65514 Federal Register / Vol. 73, No. 214 / Tuesday, November 4, 2008 / Rules and Regulations 

1 7 U.S.C. 24. 

(h) On RB211–535E4–B engines: (1) Ultrasonically inspect the fan blade 

root, and if required, relubricate using one of 

the methods in Table 4 of this AD. 

(2) If the initial inspection is complete 

prior to 18,800 CSN, then the next inspection 

may be postponed until 20,000 CSN. 

TABLE 4—RB211–535E4–B 

Engine location 

Initial 

inspection 

within 

(CSN) 

Type action In accordance with MSB 

Repeat 

inspection 

within (CSLI) 

(i) On-wing .............................. 20,000 (A) Root Probe inspect, OR .. RB.211–72–C879 Revision 6, 3.A.(1) 

through 3.A.(7), dated December 14, 2007.

1,200 

(B) Wave Probe inspect ......... RB.211–72–C879 Revision 6, 3.B.(1) 

through 3.B.(7), dated December 14, 2007.

1,000 

(ii) In shop .............................. 20,000 Root Probe inspect. Relubricate if blade life is more 

than 19,650 cycles.

RB.211–72–C879 Revision 6, 3.C.(1) 

through 3.C.(4), dated December 14, 2007.

1,200 

(i) For fan blades operated to any 

combination of RB211–535E4 Flight Profile 

A, –535E4 Flight Profile B, –535E4–B, 

–535E4–B and –535E4–C engines: 

(1) Calculate an equivalent CSN as defined 

in the Time Limits Manual. See References 

Section 1.G.(3), of MSB RB.211–72–C879, 

Revision 6, dated December 14, 2007. 

(2) For fan blades that are currently flying 

in Profile A, inspect using paragraph (f) and 

Table 2 of this AD using equivalent CSN. 

(3) For fan blades that are currently flying 

in Profile B, inspect using paragraph (g) and 

Table 3 of this AD using equivalent CSN. 

(4) For fan blades that are currently flying 

in an RB211–535E4–B engine, inspect using 

paragraph (h) and Table 4 of this AD using 

equivalent CSN. 

Optional Terminating Action 

(j) Application of Metco 58 blade root 

coating using RR SB No. RB.211–72–C946, 

Revision 2, dated September 26, 2002, 

constitutes terminating action to the 

repetitive inspection requirements specified 

in paragraphs (f), (g), (h), and (i) of this AD. 

Alternative Methods of Compliance 

(k) The Manager, Engine Certification 

Office, has the authority to approve 

alternative methods of compliance for this 

AD if requested using the procedures found 

in 14 CFR 39.19. 

Previous Credit 

(l) Inspections and relubrication done 

before the effective date of this AD that use 

AD 2003–12–15 (Amendment 39–13200, 68 

FR 37735, June 25, 2003), RR MSB No. 

RB.211–72–C879, Revision 3, dated October 

9, 2002, MSB No. RB.211–72–C879, Revision 

4, dated April 2, 2004, or MSB No. RB.211– 

72–C879, Revision 5, dated March 8, 2007, 

comply with the requirements specified in 

this AD. 

Related Information 

(m) United Kingdom Civil Aviation 

Authority airworthiness directive AD 002– 

01–2000, dated October 9, 2002, also 

addresses the subject of this AD. 

(n) Contact Ian Dargin, Aerospace 

Engineer, Engine Certification Office, FAA, 

Engine and 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. 

Material Incorporated by Reference 

(o) You must use Rolls-Royce plc 

Mandatory Service Bulletin No. RB.211–72– 

C879, Revision 6, dated December 14, 2007 

to perform the inspections and relubrication 

required by this AD. The Director of the 

Federal Register approved the incorporation 

by reference of this service bulletin in 

accordance with 5 U.S.C. 552(a) and 1 CFR 

part 51. Contact Rolls-Royce plc, PO Box 31, 

Derby, England, DE248BJ; telephone: 011– 

44–1332–242424; fax: 011–44–1332–249936, 

for a copy of this service information. You 

may review copies at the FAA, New England 

Region, 12 New England Executive Park, 

Burlington, MA; or at the National Archives 

and Records Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030, or go 

to: http://www.archives.gov/federal-register/ 

cfr/ibr-locations.html. 

Issued in Burlington, Massachusetts, on 

October 23, 2008. 

Peter A. White, 

Assistant Manager, Engine and Propeller 

Directorate, Aircraft Certification Service. 

[FR Doc. E8–25891 Filed 11–3–08; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 190 

Interpretative Statement Regarding 

Funds Related to Cleared-Only 

Contracts Determined To Be Included 

in a Customer’s Net Equity 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Interpretative Statement; 

correction. 

SUMMARY: This interpretation by the 

Commodity Futures Trading 

Commission (‘‘Commission’’) is issued 

to clarify the appropriate treatment 

under the commodity broker provisions 

of the Bankruptcy Code and Part 190 of 

the Commission’s Regulations of claims 

arising from contracts (‘‘cleared-only 

contracts’’) that, although not executed 

or traded on a Designated Contract 

Market or a Derivatives Transaction 

Execution Facility, are subsequently 

submitted for clearing through a Futures 

Commission Merchant (‘‘FCM’’) to a 

Derivatives Clearing Organization 

(‘‘DCO’’). The Commission first 

published this interpretation in the 

Federal Register of October 2, 2008 (73 

FR 57235). A statement of concurrence 

on a different matter was printed at the 

end of the interpretation, in error. The 

Commission is republishing the 

interpretation to clarify that the 

statement of concurrence is not related 

to the interpretation. 

FOR FURTHER INFORMATION CONTACT: 

Robert B. Wasserman, Associate 

Director, rwasserman@cftc.gov, (202) 

418–5092, or Amanda Olear, AttorneyAdvisor, Division of Clearing and 

Intermediary Oversight, aolear@cftc.gov, 

(202) 418–5283, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

Section 20 of the Commodity 

Exchange Act 1 (Act) empowers the 

Commission to provide how the net 

equity of a customer is to be 

determined: 

The Commission may provide, with 

respect to a commodity broker that is a 

debtor under chapter 7 of title 11 of the 

United States Code, by rule or regulation— 

(1) that certain cash, securities, other 

property, or commodity contracts are to be 

included in or excluded from customer 

property or member property; * * * and (5) 

how the net equity of a customer is to be 

determined. 

Subchapter IV of Chapter 7 of the 

Bankruptcy Code, governing commodity 

brokers, has the same effect, explicitly 

basing the definition of ‘‘net equity’’ on 


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Federal Register / Vol. 73, No. 214 / Tuesday, November 4, 2008 / Rules and Regulations 65515 

2 11 U.S.C. 761(17). 

3 17 CFR Part 190. 

4 17 CFR 190.07. 

5 11 U.S.C. 761(9) (emphasis added). 

6A similar analysis would apply to a customer of 

a clearing organization (i.e., a clearing member). 

7 11 U.S.C. 761(4). 

8 11 U.S.C. 761(7) and (8). 

9 7 U.S.C. 1a(29)(C). 

10Cf. H.R. Rep. No. 109–31(I) (2005) 

(emphasizing distinction between definitions for 

purposes of Bankruptcy Code and for purposes of 

other statutes). 

11Section 761(9)(A) of the Bankruptcy Code 

provides that an entity holding such a claim is a 

‘‘customer.’’ 11 U.S.C. 761(9)(A). 

‘‘such rules and regulations as the 

Commission promulgates under the 

Act.’’ 2

The Commission has exercised this 

power in promulgating Part 190 of its 

regulations.3 In particular, the term ‘‘net 

equity’’ is defined by Commission 

Regulation 190.07 4 as: 

The total claim of a customer against the 

estate of the debtor based on the commodity 

contracts held by the debtor for or on behalf 

of such customer less any indebtedness of the 

customer to the debtor. 

Therefore, the determination of whether 

claims relating to cleared-only contracts 

in section 4d accounts are properly 

includable within the meaning of ‘‘net 

equity’’ is dependent upon whether an 

entity holding such claims is properly 

considered a ‘‘customer.’’ This, in turn, 

as discussed below, requires an analysis 

of whether such claims are derived from 

‘‘commodity contracts.’’ 

Cleared-Only Transactions as 

Commodity Contracts 

Commission Regulation 190.01(k) 

defines ‘‘customer’’ through 

incorporation by reference of the 

definition of the term appearing in 

section 761(9) of the Bankruptcy Code, 

which provides, in relevant part: 

(9) ‘‘Customer’’ means— 

(A) With respect to a futures commission 

merchant— 

(i) Entity for or with whom such futures 

commission merchant deals and holds a 

claim against such futures commission 

merchant on account of a commodity 

contract made, received, acquired, or held by 

or through such futures commission 

merchant in the ordinary course of such 

future commission merchant’s business as a 

futures commission merchant from or for the 

commodity futures account of such entity; or 

(ii) Entity that holds a claim against such 

futures commission merchant arising out of— 

(I) The making, liquidation, or change in 

the value of a commodity contract of a kind 

specified in clause (i) of this subparagraph; 

(II) A deposit or payment of cash, a 

security, or other property with such futures 

commission merchant for the purpose of 

making or margining such a commodity 

contract; or 

(III) The making or taking of delivery on 

such a commodity contract[.] 5

Therefore, for an entity to be considered 

a ‘‘customer’’ of an FCM, such entity’s 

claim must arise out of a ‘‘commodity 

contract.’’ 6

A ‘‘commodity contract,’’ as the term 

appears within the context of section 

761(9), is defined in section 761(4) of 

the Bankruptcy Code, which states, in 

pertinent part: 

(4) ‘‘Commodity Contract’’ means— 

(A) With respect to a futures commission 

merchant, contract for the purchase or sale of 

a commodity for future delivery on, or 

subject to the rules of, a contract market or 

board of trade[.] 7

This definition contains two elements: 

(1) The nature of the contract; and (2) 

the nature of the venue whose rules 

govern the contract. 

With regard to the first element, overthe-counter contracts that are clearedonly contracts are contracts for the 

purchase or sale of a commodity for 

future delivery within the meaning of 

this section of the Bankruptcy Code. 

When cleared, they are subject to 

performance bond requirements, daily 

variation settlement, the potential for 

offset, and final settlement procedures 

that are substantially similar, and often 

identical, to those applicable to 

exchange-traded products at the same 

clearinghouse. Cf. 11 U.S.C. 761(4)(F). 

Although the creation and trading of 

these products is outside the 

Commission’s jurisdiction, the clearing 

of these products by FCMs and DCOs is 

within the Commission’s jurisdiction. 

With regard to the second element, 

section 761(7) of the Bankruptcy Code 

states that a ‘‘ ‘contract market’ means a 

registered entity,’’ and section 761(8), in 

turn, provides that a ‘‘ ‘registered entity’ 

* * * ha[s] the meaning[ ] assigned to 

[that] term[ ] in the [Commodity 

Exchange] Act.’’ 8 Section 1a(29)(C) of 

the Act defines the term ‘‘registered 

entity’’ as including ‘‘a derivatives 

clearing organization registered under 

section 5b’’ of the Act.9

Thus, when a contract is cleared 

through a DCO, such a contract would 

be considered a ‘‘commodity contract’’ 

under section 761(4) of the Bankruptcy 

Code.10 Therefore, an entity with a 

claim based on a cleared-only contract 

would be a ‘‘customer’’ within the 

meaning of section 761 of the 

Bankruptcy Code. Further, because Part 

190 of the Commission’s Regulations 

defines ‘‘customer’’ as having the 

meaning set forth in section 761, such 

entity with a claim based on a clearedonly contract would also be a 

‘‘customer’’ for the purposes of Part 190 

of the Commission’s Regulations. Based 

on the foregoing, such claims arising out 

of cleared-only contracts are properly 

included within the meaning of ‘‘net 

equity’’ for the purposes of Subchapter 

IV of the Bankruptcy Code and Part 190 

of the Commission’s Regulations. 

Portfolio Performance Bond as Net 

Equity 

There is an alternative path to reach 

the same conclusion. In cases where 

cleared-only contracts are held in a 

commodity futures account at an FCM 

and margined as a portfolio with 

exchange-traded futures (i.e., where the 

Commission has issued an order 

pursuant to section 4d(a)(2) of the 

Commodity Exchange Act), assets 

margining that portfolio are likely to be 

includable within ‘‘net equity’’ even if 

cleared-only contracts were found not to 

be ‘‘commodity contracts’’ within the 

meaning of the Bankruptcy Code and 

Part 190 of the Commission’s 

Regulations. 

Where the assets in an entity’s 

account margin (i.e., collateralize) both 

cleared-only contracts and exchangetraded futures, the entirety of those 

assets serves as performance bond for 

each of the exchange-traded futures and 

the cleared-only contracts. Therefore, (a) 

a claim for those assets constitutes a 

claim ‘‘on account of a commodity 

contract made, received, acquired, or 

held by or through such futures 

commission merchant in the ordinary 

course of such future commission 

merchant’s business as a futures 

commission merchant from or for the 

commodity futures account of such 

entity;’’ 11 (b) the entity qualifies as a 

‘‘customer’’ within the meaning of the 

Bankruptcy Code as a result of that 

claim; and (c) those margin assets are 

properly included within that entity’s 

net equity. 

The dynamics of futures trading 

render it unwise to distinguish between 

an account that currently is portfolio 

margined and one that was at one time 

or is intended to be so in the future. 

Indeed, Subchapter IV of the 

Bankruptcy Code includes as customers 

entities with certain claims arising out 

of property that is not currently 

margining a commodity contract. 

Specifically, section 761(9)(A)(ii) 

provides that an entity can qualify as a 

‘‘customer’’ based on claims arising out 

of any of the following: (I) The 

‘‘liquidation, or change in the value of 

a commodity contract;’’ (II) a deposit of 

property ‘‘for the purpose of making or 

margining * * * a commodity 

contract;’’ or (III) ‘‘the making or taking 

of delivery of a commodity contract.’’ 


dwashington3 on PRODPC61 with RULES
65516 Federal Register / Vol. 73, No. 214 / Tuesday, November 4, 2008 / Rules and Regulations 

12See 17 CFR 190.01. 

13See Interpretative Statement Regarding Funds 

Determined To Be Held in the Futures Account 

Type of Customer Account Class, 69 FR 69510 

(Nov. 30, 2004). 

1 17 CFR 232.101 and 232.201. 

2 17 CFR 270.0–2. 

3We proposed these amendments in November 

2007. See Rulemaking for EDGAR System; 

Mandatory Electronic Submission of Applications 

for Orders under the Investment Company Act and 

Filings Made Pursuant to Regulation E, Release No. 

33–8859 (Nov. 1, 2007) [72 FR 63513 (Nov. 9, 2007)] 

(‘‘Proposing Release’’). 

4We recently announced the successor to the 

EDGAR Database. The new system is called IDEA, 

short for Interactive Data Electronic Applications, 

and will at first supplement and then eventually 

replace the EDGAR system. See ‘‘SEC Announces 

Successor to EDGAR Database; ‘‘IDEA’’ Will Make 

Company and Fund Information Interactive,’’ Press 

Release No. 2008–179, Aug. 19, 2008. 

5See Rulemaking for EDGAR System, Release No. 

33–7855 (Apr. 27, 2000) [65 FR 24788] (the 

‘‘Modernization Adopting Release’’). See also 

Release No. 33–7803 (Mar. 3, 2000) [65 FR 11507] 

(‘‘Modernization Proposing Release’’). 

6See Mandated EDGAR Filing for Foreign Issuers, 

Release No. 33–8099 (May 14, 2002) [67 FR 36678]. 

7 15 U.S.C. 78p(a). 

8See Mandated EDGAR Filing and Web Site 

Posting for Forms 3, 4 and 5, Release No. 33–8230 

(May 7, 2003) [68 FR 25788] (the ‘‘EDGAR Section 

16 Release’’). 

9 15 U.S.C. 80a–17(g). 

10 15 U.S.C. 80a–24(b). 

Accordingly, there is no requirement 

that the customer’s assets be margining 

commodity contracts on the day that the 

bankruptcy petition is filed. Therefore, 

all assets contained in such an account 

are properly included within the 

customer’s net equity. 

Account Classes 

Part 190 of the Commission’s 

Regulations divides accounts into 

several classes, specifically: Futures 

accounts, foreign futures accounts, 

leverage accounts, commodity option 

accounts, and delivery accounts.12

In October 2004, the Commission 

issued an interpretation regarding the 

appropriate account class for funds 

attributable to contracts traded on nondomestic boards of trade, and the assets 

margining such contracts, that are 

included in accounts segregated in 

accordance with Section 4d of the Act 

pursuant to Commission Order.13 In that 

context, the Commission concluded that 

the claim is properly against the Section 

4d account class because customers 

whose assets are deposited in such an 

account pursuant to Commission Order 

should benefit from that pool of assets. 

The same rationale supports the 

Commission’s conclusion that a claim 

arising out of a cleared-only contract, or 

the property margining such a contract, 

would be includable in the futures 

account class where, pursuant to 

Commission Order, the contract or 

property is included in an account 

segregated in accordance with Section 

4d of the Act. 

* * * * * 

Issued in Washington, DC, on September 

26, 2008, by the Commodity Futures Trading 

Commission. 

David Stawick, 

Secretary of the Commission. 

[FR Doc. E8–26199 Filed 11–3–08; 8:45 am] 

BILLING CODE 6351–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

17 CFR Parts 232 and 270 

[Release Nos. 33–8981; 34–58874; IC–28476 

File No. S7–25–07] 

RIN 3235–AJ81 

Mandatory Electronic Submission of 

Applications for Orders Under the 

Investment Company Act and Filings 

Made Pursuant to Regulation E 

AGENCY: Securities and Exchange 

Commission. 

ACTION: Final rule. 

SUMMARY: We are adopting several 

amendments to rules regarding our 

Electronic Data Gathering, Analysis, and 

Retrieval (EDGAR) system. Specifically, 

we are amending our rules to make 

mandatory the electronic submission on 

EDGAR of applications for orders under 

any section of the Investment Company 

Act of 1940 (‘‘Investment Company 

Act’’) as well as Regulation E filings of 

small business investment companies 

and business development companies. 

We also are amending the electronic 

filing rules to make the temporary 

hardship exemption unavailable for 

submission of applications under the 

Investment Company Act. Finally, we 

are amending Rule 0–2 under the 

Investment Company Act, eliminating 

the requirement that certain documents 

accompanying an application be 

notarized and the requirement that 

applicants submit a draft notice as an 

exhibit to an application. 

DATES: Effective Date: January 1, 2009. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions about the rules, 

please contact one of the following 

members of our staff in the Division of 

Investment Management, at the 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–0506: in the Office of Legal and 

Disclosure, Ruth Armfield Sanders, 

Senior Special Counsel (EDGAR), at 

(202) 551–6989; in the Office of 

Investment Company Regulation, 

Michael W. Mundt, Assistant Director, 

at (202) 551–6821; or, in the Office of 

Insurance Products, Keith Carpenter, 

Senior Special Counsel, at (202) 551– 

6766; for technical questions relating to 

the EDGAR system, in the Office of 

Information Technology, Richard D. 

Heroux, EDGAR Program Manager, at 

(202) 551–8168. 

SUPPLEMENTARY INFORMATION: The 

Securities and Exchange Commission 

(‘‘Commission’’) is adopting 

amendments to Rules 101 and 201 of 

Regulation S–T1 relating to electronic 

filing on the EDGAR system and to Rule 

0–2 2 under the Investment Company 

Act.3

I. Background 

In the last several years, we initiated 

a series of amendments to keep EDGAR 

current technologically and to make it 

more useful to the investing public and 

Commission staff.4 In April 2000, we 

adopted rule and form amendments in 

connection with the modernization of 

EDGAR.5 In the Modernization 

Proposing Release, we noted that, as the 

use of electronic databases grows, it 

becomes increasingly important for 

members of the public to have 

electronic access to our filings. We also 

stated that we were contemplating 

future rulemaking to require more of our 

filings to be filed on EDGAR. In May 

2002, we adopted rules requiring foreign 

private issuers and foreign governments 

to file most of their documents 

electronically.6 In May 2003, we 

adopted rules requiring electronic filing 

of beneficial ownership reports filed by 

officers, directors and principal security 

holders under section 16(a) 7 of the 

Securities Exchange Act of 1934 

(‘‘Exchange Act’’).8 In July 2005, we 

adopted rules requiring certain openend management investment companies 

and insurance companies separate 

accounts to identify in their EDGAR 

submissions information relating to 

their series and classes (or contracts, in 

the case of separate accounts) and 

mandating that fidelity bonds filed 

under section 17(g) 9 and sales literature 

filed with us under section 24(b) 10 be 


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