7838 Federal Register / Vol. 74, No. 33 / Friday, February 20, 2009 / Proposed Rules 

1See 17 CFR 1.3(gg) (defining the term ‘‘customer 

funds’’). 

2 7 U.S.C. 1 et seq. 

2. Is not a ‘‘significant rule’’ under the 

DOT Regulatory Policies and Procedures 

(44 FR 11034, February 26, 1979); and 

3. Will not have a significant 

economic impact, positive or negative, 

on a substantial number of small entities 

under the criteria of the Regulatory 

Flexibility Act. 

We prepared a regulatory evaluation 

of the estimated costs to comply with 

this proposed AD and placed it in the 

AD docket. 

List of Subjects in 14 CFR Part 39 

Air transportation, Aircraft, Aviation 

safety, Safety. 

The Proposed Amendment 

Accordingly, under the authority 

delegated to me by the Administrator, 

the FAA proposes to amend 14 CFR part 

39 as follows: 

PART 39—AIRWORTHINESS 

DIRECTIVES 

1. The authority citation for part 39 

continues to read as follows: 

Authority: 49 U.S.C. 106(g), 40113, 44701. 

§ 39.13 [Amended] 

2. The FAA amends § 39.13 by adding 

the following new AD: 

Pratt & Whitney Canada Corp.: Docket No. 

FAA–2009–0046; Directorate Identifier 

2008–NE–05–AD. 

Comments Due Date 

(a) We must receive comments by March 

23, 2009. 

Affected Airworthiness Directives (ADs) 

(b) None. 

Applicability 

(c) This AD applies to Pratt & Whitney 

Canada Corp. (P&WC) Models PW305A and 

PW305B turbofan engines with high pressure 

compressor (HPC) drum rotor assemblies, 

post P&WC Service Bulletin (SB) PW300–72– 

24287 but without P&WC SB PW300–72– 

24376, installed. These engines are installed 

on, but not limited to, Bombardier Learjet 

M60 and Hawker Beechcraft 1000 series 

airplanes. 

Reason 

(d) P&WC has determined that the PostService Bulletin (SB) PW300–72–24287 High 

Pressure Compressor (HPC) drum rotor 

assemblies P/N 30B2478 and 30B2542 on 

PW305A and 305B engines with single stage 

coated labyrinth seals, are susceptible to 

developing significant cracks in the region of 

the labyrinth seal. 

We are issuing this AD to detect cracks in the 

HPC drum rotor assembly, which could lead 

to an uncontained failure of the drum rotor 

assembly and damage to the airplane. 

Actions and Compliance 

(e) Unless already done, do the following 

actions. 

(1) Within 500 flight hours after effective 

date of this directive, borescope-inspect the 

interiors of affected HPC rotor assemblies for 

cracks. If a crack is found, remove the engine 

before next flight for HPC drum rotor 

replacement. Pratt & Whitney Maintenance 

Manual, Chapter 72–00–00, contains 

information about borescope inspection. 

Credit for Previous Inspections 

(2) Inspection of affected HPC drum rotor 

assembly per P&WC SB PW300–72–24462 

and or SB PW305 MM 05–20–00 inspection 

requirements prior to the effective date of 

this directive satisfies the requirements of 

paragraph (e)(1) of this AD. 

(3) Repeat borescope inspection per 

paragraph (e)(1) of this AD, at intervals not 

exceeding 1,350 flight cycles. If a crack is 

found, remove the engine before next flight 

for HPC rotor drum replacement. 

Optional Terminating Action 

(4) Replacement of the affected HPC rotor 

assembly P/N 30B2478 or 30B2542 with PostSB PW300–72–24376 assembly P/N 

31B6325–01 or later superseding P/N, will 

constitute terminating action for the 

inspection requirements of the above 

paragraphs (e)(1) and (e)(2) of the corrective 

action requirements of this AD. 

Other FAA AD Provisions 

(f) Alternative Methods of Compliance 

(AMOCs): The Manager, Engine Certification 

Office, FAA, has the authority to approve 

AMOCs for this AD, if requested using the 

procedures found in 14 CFR 39.19. 

Related Information 

(g) Refer to Canadian Airworthiness 

Directive CF–2007–25R1, dated February 13, 

2008, and P&WC SB PW300–72–24462, dated 

December 13, 1999, for related information. 

Contact Pratt & Whitney Canada Corp., 1000 

Marie-Victorin, Longueuil, Quebec, Canada 

J4G 1A1, telephone: (800) 268–8000, for a 

copy of this service information. 

(h) Contact Ian Dargin, Aerospace 

Engineer, Engine Certification Office, FAA, 

Engine & Propeller Directorate, 12 New 

England Executive Park, Burlington, MA 

01803; e-mail: ian.dargin@faa.gov; telephone 

(781) 238–7178; fax (781) 238–7199, for more 

information about this AD. 

Issued in Burlington, Massachusetts, on 

February 13, 2009. 

Peter A. White, 

Assistant Manager, Engine and Propeller 

Directorate, Aircraft Certification Service. 

[FR Doc. E9–3622 Filed 2–19–09; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 1, 30, and 140 

RIN 3038–AC72 

Acknowledgment Letters for Customer 

Funds and Secured Amount Funds 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is proposing to amend its 

regulations regarding the required 

content of the acknowledgment letter 

that a registrant must obtain from any 

depository holding its segregated 

customer funds or funds of foreign 

futures or foreign options customers, 

and certain technical changes. 

DATES: Submit comments on or before 

March 23, 2009. 

ADDRESSES: You may submit comments, 

identified by RIN number, by any of the 

following methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Agency Web Site: http:// 

www.cftc.gov. Follow the instructions 

for submitting comments on the Web 

site. 

• E-mail: secretary@cftc.gov. Include 

the RIN number in the subject line of 

the message. 

• Fax: 202–418–5521. 

• Mail: David A. Stawick, Secretary of 

the Commission, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

mail above. 

FOR FURTHER INFORMATION CONTACT: 

Eileen A. Donovan, Special Counsel, 

202–418–5096, edonovan@cftc.gov; 

Division of Clearing and Intermediary 

Oversight, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Regulation 1.20 (17 CFR 1.20) requires 

futures commission merchants (FCMs) 

that accept customer funds and 

derivatives clearing organizations 

(DCOs) that accept customer funds from 

FCMs to segregate and separately 

account for those funds.1 Currently, 

Regulation 1.20 requires such FCMs and 

DCOs to obtain from the bank, trust 

company, FCM or DCO holding 

customer funds in the capacity of a 

depository (each, a ‘‘Depository’’) a 

written acknowledgment that the 

Depository was informed that the 

customer funds deposited therein are 

those of commodity or option customers 

and are being held in accordance with 

the provisions of the Commodity 

Exchange Act (Act) 2 and CFTC 

Federal Register / Vol. 74, No. 33 / Friday, February 20, 2009 / Proposed Rules 7839 

3 17 CFR Parts 1–199. 

4See 17 CFR 1.3(rr) (defining the term ‘‘foreign 

futures or foreign options secured amount’’). 

5The Commission has issued an interpretative 

statement with respect to the secured amount 

requirement set forth in Regulation 30.7. See 17 

CFR Part 30, App. B. 

regulations.3 Regulation 1.26 (17 CFR 

1.26), which requires FCMs and DCOs 

to segregate and separately account for 

instruments purchased with customer 

funds, repeats the requirement to obtain 

an acknowledgment letter. FCMs also 

must obtain a similar written 

acknowledgment from Depositories 

holding ‘‘secured amount’’ funds 4

required under Regulation 30.7 (17 CFR 

30.7), which governs the treatment of 

money, securities, and property held for 

or on behalf of the FCM’s foreign futures 

and foreign options customers. 

The proposed amendments to 

Regulations 1.20, 1.26, and 30.7 set out 

specific representations that would be 

required in these acknowledgment 

letters in order to reaffirm and clarify 

the obligations Depositories incur when 

accepting customer funds or secured 

amount funds. The Commission also is 

proposing several technical changes to 

Regulations 1.20, 1.26, 30.7, and 140.91. 

The Commission invites public 

comment on all aspects of the proposed 

regulations. 

II. Discussion of the Proposed 

Regulations 

A. Regulations 1.20 and 1.26 

The Commission is proposing to add 

paragraphs (d) and (e) to Regulation 1.20 

to set out specific representations that 

Depositories would have to include in 

the acknowledgment letter required by 

paragraphs (a) and (b) of the regulation. 

Proposed paragraph (d) concerns the 

letter required by paragraph (a), which 

applies to customer funds being held for 

an FCM by a bank, trust company, DCO 

or another FCM. Proposed paragraph (e) 

concerns the letter required by 

paragraph (b), which applies to 

customer funds being held for a DCO by 

a bank or trust company. 

Proposed paragraphs (d)(1)(i) and 

(e)(1)(i) require the Depository to 

acknowledge that the FCM or DCO, 

respectively, has established the 

account for the purpose of depositing 

customer funds. The FCM or DCO may 

have other accounts, in addition to the 

customer account, with the same 

Depository, and therefore the Depository 

must recognize that the funds being 

deposited in this particular account 

belong not to the FCM or DCO, but to 

customers. 

Proposed paragraphs (d)(1)(ii) and 

(e)(1)(ii) require the Depository to 

acknowledge that the customer funds 

deposited therein are those of 

commodity or option customers of the 

FCM, or clearing members of the DCO, 

respectively, and that those funds are to 

be segregated in accordance with the 

provisions of the Act and Part 1 of the 

CFTC regulations. These provisions 

would reaffirm the Depository’s 

obligation to segregate customer funds 

from any other funds that the 

Depository may hold on behalf of the 

FCM or DCO. 

Proposed paragraphs (d)(1)(iii) and 

(e)(1)(iii) require the Depository to 

acknowledge that the customer funds 

shall not be subject to any right of offset, 

or lien, for or on account of any 

indebtedness, obligations or liabilities 

owed by the FCM or DCO, respectively. 

The FCM or DCO may hold other noncustomer funds with the Depository that 

do not carry such restrictions. 

Proposed paragraphs (d)(1)(iv) and 

(e)(1)(iv) require the Depository to 

acknowledge that it must treat the 

customer funds in accordance with the 

Act and CFTC regulations. These 

provisions restate requirements 

currently included in paragraphs (a) and 

(b), respectively. 

Proposed paragraphs (d)(1)(v) and 

(e)(1)(v) require the Depository to 

acknowledge that it must immediately 

release the customer funds upon proper 

notice and instruction from the FCM or 

DCO, respectively, or from the 

Commission. The Commission is not 

proposing specific standards for what 

constitutes ‘‘proper notice.’’ This is 

because reasonable actions could vary, 

depending on the situation. For 

example, in certain circumstances, it 

may not be possible to expeditiously 

provide written notice, and a telephone 

call would be sufficient and even 

preferable. The Commission recognizes 

that the release of funds may be delayed 

by practical considerations—for 

example, electronic transfers may not be 

possible if the Fedwire is unavailable. 

But the Depository must make every 

effort to execute the transfer as soon as 

possible. The transfer of customer funds 

from a segregated account cannot be 

delayed due to concerns about the 

financial status of the FCM or DCO that 

deposited the funds. 

Proposed paragraphs (d)(1)(vi) and 

(e)(1)(vi) require the Depository to 

acknowledge that the FCM or DCO has 

informed the Depository that the FCM 

or DCO will provide the Commission 

with a copy of the written 

acknowledgment. 

Proposed paragraphs (d)(2) and (e)(2) 

require the written acknowledgment to 

include the account number for each 

account covered by the 

acknowledgment. If multiple accounts 

are covered by a single written 

acknowledgment, the account numbers 

may be listed on an attachment to the 

written acknowledgment. 

Proposed paragraphs (d)(3) and (e)(3) 

require that a copy of the written 

acknowledgment be filed with the 

regional office of the Commission with 

jurisdiction over the state in which the 

FCM’s or DCO’s principal place of 

business is located. 

The proposed changes to Regulation 

1.26 would affirm that the written 

acknowledgment required for 

instruments in which customer funds 

are invested is identical to the written 

acknowledgment required under 

Regulation 1.20 and therefore must meet 

the requirements set out in Regulation 

1.20. 

B. Regulation 30.7 

The Commission is proposing to 

amend Regulation 30.7 to set out 

specific representations that 

Depositories holding secured amount 

funds would have to include in the 

acknowledgment letter required by the 

regulation.5

Proposed paragraph (c)(2)(i)(A) 

requires the Depository to affirm that it 

meets the requirement set out in 

Regulation 30.7(c)(1). Regulation 

30.7(c)(1) lists the types of depositories 

that may accept secured amount funds. 

Proposed paragraph (c)(2)(i)(B) 

requires the Depository to acknowledge 

that the FCM has established the 

account for the purpose of depositing 

money, securities, or property for or on 

behalf of customers that include, but are 

not limited to, foreign futures and 

foreign options customers. The FCM 

may have other accounts, in addition to 

the secured amount account, with the 

same Depository, and therefore the 

Depository must recognize that the 

funds being deposited in this particular 

account are obligated not to the FCM 

but to the FCM’s foreign futures and 

foreign options customers. 

Proposed paragraph (c)(2)(i)(C) 

requires the Depository to acknowledge 

that the money, securities, or property 

deposited therein are held on behalf of 

foreign futures and foreign options 

customers of the FCM and may not be 

commingled with the FCM’s own funds 

or any other funds that the Depository 

may hold, in accordance with the 

provisions of the Act and Part 30 of the 

CFTC regulations. This provision would 

reaffirm the Depository’s obligation to 

keep the money, securities, or property 

held for the FCM’s foreign futures and 

options customers separate from any 

7840 Federal Register / Vol. 74, No. 33 / Friday, February 20, 2009 / Proposed Rules 

6See 17 CFR 30.7(d). 

7The Commission notes that under the laws of 

some foreign countries, immediate release of 

customer funds may not always be possible. 

Regulation 30.6(a) (17 CFR 30.6(a)) requires FCMs 

to furnish customers with a separate written 

disclosure statement containing the language set 

forth in Regulation 1.55(b) (17 CFR 1.55(b)). 

Regulation 1.55(b)(7) states in relevant part: 

No domestic organization regulates the activities 

of a foreign exchange * * * and no domestic 

regulator has the power to compel enforcement of 

the rules of the foreign exchange or the laws of the 

foreign country. Moreover, such laws or regulations 

will vary depending on the foreign country in 

which the transaction occurs. * * * [F]unds 

received from customers to margin foreign futures 

transactions may not be provided the same 

protections as funds received to margin futures 

transactions on domestic exchanges. 

8Appendix E of Public Law 106–554, 114 Stat. 

2763 (2000). 

9See Section 5b of the Act, 7 U.S.C. 7a–1. See 

also Section 1a(9) of the Act, 7 U.S.C. 1a(9) 

(defining the term ‘‘derivatives clearing 

organization’’). 

10 5 U.S.C. 601 et seq. 

other funds that the Depository may 

hold on behalf of the FCM, including 

those customer funds required to be 

separately accounted for and segregated 

under Section 4d of the Act.6

Proposed paragraph (c)(2)(i)(D) 

requires the Depository to acknowledge 

that the money, securities, or property 

shall not be subject to any right of offset, 

or lien, for or on account of any 

indebtedness, obligations or liabilities 

owed by the FCM. The FCM may hold 

other funds with the Depository that do 

not carry such restrictions. 

Proposed paragraph (c)(2)(i)(E) 

requires the Depository to acknowledge 

that it must treat the money, securities, 

or property in accordance with the 

provisions of the Act and CFTC 

regulations. Under this provision, the 

Depository must recognize not only the 

prohibition against commingling 

referenced in proposed paragraph 

(c)(2)(ii), but all of its legal obligations 

as a holder of customer money, 

securities, or property. 

Proposed paragraph (c)(2)(i)(F) 

requires the Depository to acknowledge 

that it must release immediately, subject 

to requirements of applicable foreign 

law,7 the money, securities, or property 

upon proper notice and instruction from 

the FCM or the Commission. The 

Commission is not proposing specific 

standards for what constitutes ‘‘proper 

notice.’’ This is because reasonable 

actions could vary, depending on the 

situation. For example, in certain 

circumstances, it may not be possible to 

expeditiously provide written notice, 

and a telephone call would be sufficient 

and even preferable. The Commission 

recognizes that the release of money, 

securities, or property may be delayed 

by practical considerations—for 

example, electronic transfers may not be 

possible if the Fedwire is unavailable. 

But the Depository must make every 

effort to execute the transfer as soon as 

possible. The transfer cannot be delayed 

due to concerns about the financial 

status of the FCM that deposited the 

money, securities, or property. 

Proposed paragraph (c)(2)(i)(G) 

requires the Depository to acknowledge 

that the FCM has informed the 

Depository that the FCM will provide 

the Commission with a copy of the 

written acknowledgment. 

Proposed paragraph (c)(2)(ii) requires 

the written acknowledgment to include 

the account number for each account 

covered by the acknowledgment. If 

multiple accounts are covered by a 

single written acknowledgment, the 

account numbers may be listed on an 

attachment to the written 

acknowledgment. 

Proposed paragraph (c)(2)(iii) requires 

the FCM to file a copy of the written 

acknowledgment with the regional 

office of the Commission with 

jurisdiction over the state in which the 

FCM’s principal place of business is 

located. 

C. Technical Amendments 

Regulation 1.20(a) imposes upon 

‘‘[e]ach registrant’’ the requirement to 

obtain and retain a written 

acknowledgment when customer funds 

are deposited with ‘‘any bank, trust 

company, clearing organization, or 

another futures commission merchant.’’ 

Regulation 1.20(a) applies to FCMs, as 

distinguished from Regulation 1.20(b), 

which applies to DCOs. Therefore, the 

Commission proposes to substitute the 

term ‘‘futures commission merchant’’ 

for the term ‘‘registrant’’ to more 

accurately reflect the intent and 

meaning of Regulation 1.20(a). In 

connection with this, the Commission 

further proposes to insert the word 

‘‘other’’ before the term ‘‘futures 

commission merchant’’ that appears 

subsequently in the same sentence, to 

distinguish between the FCM holding 

the funds of its own customers and an 

FCM holding customer funds of another 

FCM. 

Regulations 1.20, 1.26, and 30.7 

currently require that acknowledgment 

letters be retained for the period 

specified in Regulation 1.31, which 

applies to all recordkeeping required by 

the Act and CFTC regulations. 

Regulation 1.31 requires records to be 

kept for five years and to be readily 

accessible for the first two years of that 

five-year period. The proposed revisions 

would make clear that an 

acknowledgment letter is to be kept 

readily accessible for as long as the 

account remains open and that the 

retention requirements that would 

otherwise apply under Regulation 1.31 

would only take effect once the account 

has been closed. For example, if the 

account remains open for ten years, the 

letter must be kept readily accessible for 

twelve years (the ten years during which 

the account is open plus the two years 

required by Regulation 1.31) and then 

for an additional three years, also as 

required by Regulation 1.31. 

Regulations 1.20 and 1.26 use the 

term ‘‘clearing organization’’ to describe 

an entity that performs clearing 

functions. The Act, as amended by the 

Commodity Futures Modernization Act 

of 2000,8 now provides that a clearing 

organization for a contract market must 

register as a ‘‘derivatives clearing 

organization.’’ 9 To be consistent with 

the Act and other CFTC regulations, the 

Commission proposes to replace the 

term ‘‘clearing organization,’’ wherever 

it appears in Regulations 1.20 and 1.26, 

with the term ‘‘derivatives clearing 

organization.’’ 

Finally, the Commission also is 

proposing technical amendments to 

Regulation 140.91 to explicitly delegate 

to the Director of the Division of 

Clearing and Intermediary Oversight the 

authority to perform certain functions 

that are reserved to the Commission 

under the proposed changes to 

Regulations 1.20 and 30.7. Thus, for 

example, the Director of the Division of 

Clearing and Intermediary Oversight 

would have delegated authority to 

instruct the Depository to release 

customer funds or secured amount 

funds. 

D. Proposed Effective Date 

FCMs and DCOs will need to obtain 

new acknowledgment letters that 

comply with the proposed regulations 

before the final regulations take effect. 

The Commission recognizes the need for 

time to obtain the letters; therefore, the 

proposed effective date of the 

amendments to Regulations 1.20, 1.26, 

and 30.7 is 180 days from the date of 

publication of the final regulations in 

the Federal Register. 

III. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) 10 requires Federal agencies, in 

promulgating regulations, to consider 

the impact of those regulations on small 

businesses. The amendments adopted 

herein will affect FCMs and DCOs. The 

Commission has previously established 

certain definitions of ‘‘small entities’’ to 

be used by the Commission in 

Federal Register / Vol. 74, No. 33 / Friday, February 20, 2009 / Proposed Rules 7841 

11 47 FR 18618 (Apr. 30, 1982). 

12 Id. at 18619. 

13 66 FR 45604, 45609 (Aug. 29, 2001). 

14 44 U.S.C. 3501 et seq. 

evaluating the impact of its regulations 

on small entities in accordance with the 

RFA.11 The Commission has previously 

determined that FCMs 12 and DCOs 13

are not small entities for the purpose of 

the RFA. Accordingly, pursuant to 5 

U.S.C. 605(b), the Acting Chairman, on 

behalf of the Commission, certifies that 

the proposed regulations will not have 

a significant economic impact on a 

substantial number of small entities. 

B. Paperwork Reduction Act 

The Paperwork Reduction Act 

(‘‘PRA’’) 14 imposes certain 

requirements on Federal agencies in 

connection with their conducting or 

sponsoring any collection of 

information as defined by the PRA. The 

regulations to be amended under this 

proposal are part of an approved 

collection of information (OMB Control 

No. 3038–0024). The proposed 

amendments would not result in any 

material modification to this approved 

collection. Accordingly, for purposes of 

the PRA, the Commission certifies that 

these proposed amendments, if 

promulgated in final form, would not 

impose any new reporting or 

recordkeeping requirements. 

C. Cost-Benefit Analysis 

Section 15(a) of the Act requires that 

the Commission, before promulgating a 

regulation under the Act or issuing an 

order, consider the costs and benefits of 

its action. By its terms, Section 15(a) 

does not require the Commission to 

quantify the costs and benefits of a new 

regulation or determine whether the 

benefits of the 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 the following considerations: (1) 

Protection of market participants and 

the public; (2) efficiency, 

competitiveness, and financial integrity 

of futures markets; (3) price discovery; 

(4) sound risk management practices; 

and (5) other public interest 

considerations. Accordingly, the 

Commission could, in its discretion, 

give greater weight to any one of the five 

considerations and could, in its 

discretion, determine that, 

notwithstanding its costs, a particular 

regulation 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 Commission has evaluated the 

costs and benefits of the proposed 

regulations in light of the specific 

considerations identified in Section 

15(a) of the Act, as follows: 

1. Protection of market participants 

and the public. The proposed 

regulations would benefit FCMs and 

DCOs, as well as customers of the 

futures and options markets, by 

reaffirming the legal obligation of 

Depositories holding customer funds or 

secured amount funds to treat those 

funds in accordance with the 

requirements of the Act and CFTC 

regulations. 

2. Efficiency and competition. The 

proposed regulations are not expected to 

have an effect on efficiency or 

competition. 

3. Financial integrity of futures 

markets and price discovery. The 

proposed regulations would enhance 

and strengthen the protection of 

customer funds and secured amount 

funds, thus contributing to the financial 

integrity of the futures and options 

markets as a whole. This, in turn, would 

further support the price discovery and 

risk transfer functions of such markets. 

4. Sound risk management practices. 

The proposed regulations would 

reinforce the sound risk management 

practices already required of FCMs and 

DCOs holding customer funds or 

secured amount funds. 

5. Other public considerations. 

Requiring specific representations in a 

Depository’s written acknowledgment 

would reduce the likelihood that the 

Depository would misinterpret its 

obligations in connection with the 

safekeeping and administration of 

customer funds and secured amount 

funds. 

Accordingly, after considering the five 

factors enumerated in the Act, the 

Commission has determined to propose 

the regulations set forth below. 

List of Subjects 

17 CFR Parts 1 and 30 

Commodity futures, Consumer 

protection. 

17 CFR Part 140 

Authority delegations (Government 

agencies), Conflict of interests, 

Organization and functions 

(Government agencies). 

For the reasons stated in the 

preamble, the Commission proposes to 

amend 17 CFR parts 1, 30, and 140 as 

follows: 

PART 1—GENERAL REGULATIONS 

1. The authority citation for part 1 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 5, 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, as amended by 

the Commodity Futures Modernization Act of 

2000, Appendix E of Pub. L. 106–554, 114 

Stat. 2763 (2000). 

2. Revise § 1.20 to read as follows: 

§ 1.20 Customer funds to be segregated 

and separately accounted for. 

(a) All customer funds shall be 

separately accounted for and segregated 

as belonging to commodity or option 

customers. Such customer funds when 

deposited with any bank, trust 

company, derivatives clearing 

organization or another futures 

commission merchant shall be 

deposited under an account name 

which clearly identifies them as such 

and shows that they are segregated as 

required by the Act and this part. Each 

futures commission merchant shall 

obtain and maintain readily accessible 

in its files, for as long as the account 

remains open, and thereafter for the 

period provided in § 1.31, a written 

acknowledgment from such bank, trust 

company, derivatives clearing 

organization, or other futures 

commission merchant, in accordance 

with the requirements of paragraph (d) 

of this section: Provided, however, that 

an acknowledgment need not be 

obtained from a derivatives clearing 

organization that has adopted and 

submitted to the Commission rules that 

provide for the segregation as customer 

funds, in accordance with all relevant 

provisions of the Act and the rules and 

orders promulgated thereunder, of all 

funds held on behalf of customers. 

Under no circumstances shall any 

portion of customer funds be obligated 

to a derivatives clearing organization, 

any member of a contract market, a 

futures commission merchant, or any 

depository except to purchase, margin, 

guarantee, secure, transfer, adjust or 

settle trades, contracts or commodity 

option transactions of commodity or 

option customers. No person, including 

any derivatives clearing organization or 

any depository, that has received 

customer funds for deposit in a 

segregated account, as provided in this 

section, may hold, dispose of, or use any 

such funds as belonging to any person 

other than the option or commodity 

customers of the futures commission 

merchant which deposited such funds. 

(b) All customer funds received by a 

derivatives clearing organization from a 

member of the derivatives clearing 

7842 Federal Register / Vol. 74, No. 33 / Friday, February 20, 2009 / Proposed Rules 

organization to purchase, margin, 

guarantee, secure or settle the trades, 

contracts or commodity options of the 

clearing member’s commodity or option 

customers and all money accruing to 

such commodity or option customers as 

the result of trades, contracts or 

commodity options so carried shall be 

separately accounted for and segregated 

as belonging to such commodity or 

option customers, and a derivatives 

clearing organization shall not hold, use 

or dispose of such customer funds 

except as belonging to such commodity 

or option customers. Such customer 

funds when deposited in a bank or trust 

company shall be deposited under an 

account name which clearly shows that 

they are the customer funds of the 

commodity or option customers of 

clearing members, segregated as 

required by the Act and these 

regulations. The derivatives clearing 

organization shall obtain and maintain 

readily accessible in its files, for as long 

as the account remains open, and 

thereafter for the period provided in 

§ 1.31, a written acknowledgment from 

such bank or trust company, in 

accordance with the requirements of 

paragraph (e) of this section. 

(c) Each futures commission merchant 

shall treat and deal with the customer 

funds of a commodity customer or of an 

option customer as belonging to such 

commodity or option customer. All 

customer funds shall be separately 

accounted for, and shall not be 

commingled with the money, securities 

or property of a futures commission 

merchant or of any other person, or be 

used to secure or guarantee the trades, 

contracts or commodity options, or to 

secure or extend the credit, of any 

person other than the one for whom the 

same are held: Provided, however, That 

customer funds treated as belonging to 

the commodity or option customers of a 

futures commission merchant may for 

convenience be commingled and 

deposited in the same account or 

accounts with any bank or trust 

company, with another person 

registered as a futures commission 

merchant, or with a derivatives clearing 

organization, and that such share 

thereof as in the normal course of 

business is necessary to purchase, 

margin, guarantee, secure, transfer, 

adjust, or settle the trades, contracts or 

commodity options of such commodity 

or option customers or resulting market 

positions, with the derivatives clearing 

organization or with any other person 

registered as a futures commission 

merchant, may be withdrawn and 

applied to such purposes, including the 

payment of premiums to option 

grantors, commissions, brokerage, 

interest, taxes, storage and other fees 

and charges, lawfully accruing in 

connection with such trades, contracts 

or commodity options: Provided, 

further, That customer funds may be 

invested in instruments described in 

§ 1.25. 

(d)(1) The written acknowledgment 

made by a bank, trust company, 

derivatives clearing organization or 

other futures commission merchant, as 

required under paragraph (a) of this 

section, shall include the following 

representations: 

(i) That the futures commission 

merchant has established the account 

for the purpose of depositing customer 

funds; 

(ii) That the customer funds deposited 

therein are those of commodity or 

option customers of the futures 

commission merchant and shall be 

segregated from the futures commission 

merchant’s own funds in accordance 

with the provisions of the Act and this 

part; 

(iii) That the customer funds shall not 

be subject to any right of offset, or lien, 

for or on account of any indebtedness, 

obligations or liabilities owed by the 

futures commission merchant; 

(iv) That the customer funds shall be 

treated in accordance with the 

provisions of the Act and Commission 

regulations; 

(v) That the customer funds shall be 

released immediately upon proper 

notice and instruction from the futures 

commission merchant or the 

Commission; and 

(vi) That the futures commission 

merchant has informed the bank, trust 

company, derivatives clearing 

organization, or other futures 

commission merchant that the futures 

commission merchant will provide the 

Commission with a copy of the written 

acknowledgment. 

(2) The written acknowledgment shall 

include the account number for each 

account covered by the 

acknowledgment. 

(3) The futures commission merchant 

shall file a copy of the written 

acknowledgment with the regional 

office of the Commission with 

jurisdiction over the state in which the 

futures commission merchant’s 

principal place of business is located. 

(e)(1) The written acknowledgment 

made by a bank or trust company, as 

required under paragraph (b) of this 

section, shall include the following 

representations: 

(i) That the derivatives clearing 

organization has established the account 

for the purpose of depositing customer 

funds; 

(ii) That the customer funds deposited 

therein are those of commodity or 

option customers of clearing members 

and shall be segregated from the 

derivatives clearing organization’s own 

funds in accordance with the provisions 

of the Act and this part; 

(iii) That the customer funds shall not 

be subject to any right of offset, or lien, 

for or on account of any indebtedness, 

obligations or liabilities owed by the 

derivatives clearing organization; 

(iv) That the customer funds shall be 

treated in accordance with the 

provisions of the Act and Commission 

regulations; 

(v) That the customer funds shall be 

released immediately upon proper 

notice and instruction from the 

derivatives clearing organization or the 

Commission; and 

(vi) That the derivatives clearing 

organization has informed the bank or 

trust company that it will provide the 

Commission with a copy of the written 

acknowledgment. 

(2) The written acknowledgment shall 

include the account number for each 

account covered by the 

acknowledgment. 

(3) The derivatives clearing 

organization shall file a copy of the 

written acknowledgment with the 

regional office of the Commission with 

jurisdiction over the state in which the 

derivatives clearing organization’s 

principal place of business is located. 

3. Revise § 1.26 to read as follows: 

§ 1.26 Deposit of instruments purchased 

with customer funds. 

(a) Each futures commission merchant 

who invests customer funds in 

instruments described in § 1.25 shall 

separately account for such instruments 

and segregate such instruments as 

belonging to such commodity or option 

customers. Such instruments, when 

deposited with a bank, trust company, 

derivatives clearing organization or 

another futures commission merchant, 

shall be deposited under an account 

name which clearly shows that they 

belong to commodity or option 

customers and are segregated as 

required by the Act and this part. Each 

futures commission merchant upon 

opening such an account shall obtain 

and maintain readily accessible in its 

files, for as long as the account remains 

open, and thereafter for the period 

provided in § 1.31, a written 

acknowledgment from such bank, trust 

company, derivatives clearing 

organization or other futures 

commission merchant, in accordance 

with the requirements of paragraph (d) 

of § 1.20: Provided, however, that an 

acknowledgment need not be obtained 

Federal Register / Vol. 74, No. 33 / Friday, February 20, 2009 / Proposed Rules 7843 

from a derivatives clearing organization 

that has adopted and submitted to the 

Commission rules that provide for the 

segregation as customer funds, in 

accordance with all relevant provisions 

of the Act and the rules and orders 

promulgated thereunder, of all funds 

held on behalf of customers and all 

instruments purchased with customer 

funds. Such bank, trust company, 

derivatives clearing organization or 

other futures commission merchant 

shall allow inspection of such 

instruments at any reasonable time by 

representatives of the Commission. 

(b) Each derivatives clearing 

organization which invests money 

belonging or accruing to commodity or 

option customers of its clearing 

members in instruments described in 

§ 1.25 shall separately account for such 

instruments and segregate such 

instruments as belonging to such 

commodity or option customers. Such 

instruments, when deposited with a 

bank or trust company, shall be 

deposited under an account name 

which will clearly show that they 

belong to commodity or option 

customers and are segregated as 

required by the Act and this part. Each 

derivatives clearing organization upon 

opening such an account shall obtain 

and maintain readily accessible in its 

files, for as long as the account remains 

open, and thereafter for the period 

provided in § 1.31, a written 

acknowledgment from such bank or 

trust company, in accordance with the 

requirements of paragraph (e) of § 1.20. 

Such bank or trust company shall allow 

inspection of such instruments at any 

reasonable time by representatives of 

the Commission. 

PART 30—FOREIGN FUTURES AND 

OPTIONS TRANSACTIONS 

4. The authority citation for part 30 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 6, 6c, and 12a, 

unless otherwise noted. 

5. Revise paragraph (c)(2) of § 30.7 to 

read as follows: 

§ 30.7 Treatment of foreign futures or 

foreign options secured amount. 

* * * * * 

(c) * * * 

(2)(i) Each futures commission 

merchant must obtain and maintain 

readily accessible in its files, for as long 

as the account remains open, and 

thereafter for the period provided in 

§ 1.31, a written acknowledgment from 

such depository that shall include the 

following representations: 

(A) That the depository meets the 

requirement set out in § 30.7(c)(1); 

(B) That the futures commission 

merchant has established the account 

for the purpose of depositing money, 

securities, or property for or on behalf 

of customers that include, but are not 

limited to, foreign futures and foreign 

options customers; 

(C) That the money, securities, or 

property deposited therein are held for 

or on behalf of customers that include, 

but are not limited to, foreign futures 

and foreign options customers of the 

futures commission merchant and may 

not be commingled with the futures 

commission merchant’s own funds or 

any other funds that the depository may 

hold, in accordance with the provisions 

of the Act and this part; 

(D) That the money, securities, or 

property shall not be subject to any right 

of offset, or lien, for or on account of 

any indebtedness, obligations or 

liabilities owed by the futures 

commission merchant; 

(E) That the money, securities, or 

property shall be treated in accordance 

with the provisions of the Act and 

Commission regulations; 

(F) That the money, securities, or 

property shall be released immediately, 

subject to requirements of applicable 

foreign law, upon proper notice and 

instruction from the futures commission 

merchant or the Commission; and 

(G) That the futures commission 

merchant has informed the depository 

that the futures commission merchant 

will provide the Commission with a 

copy of the written acknowledgment. 

(ii) The written acknowledgment shall 

include the account number for each 

account covered by the 

acknowledgment. 

(iii) The futures commission merchant 

shall file a copy of the written 

acknowledgment with the regional 

office of the Commission with 

jurisdiction over the state in which the 

futures commission merchant’s 

principal place of business is located. 

* * * * * 

PART 140—ORGANIZATION, 

FUNCTIONS, AND PROCEDURES OF 

THE COMMISSION 

6. The authority citation for part 140 

continues to read as follows: 

Authority: 7 U.S.C. 2 and 12a. 

7. In § 140.91, redesignate paragraph 

(a)(8) as paragraph (a)(10) and paragraph 

(a)(7) as paragraph (a)(8); and add new 

paragraphs (a)(7) and (a)(9) to read as 

follows: 

§ 140.91 Delegation of authority to the 

Director of the Division of Clearing and 

Intermediary Oversight. 

(a) * * * 

(7) All functions reserved to the 

Commission in § 1.20 of this chapter. 

* * * * * 

(9) All functions reserved to the 

Commission in § 30.7 of this chapter. 

* * * * * 

Issued in Washington, DC, on February 13, 

2009 by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. E9–3551 Filed 2–19–09; 8:45 am] 

BILLING CODE 6351–01–P 

EQUAL EMPLOYMENT OPPORTUNITY 

COMMISSION 

29 CFR Part 1612 

Government in the Sunshine Act 

Regulations 

AGENCY: Equal Employment 

Opportunity Commission. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: The Equal Employment 

Opportunity Commission is proposing 

to revise the method of public 

announcement of agency meetings 

subject to the Government in the 

Sunshine Act. 

DATES: The agency must receive 

comments on or before April 21, 2009. 

ADDRESSES: Written comments should 

be submitted to Stephen Llewellyn, 

Executive Officer, Executive Secretariat, 

Equal Employment Opportunity 

Commission, Room 6NE03F, 131 M 

Street, NE., Washington, DC 20507. As 

a convenience to commentators, the 

Executive Secretariat will accept 

comments totaling six or fewer pages by 

facsimile (‘‘FAX’’) machine. This 

limitation is necessary to assure access 

to the equipment. The telephone 

number of the FAX receiver is (202) 

663–4114. (This is not a toll-free 

number.) Receipt of FAX transmittals 

will not be acknowledged, except that 

the sender may request confirmation of 

receipt by calling the Executive 

Secretariat staff at (202) 663–4070 

(voice) or (202) 663–4074 (TTD). (These 

are not toll-free telephone numbers.) 

You may also submit comments and 

attachments electronically at http:// 

www.regulations.gov, which is the 

Federal eRulemaking Portal. Follow the 

instructions online for submitting 

comments. Copies of comments 

submitted by the public can be reviewed 

at http://www.regulations.gov or by 

appointment at the Commission’s 

library, 131 M Street, NE., Washington, 

DC 20507 between the hours of 9:30 

a.m. and 5 p.m. (call 202–663–4630