52832 Federal Register / Vol. 73, No. 177 / Thursday, September 11, 2008 / Notices 

1Commission regulations may be found at 17 CFR 

Ch. 1 (2008). 

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

3For example, see Commission Regulation 1.17 

for the minimum financial requirements for FCMs 

and introducing brokers (‘‘IBs’’) adopted by the 

Commission, and Commission Regulations 1.10 and 

1.12 for monthly and annual financial reporting 

requirements and notice requirements, respectively. 

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

5See Division of Trading and Markets Financial 

and Segregation Interpretation No. 4–1—Advisory 

Interpretation for Self-Regulatory Organization 

Surveillance over Members’ Compliance with 

Minimum Financial, Segregation, Reporting, and 

Related Recordkeeping Requirements, Comm. Fut. 

L. Rep. (CCH) ¶ 7114A (Jul. 29, 1985); and Division 

of Trading and Markets Financial and Segregation 

Interpretation No. 4–2—Risk-Based Auditing, Com. 

Fut. L. Rep. (CCH) ¶ 7114E (August 20, 1999). 

6Regulation 1.52(g) states: 

‘‘After appropriate notice and opportunity for 

comment, the Commission may, by written notice, 

approve such a plan, or any part of the plan, if it 

finds that the plan, or any part of it: (1) Is necessary 

or appropriate to serve the public interest; (2) Is for 

the protection and in the interest of customers; (3) 

Reduces multiple monitoring and auditing for 

compliance with the minimum financial rules of 

the [SROs] submitting the plan for any [FCM or IB 

that] is a member of more than one [SRO]; (4) 

Reduces multiple reporting of the financial 

management, including current research 

on market squid, Pacific sardine, and 

the California Current Ecosystem, 

planning the 2009 review of Pacific 

sardine allocation, and implementation 

of the reauthorized Magnuson-Stevens 

Fishery Conservation and Management 

Act. No management actions will be 

decided by the CPSMT, the SSC CPS 

Subcommittee, or the CPSAS. 

Although non-emergency issues not 

contained in the meeting agendas may 

be discussed, those issues may not be 

the subject of formal action during these 

meetings. Advisory body action will be 

restricted to those issues specifically 

listed in this notice and any issues 

arising after publication of this notice 

that require emergency action under 

Section 305(c) of the Magnuson-Stevens 

Fishery Conservation and Management 

Act, provided the public has been 

notified of the intent to take final action 

to address the emergency. 

Special Accommodations 

These meetings are physically 

accessible to people with disabilities. 

Requests for sign language 

interpretation or other auxiliary aids 

should be directed to Ms. Carolyn Porter 

at (503) 820–2280 at least 5 days prior 

to the meeting date. 

Dated: September 8, 2008. 

Tracey L. Thompson, 

Acting Director, Office of Sustainable 

Fisheries, National Marine Fisheries Service. 

[FR Doc. E8–21096 Filed 9–10–08; 8:45 am] 

BILLING CODE 3510–22–S 

COMMODITY FUTURES TRADING 

COMMISSION 

Joint Audit Committee Operating 

Agreement 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Request for comment. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is publishing for public 

comment an agreement submitted by the 

Joint Audit Committee (‘‘JAC’’) for 

approval pursuant to Commission 

Regulation 1.52.1 The JAC is a 

voluntary, cooperative organization 

comprised of representatives of the 

financial surveillance staff of designated 

contract markets (‘‘DCMs’’) and the 

National Futures Association (‘‘NFA’’) 

and was formed for the purpose of 

coordinating the monitoring and 

examination of common futures 

commission merchant (‘‘FCM’’) 

members of such entities. The 

agreement governs the operation of the 

JAC and the manner by which the JAC 

will coordinate and cooperate in 

examining and monitoring FCMs for 

compliance with Commission and selfregulatory organization (‘‘SRO’’) 

minimum financial and related 

reporting requirements. The JAC is 

submitting the agreement to replace the 

current operating agreement, which has 

been in effect since 1984. 

DATE: Comments must be received on or 

before October 14, 2008. 

ADDRESSES: Interested persons should 

submit their views and comments to 

David Stawick, Secretary, Commodity 

Futures Trading Commission, Three 

Lafayette Centre, 1155 21st Street, NW., 

Washington, DC 20581. In addition, 

comments may be sent by facsimile 

transmission to (202) 418–5521, or by 

electronic mail to secretary@cftc.gov. 

Reference should be made to ‘‘Joint 

Audit Committee’’. This document also 

will be available for comment at 

http://www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Thomas J. Smith, Deputy Director and 

Chief Accountant, or Jennifer Bauer, 

Special Counsel, Division of Clearing 

and Intermediary Oversight, Commodity 

Futures Trading Commission, 

jbauer@cftc.gov, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. Telephone (202) 418–5472. 

SUPPLEMENTARY INFORMATION: 

The Commodity Exchange Act 2

(‘‘Act’’) authorizes the Commission to 

adopt regulations imposing minimum 

financial and related reporting 

requirements upon FCMs. In this regard, 

Section 4f(b) of the Act authorizes the 

Commission to adopt regulations 

imposing minimum capital 

requirements upon FCMs. In addition, 

Section 4d of the Act requires FCMs to 

segregate from their own assets all 

money, securities, and property 

deposited by customers to margin, 

guarantee, or secure futures positions, 

and Section 4f(a)(1) of the Act 

authorizes the Commission to establish 

financial reporting requirements upon 

FCMs. Consistent with this authority, 

the Commission has adopted regulations 

addressing minimum financial and 

related reporting requirements for 

FCMs.3

The Act further imposes obligations 

upon DCMs and NFA to monitor FCMs 

for compliance with the minimum 

financial and related reporting 

requirements. Specifically, DCM Core 

Principle 11 requires a board of trade to 

establish and to enforce rules addressing 

the financial integrity of FCMs.4 In 

addition, Section 17(p)(2) of the Act 

requires NFA to establish minimum 

capital, segregation, and other financial 

requirements for member FCMs and to 

implement a program to audit and to 

enforce compliance with such 

requirements. Minimum standards for 

an effective financial surveillance 

program are further set forth in 

interpretations issued by the 

Commission’s Division of Trading and 

Markets.5

In 1984, a number of futures 

exchanges (now, DCMs) and NFA 

(collectively referred to as SROs) 

entered into a Joint Audit Agreement 

(‘‘1984 Agreement’’). The 1984 

Agreement generally provides that an 

FCM that is a member of more than one 

SRO would have a single designated 

SRO (‘‘DSRO’’). The DSRO is primarily 

responsible for conducting periodic 

financial examinations, the results of 

which are shared with the other SROs 

of which the FCM is a member. The 

DSRO process is intended to enhance 

the effectiveness and efficiency of the 

SROs’ financial surveillance function by 

avoiding unnecessary duplicative 

financial examinations of FCMs that are 

members of more than one SRO. This 

regulatory approach was endorsed by 

the Commission when it adopted 

Regulation 1.52, which permits DSROs 

to enter into cooperative agreements 

sharing financial surveillance oversight 

responsibilities for FCMs that are 

members of more than one SRO, 

provided that the oversight agreement is 

approved by the Commission after 

public notice and comment.6


rmajette on PRODPC74 with NOTICES
Federal Register / Vol. 73, No. 177 / Thursday, September 11, 2008 / Notices 52833 

information necessitated by such minimum 

financial and related reporting requirements by any 

[FCM or IB that] is a member of more than one 

[SRO]; (5) Fosters cooperation and coordination 

among the contract markets; and (6) Does not 

hinder the development of a registered futures 

association under [S]ection 17 of the Act.’’

7One of the comments received with respect to 

the proposed amendments published in 2004 was 

from the Futures Industry Association (‘‘FIA’’), 

dated June 18, 2004, which stated that the FIA’s 

comments may change based on the results of the 

Commission’s SRO study and that any action taken 

with respect to the proposed amendments to the 

JAC agreement should be deferred until the 

completion of the SRO study. 

8 72 FR 6936 (February 14, 2007). 

9See 72 FR 65658 (November 23, 2007). 

In 2004, the SROs, through the JAC, 

submitted proposed amendments to the 

1984 agreement to the Commission for 

approval. The Commission published 

the proposed amendments for public 

comment on April 12, 2004. The 

proposal, however, became linked to the 

Commission’s study on the SRO 

process, which encompassed the topic 

of the general governance of SROs and 

the role of industry self-regulation.7 The 

Commission completed its SRO 

governance study in 2007 with the 

adoption of a regulation providing 

acceptable practices under core 

principles for the composition of boards 

of directors of SROs.8 However, the 

effectiveness of this regulation has been 

stayed,9 and no final action was taken 

by the Commission with respect to the 

amendments proposed in 2004. The 

1984 Agreement has remained in effect, 

and the JAC has continued its role of 

enabling the cooperative examination of 

member firms in the intervening time 

period. 

The Commission has now received 

from the JAC a revised series of 

proposed amendments to the 1984 

Agreement (‘‘Proposed Agreement’’) for 

which approval has been requested. In 

accordance with Regulation 1.52(g), the 

Commission is publishing this notice to 

request public comment on the 

Proposed Agreement before taking 

action to approve or to deny approval of 

the Proposed Agreement. 

The Proposed Agreement includes 

provisions addressing JAC governance 

procedures and voting rights, 

membership criteria, information 

sharing arrangements, and DSRO 

designation criteria. The Proposed 

Agreement differs in several material 

respects from the revisions published 

for comment in 2004, and many 

comments received in 2004 were related 

to provisions which are no longer 

applicable in the Proposed Agreement. 

In addition, in the intervening period of 

four years commenters may have 

changed their positions from those 

previously communicated. Therefore, 

the Commission will not consider the 

comments submitted in response to the 

2004 request for comments in assessing 

whether the Proposed Agreement 

satisfies the requirements of Regulation 

1.52(g). Accordingly, any person 

wishing to comment on the Proposed 

Agreement should submit a comment 

letter. 

The Commission invites comment on 

the Proposed Agreement, particularly 

with respect to the ability of the DSRO 

system to continue to serve the public 

interest, reduce duplicative reporting 

and examination burdens on FCMs, 

strengthen customer protections, and 

foster cooperation and coordination 

among DCMs. 

The 1984 Agreement, Commission 

letter approving the 1984 Agreement, 

and the Proposed Agreement are 

available on the Commission’s Web site 

at http://www.cftc.gov upon the 

issuance of this notice by the 

Commission. Copies of these documents 

also may be obtained from the Office of 

the Secretariat, Commodity Futures 

Trading Commission, 1155 21st Street, 

NW., Washington, DC 20581. 

Issued in Washington, DC on September 8, 

2008, by the Commission. 

David Stawick, 

Secretary of the Commission. 

[FR Doc. E8–21114 Filed 9–10–08; 8:45 am] 

BILLING CODE 6351–01–P 

COMMODITY FUTURES TRADING 

COMMISSION 

Privacy Act of 1974; System of 

Records 

AGENCY: Commodity Futures Trading 

Commission (CFTC). 

ACTION: Proposed routine use; request 

for public comment. 

SUMMARY: The CFTC proposes to adopt 

a new routine use that would permit 

disclosure of CFTC records governed by 

the Privacy Act when reasonably 

necessary to respond and prevent, 

minimize, or remedy harm that may 

result from an agency data breach or 

compromise. 

DATES: The deadline for public 

comments is October 14, 2008. 

Comments received after that date will 

be considered at the CFTC’s discretion. 

ADDRESSES: Interested parties are 

invited to submit written comments. 

Reference should be made to ‘‘Privacy 

Act of 1974; System of Records.’’

Comments should be mailed or 

delivered to: Commodity Futures 

Trading Commission, 1155 21st Street, 

NW., Washington, DC 20581, Attention: 

Office of the Secretariat. Comments may 

be sent by facsimile to 202.418.5521, or 

by e-mail to secretary@cftc.gov. 

FOR FURTHER INFORMATION CONTACT: Gail 

Scott, Attorney, CFTC, Office of General 

Counsel, 1155 21st Street, NW., 

Washington, DC 20581, 202–418–5139, 

gscott@cftc.gov. 

SUPPLEMENTARY INFORMATION: In 

accordance with the Privacy Act of 

1974, 5 U.S.C. 552a, and as 

recommended in the Office of 

Management and Budget Memorandum 

M–07–16 (Attachment 2), this document 

provides public notice that the CFTC is 

proposing to adopt a new ‘‘routine use’’

that will apply to all CFTC records 

systems covered by the Privacy Act of 

1974. The Act applies to agency systems 

of records about individuals that the 

agency maintains and retrieves by name 

or other personal identifier, such as its 

personnel and payroll systems and 

certain other CFTC records systems. A 

list of the agency’s current Privacy Act 

systems of records can be viewed on the 

CFTC’s Web site at: http://www.cftc.gov/ 

lawandregulation/federalregister/ 

systemsofrecords/index.htm. The new 

routine use would be added to the 

section General Statement of Routine 

Uses, which describes routine uses that 

apply globally to all CFTC Privacy Act 

records systems. 

This new routine use is needed in 

order to allow for disclosure of records 

to appropriate persons and entities for 

purposes of response and remedial 

efforts in the event of a breach of data 

contained in the protected systems. This 

routine use will facilitate an effective 

response to a confirmed or suspected 

breach by allowing for disclosure to 

individuals affected by the breach, in 

cases, if any, where such disclosure is 

not otherwise authorized under the Act. 

This routine use will also authorize 

disclosures to others who are in a 

position to assist in response efforts, 

either by assisting in notification to 

affected individuals or otherwise 

playing a role in preventing, 

minimizing, or remedying harms from 

the breach. 

The Privacy Act authorizes the agency 

to adopt routine uses that are consistent 

with the purpose for which information 

is collected and subject to that Act. 5 

U.S.C. 552a(b)(3); see also 5 U.S.C. 

552a(a)(7). The CFTC believes that it is 

consistent with the collection of 

information pertaining to such 

individuals to disclose Privacy Act 

records when, in doing so, it will help 

prevent, minimize or remedy a data 

breach or compromise that may affect 

such individuals. By contrast, the CFTC 

believes that failure to take reasonable 


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