63976 Federal Register / Vol. 72, No. 219 / Wednesday, November 14, 2007 / Rules and Regulations 

1Commission regulations referred to herein are 

found at 17 CFR Ch. I (2007). References to trading 

on U.S. DCMs or DTEFs shall include trading that 

is subject to the rules of such entities as well. 2 72 FR 15637 (April 2, 2007). 

3Proposed Regulation 3.10(c)(2)(ii) provided that 

a foreign broker acting in accordance with the 

codified foreign broker exemption ‘‘remains subject 

to all other provisions of the Act and of the rules, 

regulations, and orders thereunder.’’ (emphasis 

added). 

4See, e.g., 72 FR at 15639 (April 2, 2007). 

Authority: Pub. L. 106–51, 113 Stat. 252 

(15 U.S.C. 1841 note). 

■ 2. Section 400.103 is revised to read 

as follows: 

§ 400.103 Offices. 

The principal offices of the Board are 

in the U.S. Department of Commerce, 

Washington, DC 20230. 

[FR Doc. E7–22253 Filed 11–13–07; 8:45 am] 

BILLING CODE 3510–NB–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 1, 3, 4, 15, and 166 

RIN 3038–AC26 

Exemption From Registration for 

Certain Foreign Persons 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Final rule. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’) 

has amended Commission Regulation 

3.10 concerning the registration of firms 

located outside the U.S. that are engaged 

in intermediating commodity interest 

transactions on U.S. designated contract 

markets (‘‘DCMs’’) and U.S. derivative 

transaction execution facilities 

(‘‘DTEFs’’).1 The amended regulation 

codifies past actions of the Commission 

or its staff to permit certain foreign firms 

that limit their customers to foreign 

customers, and submit U.S. DCM and 

DTEF business on behalf of those 

customers for clearing on an omnibus 

basis through a registered futures 

commission merchant (‘‘FCM’’), to be 

exempt from registration as an FCM 

pursuant to section 4d of the 

Commodity Exchange Act (‘‘Act’’). The 

amended regulation similarly extends 

the relief from registration to those 

foreign persons acting in the capacity of 

an introducing broker (‘‘IB’’), 

commodity trading advisor (‘‘CTA’’) and 

commodity pool operator (‘‘CPO’’) 

solely on behalf of foreign customers. 

DATES: Effective Date: December 14, 

2007. 

FOR FURTHER INFORMATION CONTACT: 

Lawrence B. Patent, Deputy Director, or 

Andrew V. Chapin, Special Counsel, at 

(202) 418–5430, Division of Clearing 

and Intermediary Oversight, Commodity 

Futures Trading Commission, Three 

Lafayette Centre, 1155 21st Street, NW., 

Washington, DC 20581. Electronic mail: 

lpatent@cftc.gov or achapin@cftc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Commission published for 

comment on April 2, 2007 proposed 

amendments to Commission Regulation 

3.10 (‘‘the Proposal’’) 2 to clarify when 

certain persons located outside the U.S. 

may conduct commodity interest 

activities with respect to U.S. markets 

on behalf of customers located outside 

the U.S. without having to register in 

the appropriate capacity with the 

Commission. In particular, the 

Commission proposed to exempt from 

registration as an FCM certain foreign 

firms that limit their customers to 

foreign customers and submit U.S. DCM 

and DTEF business on behalf of those 

customers for clearing on an omnibus 

basis through a registered FCM. These 

firms were referred to in the Proposal as 

‘‘foreign brokers.’’ The Commission also 

proposed to create a single definition of 

‘‘foreign broker’’ and ‘‘commodity 

interest’’ consistent with the Proposal. 

Part 3 of the Commission’s regulations 

governs the registration of 

intermediaries engaged in the offer and 

sale of, and providing advice 

concerning, futures and commodity 

options traded on U.S. markets, 

including both DCMs and DTEFs. In 

particular, Regulation 3.10 sets forth the 

manner in which FCMs, IBs, CTAs, 

CPOs, and leverage transaction 

merchants must apply for registration 

with the Commission. Regulation 

3.10(c) also provides an exemption from 

registration for certain persons. 

Currently, the only exemption from 

registration as an FCM is for any person 

trading solely for proprietary accounts, 

as defined in Regulation 1.3(y). 

As explained in the Proposal, the 

Commission sought to provide clarity to 

its registration requirements under Part 

3 by codifying the longstanding 

Commission policy, known as the 

‘‘foreign broker exemption,’’ regarding 

the activities of certain foreign 

intermediaries engaged in soliciting or 

accepting commodity interest 

transactions solely on behalf of 

customers located outside the U.S. In 

particular, the Commission proposed to 

exempt from registration as an FCM any 

person that (1) limits its customers to 

customers located outside the U.S., (2) 

confines its commodity interest 

activities to areas outside the U.S, and 

(3) submits its trades for clearing on an 

omnibus basis through a registered 

FCM. 

II. Comments Regarding the Proposal 

The Commission received two 

comment letters on the Proposal, one 

from the National Futures Association 

(‘‘NFA’’) and one from the Futures 

Industry Association (‘‘FIA’’). Both NFA 

and FIA supported the Commission’s 

initiative to codify the foreign broker 

exemption as a means to provide greater 

legal certainty to futures industry 

participants. However, FIA commented 

that the effect of the Proposal would be 

to extend the Commission’s regulatory 

requirements over the activities of 

foreign brokers, rather than simply 

codify the Commission’s existing policy. 

In particular, FIA stated that, as 

proposed, amended Regulation 

3.10(c)(2)(ii) would subject foreign 

brokers to the full panoply of 

Commission regulations applicable to 

registered FCMs, such as requirements 

regarding fitness, customer funds 

segregation, and regulatory capital.3 As 

such, FIA recommended that the 

Commission revise the proposed 

amendment to Regulation 3.10(c) to 

limit the extent to which the provisions 

of the Act and Commission regulations 

apply in a manner consistent with the 

Commission’s longstanding policy 

towards foreign brokers. In support of 

its request, FIA noted that the 

Commission has recognized that a 

foreign broker holding a customer 

omnibus account with a registered FCM 

does not implicate the same regulatory 

concerns as a foreign broker that has 

more direct contact with U.S. markets, 

such as a registered FCM clearing on a 

DCM or DTEF.4

Additionally, both FIA and NFA 

recommended that the Commission 

provide greater legal certainty to futures 

industry participants by similarly 

codifying existing Commission policy 

with respect to registration exemptions 

for other foreign intermediaries, i.e., IBs, 

CTAs and CPOs, that are not engaged in 

commodity interest activities on behalf 

of U.S. customers. In support of its 

request, FIA referred to the Federal 

Register release issued by the 

Commission promulgating final rules 

establishing the registration 

requirements and procedures for 

introducing brokers and other futures 

industry professionals. In that release, 

the Commission stated that: 

given this agency’s limited resources, it is 

appropriate at this time to focus [the 


rmajette on PROD1PC64 with RULES
Federal Register / Vol. 72, No. 219 / Wednesday, November 14, 2007 / Rules and Regulations 63977 

5 48 FR 35248, 35261 (August 3, 1983). 

6CFTC Staff Letter 76–21, [1975–1977 Transfer 

Binder] Comm. Fut. L. Rep. (CCH) ¶ 20,222 (August 

15, 1976). 

7See Tamari v. Bache & Co., 730 F.2d 1103, 1108 

(7th Cir. 1984), cert. denied, 469 U.S. 871 (1984) 

(holding that a U.S. federal district court had 

subject matter jurisdiction under the Act over a 

cause of action arising from trading on U.S. 

exchanges, even though the parties were located 

outside the U.S. and contacts between them 

occurred in a foreign country). 8See, e.g., Regulation 15.05, which states that, 

absent an existing agency agreement between a 

foreign broker and another U.S. person, an FCM is 

designated as the agent of a foreign broker for 

purposes of accepting delivery and service issued 

to the foreign broker by the Commission. The 

agency requirement similarly applies to any IB who 

introduces such an account to an FCM. 

9Supra, n. 5. Regulation 1.3(aa) defines 

‘‘associated person’’ to mean a natural person 

engaged in the solicitation or acceptance of 

customer orders, or the supervision of any person 

or persons so engaged. 

Commission’s] customer protection activities 

upon domestic firms and upon firms 

soliciting or accepting orders from domestic 

users of the futures markets and that the 

protection of foreign customers of firms 

confining their activities to areas outside this 

country, its territories, and possessions may 

best be for local authorities in such areas.5

Accordingly, FIA requested that the 

Commission amend its regulations to 

provide an exemption from registration 

to any foreign person engaged in the 

activity of an IB solely on behalf of 

customers located outside the U.S. 

Similarly, NFA referred to the noaction position taken by the 

Commission’s Office of General Counsel 

stating that: (1) A person who operates 

a commodity pool outside of the 

territorial U.S. is not required to register 

as a CPO when such a person confines 

the pool activities to areas outside the 

territorial U.S., none of the participants 

in the pool is a resident or citizen of the 

U.S., and none of the funds or capital 

contributed to the pool is from U.S. 

sources; and (2) a trading advisor 

located outside the territorial U.S. who 

provides advice as to the advisability of 

trading futures contracts on domestic 

and foreign exchanges is not required to 

register when such a person confines its 

advisory services to areas outside of the 

territorial U.S., and none of its clients is 

a citizen or resident of the U.S.6

Accordingly, NFA requested that the 

Commission amend its regulations to 

provide an exemption from registration 

for any foreign person acting in the 

capacity of a CTA or CPO solely on 

behalf of customers located outside the 

U.S. 

Consistent with this request, NFA 

further requested that the Commission 

amend Regulation 3.12(h) to create an 

exemption from registration as an 

associated person for any individual 

located in the branch office of a 

Commission registrant that does not 

solicit or accept orders from customers 

located in the U.S. 

The Commission did not receive any 

comments regarding its proposal to 

revise and reserve certain regulations to 

provide a single definition for ‘‘foreign 

broker’’ and ‘‘commodity interest’’ that 

would apply to all of its regulations. 

III. Final Regulations 

As set forth in the Proposal, the 

Commission believes it is appropriate to 

amend its regulations to provide greater 

legal certainty with respect to the 

commodity interest activities on behalf 

of non-U.S. customers that are 

undertaken on U.S. markets by persons 

located outside the U.S. It was the 

Commission’s intent to codify its 

longstanding policy, and not to extend 

the scope of its regulations with respect 

to foreign brokers or other foreign 

intermediaries. As one of the 

commenters noted, transactions 

solicited or accepted by foreign brokers 

on behalf of non-U.S. customers for 

trading on U.S. markets directly 

implicate the pricing and hedging 

functions of the domestic markets, as 

would be the case for an entirely 

domestic transaction.7 The Commission 

believes that the presence of a registered 

FCM in the clearing process obviates the 

need for a foreign broker to comply with 

the full panoply of Commission 

regulations applicable to registered 

FCMs. A registered FCM clearing a 

transaction on a DCM or DTEF, among 

other requirements, must satisfy the 

fitness standards administered by NFA 

and the minimum capital requirements 

set forth in Commission Regulation 

1.17, as well as comply with the 

requirements regarding the segregation 

of customer funds set forth in section 4d 

of the Act. 

In light of the comments received and 

its own reconsideration of the issues 

involved, the Commission has 

determined to amend Regulation 3.10 

with certain revisions to the Proposal. 

As amended, Regulation 3.10 will 

specify that a foreign broker is not 

required to register as an FCM if it: (1) 

Limits its customers to customers 

located outside the U.S., (2) confines its 

commodity interest activities to areas 

outside the U.S, and (3) submits its 

trades for clearing on an omnibus basis 

through a registered FCM. A foreign 

broker will remain subject to existing 

provisions applicable to the activities of 

a foreign broker, including Parts 15 to 

21 of the Commission’s regulations 

regarding large trader reporting,8 and 

Regulation 1.58 regarding gross 

collection of exchange-set margin. 

Conversely, a foreign broker will not be 

subject to any provisions of the Act or 

Commission rules, regulations and 

orders thereunder applicable solely to a 

registered FCM or to any person 

required to be so registered. For 

example, a foreign broker will not be 

required to comply with the minimum 

financial requirements or requirements 

regarding the segregation of customer 

funds, reporting or disclosure to 

customers, and related recordkeeping 

pertaining to the foregoing 

requirements. However, the provisions 

of the Act and Commission regulations 

applicable to ‘‘any person’’ will apply to 

a foreign broker, such as those 

prohibiting fraud or manipulation by a 

foreign broker trading for its own 

account. 

The Commission also has determined 

to adopt new Regulation 3.10(c)(3) to 

provide an exemption from registration 

to other foreign intermediaries acting 

solely on behalf of customers located 

outside the U.S. In particular, the 

Commission is adopting new Regulation 

3.10(c)(3)(i) to provide an exemption 

from registration for any foreign person 

acting in the capacity of an IB, CTA or 

CPO solely with the respect to 

customers located outside the U.S., 

provided that all commodity interest 

transactions are submitted for clearing 

to a registered FCM. A foreign person 

acting in the capacity of a CTA or CPO 

will remain subject to the antifraud 

prohibition of section 4o of the Act. 

Otherwise, consistent with the revised 

regulation applicable to foreign brokers, 

new Regulation 3.10(c)(3)(ii) states that 

any foreign person acting in accordance 

with this registration exemption is not 

required to comply with those 

provisions of the Act and of the rules, 

regulations and orders thereunder 

applicable solely to any person 

registered in such capacity, or any 

person required to be so registered. 

Consistent with the amendments 

applicable to foreign intermediaries, the 

Commission also has determined to 

amend Regulation 3.12 to provide an 

exemption from AP registration for any 

foreign individual located in the foreign 

branch office of a Commission registrant 

that engages in any activity as an AP, as 

defined in Regulation 1.3(aa), solely on 

behalf of customers located outside the 

U.S.9 A person exempt from AP 

registration pursuant to this provision 

may not supervise other individuals 

engaged in the solicitation of customers 

located in the U.S. for trading on a DCM 

or DTEF. 

Any person seeking to act in 

accordance with any of the foregoing 

exemptions from registration should 


rmajette on PROD1PC64 with RULES
63978 Federal Register / Vol. 72, No. 219 / Wednesday, November 14, 2007 / Rules and Regulations 

10A person wishing to act as an intermediary for 

security futures transactions on a U.S. DCM or 

DTEF may notice register as a securities brokerdealer (‘‘BD’’) if it is registered as an FCM or IB and 

is a member of NFA. See Section 15(b)(11) of the 

Securities Exchange Act (15 U.S.C. 78o(b)(11)) and 

17 CFR 240.15b11–1. Foreign brokers taking 

advantage of the exemption from registration under 

the Act discussed herein would not qualify for 

notice registration as BDs. Accordingly, if such 

foreign brokers want to solicit or accept orders for 

security futures products traded on U.S. DCMs or 

DTEFs, they must fully register as BDs in 

accordance with Section 15(b)(1) of the Securities 

Exchange Act and regulations thereunder, unless 

other relief from such registration is available. 

Foreign brokers may wish to consult the U.S. 

Securities and Exchange Commission (‘‘SEC’’) and/ 

or private counsel regarding how taking advantage 

of this relief might affect their registration status 

with the SEC. 

11 47 FR 18618–18621 (April 30, 1982). 

12 47 FR 18619–18620. 

13 47 FR 18619–18620. 

14 47 FR 18618–18620; see also 48 FR at 35276 

(August 3, 1983). 

15Pub. L. 104–13 (May 13, 1995). 16 72 FR at 15640 (April 2, 2007). 

note that the prohibition on contact 

with U.S. customers applies to 

solicitation as well as acceptance of 

orders. If a person located outside the 

U.S. were to solicit prospective 

customers located in the U.S. as well as 

outside of the U.S., these exemptions 

would not be available, even if the only 

customers resulting from the efforts 

were located outside the U.S.10

The Commission’s adoption of these 

rule amendments supersedes prior staff 

positions on these subjects. Because the 

rule amendments contain no substantive 

changes to prior staff letters, no party 

should be disadvantaged. The new 

regulations will make these staff 

positions more accessible and widely 

understood and obviate the need for 

individual relief. 

IV. Related Matters 

A. Administrative Procedure Act 

The Administrative Procedure Act 

generally requires that, before an agency 

adopts a rule, the agency provide an 

opportunity for notice and comment 

thereon. That opportunity is not 

required, however, when the agency for 

good cause finds such procedure 

unnecessary. The Commission has 

determined to amend Regulation 1.55(f) 

without opportunity for notice or 

comment. Notice and comment is 

unnecessary in this instance because the 

amendment to Regulation 1.55(f) solely 

corrects the reference to the citation for 

‘‘institutional customer’’ in Regulation 

1.3. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’), 5 U.S.C. 601–611, requires that 

agencies, in proposing regulations, 

consider the impact of those regulations 

on small businesses. The Commission 

has previously established certain 

definitions of ‘‘small entities’’ to be used 

by the Commission in evaluating the 

impact of its regulations on such entities 

in accordance with the RFA.11 The 

Commission previously has determined 

that registered FCMs are not small 

entities for the purpose of the RFA 

because each FCM has an underlying 

fiduciary relationship with its 

customers, regardless of the size of the 

FCM.12 The Commission notes that 

certain foreign persons affected by the 

changes to the Commission’s regulations 

would be registered as FCMs if not for 

the exemption provided therein and, as 

such, would maintain a fiduciary 

relationship with customers similar to 

the relationship maintained by each 

registered FCM. The Commission also 

previously has determined that 

registered CPOs are not small entities 

for the purpose of the RFA.13

Other foreign persons affected by the 

changes would be registered as IBs and 

CTAs if not for the exemption provided 

therein. The Commission has stated that 

it would evaluate within the context of 

a particular rule whether all or some 

affected IBs and CTAs would be 

considered to be small entities and, if 

so, the economic impact on them of any 

rule.14 Although certain foreign IBs and 

CTAs might be small entities for 

purposes of the rule, the amended rules 

will reduce the regulatory burden on all 

foreign IBs and CTAs. 

Therefore, the Acting Chairman, on 

behalf of the Commission, hereby 

certifies, pursuant to 5 U.S.C. 605(b), 

that these regulations will not have a 

significant economic impact on a 

substantial number of small entities. No 

comment was received regarding the 

impact of these amendments on small 

businesses. 

C. Paperwork Reduction Act 

As required by the Paperwork 

Reduction Act of 1995,15 the 

Commission submitted a copy of the 

proposed rule amendments to the Office 

of Management and Budget for its 

review. The Commission did not receive 

any public comments relative to its 

analysis of paperwork burdens 

associated with this rulemaking. 

D. Costs and Benefits Analysis 

Section 15(a) of the Act requires the 

Commission to consider the costs and 

benefits of its actions before issuing new 

regulations under the Act. By its terms, 

Section 15(a) does not require the 

Commission to quantify the costs and 

benefits of new regulations or to 

determine whether the benefits of the 

regulations outweigh their costs. Rather, 

Section 15(a) requires the Commission 

to ‘‘consider the cost and benefits’’ of 

the subject regulations. 

The Commission published an 

analysis of costs and benefits when it 

proposed the rule amendments that it is 

now adopting.16 It did not receive any 

public comments pertaining to the 

analysis. 

List of Subjects 

17 CFR Part 1 

Definitions, Registration, Minimum 

financial and reported requirements, 

Prohibited transactions in commodity 

options, Customers’ money, securities 

and property, Miscellaneous. 

17 CFR Part 3 

Definitions, Foreign futures, 

Consumer protection, Foreign options, 

Registration requirements. 

17 CFR Part 4 

Advertising, Commodity futures, 

Consumer protection, Recordkeeping 

and reporting requirements. 

17 CFR Part 15 

Brokers, Reporting and recordkeeping 

requirements. 

17 CFR Part 166 

Authorization to trade, Customer 

protection. 

■ In consideration of the foregoing, and 

pursuant to the authority contained in 

the Commodity Exchange Act and, in 

particular, Sections 2(a)(1), 4(b), 4c and 

8a thereof, 7 U.S.C. 2, 6(b), 6c and 12a 

(1982), and pursuant to the authority 

contained in 5 U.S.C. 552 and 552b 

(1982), the Commission hereby amends 

Chapter I of Title 17 of the Code of 

Federal Regulations as follows: 

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, 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, unless otherwise 

noted. 

■ 2. Section 1.3 is amended by adding 

paragraphs (xx) and (yy) to read as 

follows: 

§ 1.3 Definitions. 

* * * * * 

(xx) Foreign Broker. This term means 

any person located outside the United 

States, its territories or possessions who 


rmajette on PROD1PC64 with RULES
Federal Register / Vol. 72, No. 219 / Wednesday, November 14, 2007 / Rules and Regulations 63979 

is engaged in soliciting or in accepting 

orders only from persons located 

outside the United States, its territories 

or possessions for the purchase or sale 

of any commodity interest transaction 

on or subject to the rules of any 

designated contract market or 

derivatives transaction execution 

facility and that, in or in connection 

with such solicitation or acceptance of 

orders, accepts any money, securities or 

property (or extends credit in lieu 

thereof) to margin, guarantee, or secure 

any trades or contracts that result or 

may result therefrom. 

(yy) Commodity Interest. This term 

means: 

(1) Any contract for the purchase or 

sale of a commodity for future delivery; 

and 

(2) Any contract, agreement or 

transaction subject to Commission 

regulation under section 4c or 19 of the 

Act. 

■ 3. Section 1.55 is amended by revising 

paragraph (f) to read as follows: 

§ 1.55 Distribution of ‘‘Risk Disclosure 

Statement’’ by futures commission 

merchants and introducing brokers. 

* * * * * 

(f) A futures commission merchant or, 

in the case of an introduced account, an 

introducing broker, may open a 

commodity futures account for an 

‘‘institutional customer’’ as defined in 

§ 1.3(g) without furnishing such 

institutional customer the disclosure 

statements or obtaining the 

acknowledgments required under 

paragraph (a) of this section §§ 1.33(g) 

and 1.65(a)(3), and §§ 30.6(a), 33.7(a), 

155.3(b)(2), 155.4(b)(2) and 190.10(c) of 

this chapter. 

* * * * * 

§ 1.56 [Amended] 

■ 4. Section 1.56 is amended by 

removing and reserving paragraph (a). 

PART 3—REGISTRATION 

■ 5. The authority citation for part 3 

continues to read as follows: 

Authority: 5 U.S.C. 522, 522b; 7 U.S.C. 1a, 

2, 4, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 

6m, 6n, 6o, 6p, 8, 9, 9a, 12, 12a, 13b, 13c, 

16a, 18, 19, 21, 23, unless otherwise noted. 

§ 3.1 [Amended] 

■ 6. Section 3.1 is amended by 

removing and reserving paragraph (f). 

■ 7. Section 3.10 is amended by revising 

paragraph (c) to read as follows: 

§ 3.10 Registration of futures commission 

merchants, introducing brokers, commodity 

trading advisors, commodity pool operators 

and leverage transaction merchants. 

* * * * * 

(c) Exemption from registration for 

certain persons. (1) A person trading 

solely for proprietary accounts, as 

defined in § 1.3(y) of this chapter, is not 

required to register as a futures 

commission merchant: Provided, that 

such person remains subject to all other 

provisions of the Act and of the rules, 

regulations and orders thereunder. 

(2)(i) A foreign broker, as defined in 

§ 1.3(xx) of this chapter, is not required 

to register as a futures commission 

merchant if it submits any commodity 

interest transactions executed on or 

subject to the rules of designated 

contract market or derivatives 

transaction execution facility for 

clearing on an omnibus basis through a 

futures commission merchant registered 

in accordance with section 4d of the 

Act. 

(ii) A foreign broker acting in 

accordance with paragraph (c)(2)(i) of 

this section is not required to comply 

with those provisions of the Act and of 

the rules, regulations and orders 

thereunder applicable solely to any 

registered futures commission merchant 

or any person required to be so 

registered. 

(3)(i) A person located outside the 

United States, its territories or 

possessions engaged in the activity of: 

An introducing broker, as defined in 

§ 1.3(mm) of this chapter; a commodity 

trading advisor, as defined in § 1.3(bb) 

of this chapter; or a commodity pool 

operator, as defined in § 1.3(nn) of this 

chapter, in connection with any 

commodity interest transaction made on 

or subject to the rules of any designated 

contract market or derivatives 

transaction execution facility only on 

behalf of persons located outside the 

United States, its territories or 

possessions, is not required to register 

in such capacity: Provided, that any 

such commodity interest transaction 

executed on or subject to the rules of 

designated contract market or 

derivatives transaction execution 

facility is submitted for clearing through 

a futures commission merchant 

registered in accordance with section 4d 

of the Act. 

(ii) A person acting in accordance 

with paragraph (c)(3)(i) of this section 

remains subject to section 4o of the Act, 

but otherwise is not required to comply 

with those provisions of the Act and of 

the rules, regulations and orders 

thereunder applicable solely to any 

person registered in such capacity, or 

any person required to be so registered. 

* * * * * 

■ 8. Section 3.12 is amended by 

removing ‘‘or’’ at the end of paragraph 

(h)(1)(ii), removing the period and 

adding a semi-colon and ‘‘or’’ at the end 

of paragraph (h)(1)(iii)(D), and adding 

paragraph (h)(1)(iv) to read as follows: 

§ 3.12 Regulation of associated persons of 

futures commission merchants, introducing 

brokers, commodity trading advisors, 

commodity pool operators and leverage 

transaction merchants. 

* * * * * 

(h) * * * 

(1) * * * 

(iv) Engaged in any activity as an 

associated person, as defined in § 1.3(aa) 

of this chapter, from a location outside 

the United States, its territories or 

possessions, and limits such activities to 

customers located outside the United 

States, its territories or possessions. 

* * * * * 

PART 4—COMMODITY POOL 

OPERATORS AND COMMODITY 

TRADING ADVISORS 

■ 9. The authority citation for part 4 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 4, 6(c), 6b, 6c, 6l, 

6m, 6n, 6o, 12a and 23. 

§ 4.10 [Amended] 

■ 10. Section 4.10 is amended by 

removing and reserving paragraph (a). 

PART 15—REPORTS—GENERAL 

PROVISIONS 

■ 11. The authority citation for part 15 

continues to read as follows: 

Authority: 7 U.S.C. 2, 5, 6(c), 6a, 6c(a)–(d), 

6f, 6g, 6i, 6k, 6m, 6n, 7, 9, 12a, 19 and 21, 

as amended by the Commodity Futures 

Modernization Act of 2000, Appendix E of 

Pub. L. 106–554, 114 Stat. 2763 (2000). 

§ 15.00 [Amended] 

■ 12. Section 15.00 is amended by 

removing and reserving paragraph (g). 

PART 166—CUSTOMER PROTECTION 

RULES 

■ 13. The authority citation for part 166 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 6b, 6c, 6d, 6g, 6h, 

6k, 6l, 6o, 7, 12a, 21, and 23, as amended by 

the Commodity Futures Modernization Act of 

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

Stat. 2763 (2000). 

§ 166.1 [Amended] 

■ 14. Section 166.1 is amended by 

removing and reserving paragraph (b). 

Dated: November 7, 2007. 

By the Commission. 

David Stawick, 

Secretary of the Commission. 

[FR Doc. E7–22110 Filed 11–13–07; 8:45 am] 

BILLING CODE 6351–01–P 


rmajette on PROD1PC64 with RULES