlement of a futures contract compiled by a third party,
typographical, renumbering and other types of non-material changes,
trading hours and trading months, and discretionary option strike
prices. The routine changes to an index eligible for this treatment are
those types of changes that are frequent and anticipated to be needed
in order to maintain the continuity and integrity of a pricing
algorithm or formula which has been defined in the contract's terms. It
does not include non-routine or unanticipated changes to the basic
construction of an index as defined in the contract, for example, by
changing the geographic pricing point of an agricultural index. The
listing of trading months are not eligible for this treatment if the
trading month cycle has been interrupted by the delisting of a
contract, unless the listing of relisting is in conjunction with, or
subsequent to, the approval of the Commission of substantive changes to
the contract's terms or conditions.
    The Commission also is proposing to reduce the associated filing
requirements for automatically approved exchange rule amendments.
Specifically, the Commission would replace the current requirement that
the exchange file a separate notice of each such amendment, with a
single, summary filing of all automatically approved rule amendments
adopted by an exchange during the preceding week.\5\ This proposal
should significantly streamline the filing process for exchanges.
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    \5\ Under this proposed requirement, an exchange, if it so
desired, could continue to file a separate notice of an
automatically approved rule amendment as is currently required.
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    The Commission also is proposing to add a new, faster category of
expedited review. This category would be for exchange rules that would
be deemed to be approved three days after receipt of the Commission,
and includes amendments to the terms and conditions of major currency
\6\ futures contracts which meet the standards of Guideline No. 1,
amendments to the terms and conditions of options on futures
contracts,\7\ and proposed revisions to the relating to the minimum
price fluctuation and daily price limits.
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    \6\ Major currencies have nearly inexhaustible deliverable
supplies, exhibit extremely deep and liquid markets, are not subject
to convertibility or delivery restrictions and are easily arbitraged
between cash and futures markets. For this rule, they are defined as
the Australian dollar; British pound; Euro (and its component
currencies); Japanese yen; Canadian dollar; Swiss franc; New Zealand
dollar; Swedish krona; and Norwegian krone.
    \7\ Under the proposal, changes to the cabinet trade provisions
of an option contract, which currently are eligible for expedited
approval under Commission regulation 1.41(q), would now qualify for
expedited approval under the three day provision as provided in
proposed Rule 1.41(b)(4). In this regard, a cabinet trade is defined
as an option transaction whereby the per contract value of the
cabinet trade is less than the per-contract value of a trade at the
specified minimum premium fluctuation for the option contract.
Cabinet trades, thus, are incorporated in Chart C of Guideline No. 1
as part of an option contract's minimum premium fluctuation rules.
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    These review categories reflect the Commission's experience in the
time necessary to review proposed amendments to particular types of
contract terms and conditions. The contract amendments eligible for
these procedures are routine in nature and have clearly defined, often
objective, standards regarding their permissibility under the Act and
Commission regulations and it can be determined on its face whether the
particular rule amendment complies with the applicable standard.
Moreover, such rule amendments generally do not raise any issues
relating to the contract's susceptibility to manipulation or whether
its trading would be in the public interest.
    In addition to the proposed new categories and expanded eligibility
for such procedures, the Commission is proposing to reorganize its
rules on expedited approval procedures into a more accessible and
clearer format.\8\ As proposed, Rule 1.41(b) would be reorganized into
paragraphs reflecting the time permitted the Commission for review, 180
day review period, 45 day fast track review, 10 or 3 day expedited
review (currently Rules 1.41(i)-(t)) and rules approved on adoption.
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    \8\ As discussed above, these procedures and standards currently
are provided in a number of different Commission rules, including
Rule 1.41(b) (which includes the fast-track procedures), and Rules
1.41(i) through (t) (expedited procedures).
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    To further its goal of streamlining the filing process, the
Commission is also encouraging exchanges to file their submissions
electronically. Electronic filing of submissions will reduce
unnecessary burdens and costs associated with the submission process to
both the exchanges and the Commission.

[[Page 38161]]

B. Commission Rule 1.41(d)

    Commission Rule 1.41(d) sets forth the submission requirements for
contract market rules that are exempt from the requirements of section
5a(a)(12)(A) of the Act. These rules involve non-substantive, routine
and administrative matters such as exchange standards of decorum and
typographical error corrections. The Commission is proposing that
rather than filing Rule 1.41(d) submissions on an individual basis, the
exchanges be allowed to make these filings on a weekly basis and in
electronic form if so desired.\9\ The Commission believes that, to the
extent that an exchange might otherwise make multiple Rule 1.41(d)
filings in a particular week, this proposal will significantly
streamline the filing process, thus making compliance easier to
achieve.
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    \9\ Section 5a(a)(1) of the Act requires that a contract market
``promptly furnish the Commission with copies of all bylaws, rules,
regulations, and resolutions made or issued by it.'' (emphasis
added). While in these proposed rules a contract market must furnish
rules within seven days, this is not to suggest that the term
``prompt,'' which may appear in other sections of the Act or rules,
is seven days.
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C. Commission Rule 1.45

    The Commission is proposing to remove Commission Rule 1.45. This
Rule requires that the terms and conditions of all exchange traded
futures contracts specify that the grades of the underlying commodities
conform to U.S. standards, if the Commission has adopted such
standards. The Commission as a matter of practice, does not officially
promulgate specific standards for commodity futures contracts. Instead,
the Commission has adopted the requirement that contract terms and
conditions must be in conformance with customary cash market practices;
provided that variances from cash market practices are permitted if
necessary or appropriate for the contract. These requirements are
currently set forth under the procedures of Guideline No. 1. Guideline
No. 1, in effect, requires that contract terms and conditions submitted
for approval must be based on U.S. standards if those standards
represent cash market standards. The Commission approves rules
requiring delivery of commodities using applicable U.S. standards based
upon its assessment of the cash market. Given these procedures under
Guideline No. 1, the Commission believes that requirements Rule 1.45
imposes are redundant and, therefore, Rule 1.45 should be removed.
    These proposals should significantly reduce the regulatory burden
for United States exchanges, while maintaining the public protections
of an effective system of Commission review of exchange rule
amendments.
    The Commission believes that the proposed revisions streamlining
current review procedures offer the best balance between protection of
the public and reducing regulatory and cost burdens on United States
exchanges, thereby enabling them to compete better. In addition to
relieving U.S. exchanges of any unnecessary burdens, the proposed rules
will enable the Commission to devote its staff resources to the review
of rules which raise more substantive issues. The Commission invites
comment from the public regarding additional categories of contract
terms and conditions that can be included within the relief proposed,
or other additional steps that the Commission can take under its
regulatory reform program.

Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act, (RFA), 5 U.S.C. 601 et seq.,
requires that agencies, in promulgating rules, consider the impact of
these rules on small entities. The Commission has previously determined
that contract markets are not ``small entities'' for purposes of the
RFA, 5 U.S.C., 601 et seq. 47 FR 18618 (April 30, 1982). These
amendments propose to establish streamlined procedures for Commission
review and approval of proposed exchange amendments to its rules.
Accordingly, the Acting Chairman, on behalf of the Commission, hereby
certifies, pursuant to 5 U.S.C. 605(b), that the action taken herein
will not have a significant economic impact on a substantial number of
small entities. However, the Commission invites comments from any firms
or other persons that believe that the promulgation of these rules
might have a significant impact upon their activities.

B. Paperwork Reduction Act

    When publishing proposed rules, the Paperwork Reduction Act (PRA)
of 1995 {Pub. L. 104-13 (May 1, 1995)} imposes certain requirements on
federal agencies (including the Commission) in connection with their
conducting or sponsoring any collection of information defines by the
PRA. In compliance with the Act, the Commission, through this rule
proposal, solicits comments to:
    (1) Evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the agency,
including the validity of the methodology and assumptions used; (2)
evaluate the accuracy of the agency's estimate of the burden of the
proposed collection of information including the validity of the
methodology and assumptions used; (3) enhance the quality, utility, and
clarity of the information to be collected; and (4) minimize the burden
of the collection of the information on those who are to respond,
including through the use of appropriate automated, electronic,
mechanical, or other technological collection techniques or other forms
of information technology, e.g. permitting electronic submissions of
responses.
    The Commission has previously submitted these rules and their
associated information collection requirements to the Office of
Management and Budget (OMB). The Office of Management and Budget
approved the collection of information associated with these rules on
October 24, 1998 and assigned OMB control number 3038-0022 to the
rules. The burden associated with the entire collection (3038-0022),
including these proposed rules is as follows:
    Average burden hours per response: 3,609.89.
    Number of respondents: 15,893.
    Frequency of response: On Occasion.
    Persons wishing to comment on the information which would be
required by the proposed rules should contact the Desk Officer, CFTC,
Office of Management and Budget, Room 10202, NEOB, Washington, DC
20503, (202) 395-7340. Copies of the information collection submission
to OMB are available from the CFTC Clearance Officer, 1155 21st Street,
NW, Washington, DC 20581, (202) 418-5160.
    Copies of the OMB-approved information collection package
associated with this rulemaking may be obtained from the Desk Officer,
Commodity Futures Trading Commission, Office of Management and Budget,
Room 10202, NEOB Washington, DC 20503, (202) 395-7340.

List of Subjects in 17 CFR Part 1

    Commodity exchanges, Contract market rules, Rule review procedures.

    In consideration of the foregoing, and pursuant to the authority
contained in the Commodity Exchange Act and, in particular, sections
4c, 5, 5a and 8a thereof, 7 U.S.C. 6c, 7, 7a, and 12a, the Commission
hereby proposes to amend Part 1 of Chapter I of Ttitle 17 of the Code
of Federal Regulations as follows:

[[Page 38162]]

PART 1--GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT

    1. The authority citation for part 1 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 2a, 4, 4a, 6, 6a, 6b, 6c, 6d, 6e, 6f,
6g, 6h, 6i, 6j, 6k, 6l, 6m, 6n, 6o, 6p, 7, 7a, 7b, 8, 9, 12, 12a,
12c, 13a, 13a-1, 16, 16a, 19, 21, 23, and 24.

    2. Section 1.41 is proposed to be amended by revising paragraphs
(b)(1)(i) introductory text, (b)(1)(i)(A), and (b)(2), by removing
paragraphs (b)(3) and (b)(4), by adding new paragraphs (b)(3), (b)(4)
and (b)(5), by revising paragraph (d)(2) and by removing paragraphs (i)
through (t) to read as follows:


Sec. 1.41  Contract market rules; submission of rules to the
Commission; exemption of certain rules.

* * * * *
    (b) Rules that relate to contract terms and conditions.--(1) Pre-
approval review procedures. (i) Except as provided in paragraphs (b)(5)
and (f) of this section, all proposed contract market rules that relate
to terms and conditions must be submitted to the Commission for
approval pursuant to section 5a(a)(12)(A) of the Act prior to their
proposed effective dates. One copy of each rule submitted under this
section shall be furnished in hard copy or electronically in a format
specified by the Secretary of the Commission to the Commission at its
Washington, DC headquarters. If a hard copy is furnished for
submissions under appendix A to part 5 of this chapter, two additional
hard copies shall be furnished to the Commodity Futures Trading
Commission, Three Lafayette Centre, 1155 21st Street NW., Washington,
DC 20581. Each submission under this paragraph (b) shall be in the
following order:
    (A) Label the submission as being submitted pursuant to Regulation
1.41(b)--regular review procedures.
* * * * *
    (2) Fast track 45 day review. (i) All proposed contract market
rules that relate to terms and conditions submitted for review under
paragraph (b)(1) of this section shall be deemed approved by the
Commission under section 5a(a)(12)(A) of the Act, 45 days after receipt
by the Commission, unless notified otherwise within that period, if:
    (A) The contract market labels the submission as being submitted
pursuant to Commission Rule 1.41(b)--Fast Track Review;
    (B) The submission complies with the requirements of paragraph
(b)(1)(i)(A) through (E), of this section or for dormant contracts, the
requirements of Sec. 5.2 of this chapter;
    (C) The contract market does not amend the proposed rule or
supplement the submission, except as requested by the Commission,
during the pendency of the review period; and
    (D) The contract market has not instructed the Commission in
writing during the review period to review the proposed rule under the
usual procedures under section 5a(a)(12)(A) of the Act and paragraph
(b)(1) of this section.
    (ii) The Commission, within 45 days after receipt of a submission
filed pursuant to paragraph (b)(2)(i) of this section, may notify the
contract market making the submission that the review period has been
extended for a period of 30 days where the proposed rules raises novel
or complex issues which required additional time for review. This
notification will briefly specify the nature of the specific issues for
which additional time for review is required. Upon such notification,
the period for fast-track review of paragraph (b)(2)(i) of this section
shall be extended for a period of 30 days.
    (iii) During the 45-day period for fast track review, or the 30-day
extension when the period had been enlarged under paragraph (b)(2)(ii)
of this section, the Commission shall notify the contract market that
the Commission is terminating fast-track review procedures and will
review the proposed rule under the usual procedures of section
5a(a)(12)(A) of the Act and paragraph (b)(1) of this section if it
appears that the proposed rule may violate a specific provision of the
Act, regulation, or form or content requirement of this section. This
termination notification will briefly specify the nature of the issues
raised and the specific provision of the Act, regulation or form or
content requirement of this section that the proposed rule appears to
violate. Within 10 days of receipt of this termination notification,
the contract market may request that the Commission render a decision
whether to approve the proposed rule or to institute a proceeding to
disapprove the proposed rule under the procedures specified in section
5a(a)(12)(A) of the Act by notifying the Commission that the contract
market views its submission as complete and final as submitted.
    (3) Expedited 10 day review. (i) Notwithstanding the provisions of
paragraph (b)(1) of this section, the following changes to contract
terms and conditions shall be deemed approved by the Commission ten
business days after receipt:
    (A) Specifically approved standards. Changes to terms and
conditions that are consistent with the Act and Commission regulations
and with standards approved or established by the Commission in a
written notification to the contract market of the applicability of
this paragraph; provided, however, that the Commission may at any time
alter or revoke the applicability of such a notice to any particular
contract;
    (B) Financial standards for delivery facilities. Changes in the
financial standards or requirements for regular delivery facilities or
comparable entities; provided that:
    (1) The amended rule does not affect the regularity or delivery
status of any existing facility declared regular by the contract market
for the relevant commodity(ies) or likely candidates for regularity
status,
    (2) The requirement is stated in the rules and applies uniformly to
all applications for regularity, and
    (3) The requirement is related solely for the purpose of ensuring
the financial integrity of the regular facility(ies); and
    (C) Delivery standards set by third parties. Changes to grades or
standards of commodities deliverable on futures contracts which are
established by an independent third party and which are incorporated by
reference as terms of the contract; provided that the grade or standard
is not established, selected or calculated solely for use in connection
with futures or option trading.
    (ii) The contract market must label filings under this paragraph as
submitted for ``10 Day Expedited Review.''
    (iii) The Commission will, within 10 business days after receipt of
the submission, notify the contract market making the submission if it
appears that the change is not consistent with the provisions of this
paragraph. Upon such notification by the Commission to the contract
market, the change will be subject to the usual procedures under
section 5a(a)(12)(A) of the Act and paragraph (b)(1) of this section.
    (4) Expedited three day review, (i) Notwithstanding the provisions
of paragraph (b)(1) of this section, the following changes to contract
terms and conditions shall be deemed approved by the Commission three
business days after receipt:
    (A) Specifically approved standards. Changes to terms and
conditions that are consistent with the Act and Commission regulations
and with standards approved or established by the Commission in a
written notification to the contract market of the applicability of
this paragraph;

[[Page 38163]]

provided, however, that the Commission may at any time alter or revoke
the applicability of such a notice to any particular contract;
    (B) Options on futures contracts. (1) Changes to terms and
conditions for options on futures contracts that are consistent with
the Act, Commission regulations and the standards set forth in Part 5,
Appendix A(c)(3) of this chapter;
    (2) Changes to exchange rules governing option trading months,
including a procedure for listing options with different expiration
dates based on the same underlying futures contract month (option
serial months), that are specified and automatic; and
    (3) Changes to option automatic exercise procedures that are
specified and objective, apply only to in-the-money options and provide
an opportunity for option holders to override the automatic exercise
provision.
    (C) Currency futures contracts. Changes to terms and conditions
that are consistent with the Act, Commission regulations and the
standards set forth in Part 5, Appendix A(a)(3)(1)-(15) of this chapter
for futures and options on physicals contracts based on the following
currencies (including currency cross rates); Australian dollar, British
pound; Euro (and its component currencies); Japanese yen; Canadian
dollar; Swiss franc; New Zealand dollar; Swedish krona; and Norwegian
krone.
    (D) Minimum price fluctuation limits. Changes to the minimum tick
provisions for futures contracts that do not increase tick size; and
    (E) Price limit provisions for futures contracts. Changes to price
limit rules for futures contracts, except for equity index contracts,
provided that the change does not reduce the existing price limit.
    (ii) The contract market must label filings under this paragraph as
submitted for ``Three Day Expedited Review.''
    (iii) The Commission will, within three business days after receipt
of the submission, notify the contract market making the submission if
it appears that the change is not consistent with the provisions of
this paragraph. Upon such notification by the Commission to the
contract market, the change will be subject to the usual procedures
under section 5a(a)(12)(A) of the Act and paragraph (b)(1) of this
section.
    (5) Pre-approved rules. (i) Notwithstanding the provisions of
paragraph (b)(1) of this section, the following changes to contract
terms and conditions shall be deemed approved by the Commission at the
time the change is adopted by the contract market:
    (A) Specifically approved standards. Changes to terms and
conditions that are consistent with the Act and Commission regulations
and with standards approved or established by the Commission in a
written notification to the contract market of the applicability of
this paragraph; provided, however, that the Commission may at any time
alter or revoke the applicability of such a notice to any particular
contract;
    (B) Index contracts. Routine changes in the composition,
computation, or method of selection of component entities of an index
other than a stock index referenced and defined in the contract's
terms, made by an independent third party whose business relates to the
collection or dissemination of price information and which was not
formed solely for the purpose of compiling an index for use in
connection with a futures of option contract;
    (C) Survey lists for cash settled contracts. Proposals relating to
the initial listing or changes to the lists of banks, brokers, dealers
or other entities which provide price or cash market information to a
contract market for purposes of computing cash settlement prices or a
cash price series or for defining the deliverable supply for physical
delivery contracts, if consistent with a rule approved by the
Commission establishing standards or criteria for the persons or
entities which qualify for the list;
    (D) Non-material revisions. Corrections of typographical errors,
renumbering, periodic routine updates to identifying information about
approved entities and other such nonsubstantive revisions of contract
terms and conditions that have no effect on the economic
characteristics of the contract;
    (E) Trading hours. Changes to trading hours; provided that for
changes that permit trading between 6:00 p.m. and 7:00 am local time
where the contract market is located, the contract market has
previously received Commission approval for trading in such hours in at
least one designated contact, and that the change does not provide for
the initial listing of a contract on an automated trading system;
    (F) Trading months. Proposals to list initially or to change the
listing of trading months for futures and options on physicals
contracts which are not outside of a previously approved listing cycle
and were not previously delisted, unless the delisted month is being
relisted subsequent to the amendment of a contract term or condition
approved or deemed to be approved by the Commission under this section
and proposals to delist trading months having no open interest;
    (G) Discretionary option strike prices. The non-routine listing of
option strike prices not required to be listed under the automatic
listing procedures; and
    (H) Listings on supplemental trading sessions. Changes to the
months or strike prices listed for trading during supplemental trading
sessions outside normal trading hours where such listings represent all
or a subset of the months or strikes listed during regular trading
hours.
    (ii) The contract market must provide to the Commission at least
weekly a summary notice of all rule changes made pursuant to this
paragraph during the preceding week. Such notice must be labeled
``Weekly List of Pre-Approved Rule Changes'' and need not be filed for
weeks during which no such actions have been taken. One copy of each
such submission shall be furnished in hard copy or electronically in a
format specified by the Secretary of the Commission to the Commodity
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street
NW., Washington, DC 20581.
    (iii) The Commission will, within three business days after receipt
of the submission, notify the contract market making the submission if
it appears that change is not consistent with the provisions of this
paragraph. Upon such notification by the Commission to the contract
market, the change will be subject to the usual procedures under
section 5a(a)(12)(A) of the Act and paragraph (b)(1) of this section.
* * * * *
    (d) * * *
    (2) Rules that are exempt from the requirements of section
5a(a)(12)(A) of the Act in accordance with the provisions of this
paragraph (d) shall nonetheless be submitted to the Commission pursuant
to the provisions of section 5a(a)(1) of the Act. Each such submissions
shall be labeled as being submitted pursuant to section 5a(a)(1) of the
Act and paragraph (d) of this section. The contract market may instead
provide to the Commission, at least weekly, a summary notice of all
rule changes made pursuant to this paragraph during the preceding week.
One copy of each such submissions shall be furnished in hard copy or
electronically in a format specified by the Secretary of the Commission
to the Commodity Futures Trading Commission, Three Lafayette Centre,

[[Page 38164]]

1155 21st Street NW., Washington, DC 20581.
* * * * *
    3. Section 1.45 is removed and reserved.

    Issued in Washington, DC, this 7th day of July, 1999 by the
Commodity Futures Trading Commission.
Jean Webb,
Secretary of the Commission.
[FR Doc. 99-17812 Filed 7-14-99; 8:45 am]
BILLING CODE 6351-01-M
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