Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules 45185 

1 66 FR 42256 (August 10, 2001). 

2Pub. L. 106–554, 114 Stat. 2763 (December 21, 

2000). 3 7 U.S.C. 2(h)(3). 

4 7 U.S.C. 2(h)(4). 

5 7 U.S.C. 2(h)(5). 

6 69 FR 43285 (July 20, 2004). 

7 Id. at 43289. 

July, 1980. The MCAI required a one-time 

inspection for leaks and replacement if leaks 

were found. There was no MCAI action to 

determine whether leaks developed in the 

future. The FAA believes that mandatory 

replacement of the fittings will eliminate 

current leaking fittings as well as preventing 

the problem from developing in the future. 

Other FAA AD Provisions 

(g) The following provisions also apply to 

this AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, Standards Staff, 

FAA, has the authority to approve AMOCs 

for this AD, if requested using the procedures 

found in 14 CFR 39.19. Send information to 

ATTN: Karl Schletzbaum, Aerospace 

Engineer, FAA, Small Airplane Directorate, 

901 Locust, Room 301, Kansas City, Missouri 

64106; telephone: (816) 329–4146; fax: (816) 

329–4090. Before using any approved AMOC 

on any airplane to which the AMOC applies, 

notify your appropriate principal inspector 

(PI) in the FAA Flight Standards District 

Office (FSDO), or lacking a PI, your local 

FSDO. 

(2) Airworthy Product: For any requirement 

in this AD to obtain corrective actions from 

a manufacturer or other source, use these 

actions if they are FAA-approved. Corrective 

actions are considered FAA-approved if they 

are approved by the State of Design Authority 

(or their delegated agent). You are required 

to assure the product is airworthy before it 

is returned to service. 

(3) Reporting Requirements: For any 

reporting requirement in this AD, under the 

provisions of the Paperwork Reduction Act 

(44 U.S.C. 3501 et seq.), the Office of 

Management and Budget (OMB) has 

approved the information collection 

requirements and has assigned OMB Control 

Number 2120–0056. 

Related Information 

(h) Refer to MCAI Airworthiness Authority 

of New Zealand AD DCA/R2000/12, dated 

June 29, 2006; and Avions Pierre Robin 

Service Bulletin 86, dated July, 1980, for 

related information. 

Issued in Kansas City, Missouri, on August 

6, 2007. 

Kim Smith, 

Manager, Small Airplane Directorate, Aircraft 

Certification Service. 

[FR Doc. E7–15794 Filed 8–10–07; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 36 and 40 

RIN 3038–AC39 

Amendments Pertinent to Registered 

Entities and Exempt Commercial 

Markets 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rulemaking. 

SUMMARY: The proposed regulations 

expand the set of persons delegated by 

the Commission with the authority to 

issue exempt commercial market (ECM) 

special calls to include the Director of 

the Division of Enforcement and that 

Director’s designees. The proposed 

regulations clarify the process for 

listing, clearing, or implementing 

registered entity products or rules, 

including dormant products and rules, 

and amend the definition of emergency 

to clarify that persons other than 

members of the governing board of a 

registered entity may declare an 

emergency on behalf of the governing 

board. The proposed regulations also 

clarify the duration of the rule approval 

period for designated contract market 

(DCM) rules that may change a material 

term or condition of a contract based on 

the agricultural commodities 

enumerated in section 1a(4) of the 

Commodity Exchange Act (CEA or Act). 

Finally, the proposed regulations clarify 

how far in advance of implementation 

registered entities must submit selfcertified contracts and rules to the 

Commission, and identify three 

additional categories of rules that a 

registered entity may implement 

without filing certified submissions or 

receiving prior Commission approval. 

DATES: Comments must be received by 

September 12, 2007. 

ADDRESSES: Comments should be sent to 

the Commodity Futures Trading 

Commission, Three Lafayette Centre, 

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. Reference should 

be made to the ‘‘Amendments Pertinent 

to Registered Entities and Exempt 

Commercial Markets.’’ Comments may 

also be submitted through the Federal 

eRulemaking Portal at http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: 

Bruce Fekrat, Special Counsel, Office of 

the Director (telephone 202.418.5578, email bfekrat@cftc.gov), Division of 

Market Oversight, Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street, NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The Commodity Futures Trading 

Commission (Commission) published 

comprehensive final regulations for 

trading facilities on August 10, 2001.1

The final regulations codified the 

procedural provisions common to 

exempt boards of trade and ECMs 

operating pursuant to sections 5d or 

2(h)(3) through (5) of the Act, 

respectively, in part 36 of the 

Commission’s regulations. The final 

regulations also codified the procedural 

provisions common to DCMs, 

derivatives transaction execution 

facilities (DTEF), and derivatives 

clearing organizations (DCO) in part 40 

of the Commission’s regulations, and 

further established the regulatory 

framework necessary to implement and 

interpret the provisions of the CEA, as 

amended by the Commodity Futures 

Modernization Act of 2000 (CFMA),2

pertinent to trading facilities. Based 

upon its subsequent experience in 

administering the Act, the Commission 

herein proposes several amendments to 

parts 36 and 40 of the Commission’s 

regulations to better implement the Act 

and provide clearer direction as to the 

Commission’s regulatory requirements 

thereunder. 

II. Exempt Commercial Markets 

The CFMA created a qualified 

exemption from the Commission’s 

jurisdiction for transactions executed or 

traded on ECMs. Section 2(h)(3) of the 

Act, which was added by the CFMA, 

applies the exemption to transactions in 

exempt commodities executed or traded 

on an electronic trading facility that are 

entered into on a principal-to-principal 

basis solely between persons that are 

eligible commercial entities.3 The CEA 

specifically reserves the applicability of 

the Commission’s antifraud and 

antimanipulation authority to 

transactions executed or traded on 

ECMs in section 2(h)(4) of the Act 4 and 

gives the Commission the authority to 

issue ECM special calls for information 

to, among other things, enforce that 

authority.5

In July 2004, the Commission 

amended regulation 36.3(b), which 

governs the Commission’s access to 

ECM transaction data, to improve the 

quality of accessible information 

relevant to its antifraud and 

antimanipulation authority.6 In that 

rulemaking, the Commission stated that 

aberrant price behavior on ECMs may 

require further Commission 

investigation and the eventual use of the 

Commission’s special call authority to 

identify wrongful conduct.7 The 

authority to issue special calls to ECMs 

currently is delegated to the Directors of 


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45186 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules 

8The Commission defines a dormant contract as 

a contract or product without open interest that, 

after the expiration of a thirty-six month 

development period following initial certification 

or approval, has not traded in the preceding twelve 

consecutive calendar months. 17 CFR 40.1(b). The 

Commission defines a dormant rule as a rule that 

has remained unimplemented for twelve 

consecutive calendar months following the rule’s 

initial certification with, or approval by, the 

Commission. 17 CFR 40.1(f). 9This alignment of procedural requirements is 

based, in part, on the premise that certain contracts 

and rules, which have remained inactive or 

unimplemented for a significant period of time, 

may no longer contain terms that are consistent 

with the Commission’s regulations and prevailing 

market conditions. 67 FR 62783, 62784 (October 9, 

2002). 

10The Commission’s regulations do not require a 

DTEF to either certify or submit for Commission 

approval a product or rule prior to listing or 

implementation. However, a DTEF, which is 

generally subject to notice filing requirements, may 

choose to self-certify products or rules or submit 

them for Commission approval pursuant to the 

procedures established in part 40 of the 

Commission’s regulations. See 17 CFR 37.7. 

11 DCM rules that will materially change a term 

or condition of a contract with open interest that 

is based on an agricultural commodity enumerated 

in section 1a(4) of the Act must be approved by the 

Commission prior to implementation. 7 U.S.C. 7a–

2(c)(2)(B). 

12See 17 CFR 40.1. 

13See 47 FR 29515 (July 7, 1982). 

14See 71 FR 1953, 1960 (January 12, 2006). 

15The term ‘‘rule’’ is defined to include any 

registered entity (DCM, DTEF, or DCO) ‘‘* * * rule, 

regulation, resolution, interpretation, stated policy, 

term and condition * * * in whatever form 

adopted, and any amendment or addition thereto or 

repeal thereof * * *’’ 17 CFR 40.1(h). 

16See 17 CFR 40.6(a)(2). 

17See 17 CFR 40.1(g). 

18See letter from James A. Newsome, President, 

NYMEX, to Jean A. Webb, Secretary of the 

Commission (September 26, 2005) (on file with the 

Commission), available at http://www.cftc.gov/foia/ 

comment05/foi05--004_1page2.htm. 

19 17 CFR 40.1(g). 

the Division of Market Oversight (DMO) 

and the Division of Clearing and 

Intermediary Oversight and their 

designees. Given the importance of the 

authority to issue special calls to the 

Commission’s ability to enforce its 

reserved antifraud and antimanipulation 

authority with respect to ECM 

transactions, the Commission herein 

proposes to amend regulation 36.3 to 

expand the set of persons with 

delegated authority to issue special calls 

pursuant to section 2(h)(5)(B)(iii) of the 

Act to include the Director of the 

Division of Enforcement and that 

Director’s designees. 

III. Proposed Amendments to Part 40 of 

the Commission’s Regulations 

A. Self-Certification, Approval, and 

Dormancy 

Part 40 of the Commission’s 

regulations currently does not clearly 

indicate that the procedural 

requirements for listing, clearing or 

implementing dormant contracts and 

rules 8 are identical to the requirements 

established for initial submissions of 

contracts and rules that have never been 

approved by, or certified with, the 

Commission.9 The current product and 

rule filing provisions of part 40 also do 

not clearly indicate that a DCM or DCO, 

in general, must choose either to comply 

with the rule approval process 

established in part 40 or, in the 

alternative, the certification process 

established in part 40 prior to listing, 

clearing, or implementing any product 

or rule, including any product or rule 

that has become dormant.10 The 

Commission therefore proposes to 

amend the language in regulations 

40.2(a), 40.3(a), 40.4(a), 40.5(a) and 

40.6(a) to clarify that a DCM or DCO in 

general must choose either to list, clear, 

or implement a product or rule, 

including any dormant product or rule, 

pursuant to the self-certification 

provisions of part 40 or, in the 

alternative, pursuant to the process 

established in part 40 for receiving the 

Commission’s prior approval.11

B. Dormant Registered Entities, 

Contracts, and Rules 

The Commission has applied the 

concept of dormancy to registered 

entities by defining a dormant market or 

clearing organization as a registered 

entity that has been designated by, or 

registered with, the Commission for a 

period of thirty-six months or more but 

has not served as a facility for the 

trading or clearing of transactions for a 

period of twelve consecutive calendar 

months.12 The Commission recognizes 

that a significant period of inactivity can 

potentially have a negative impact on a 

registered entity’s ability to implement 

rules and list and clear contracts in a 

manner that remains consistent with 

current market conditions, the 

Commission’s regulations, and selfregulatory best practices.13 Accordingly, 

the Commission has deemed that upon 

a registered entity becoming dormant, 

its rules and contracts shall also become 

dormant.14

In contrast to this view, the current 

language of the Commission’s 

regulations implies that the earliest 

possible time that a rule can become 

dormant, regardless of whether a 

registered entity has entered into 

dormancy, is at the end of a twelve 

month implementation period.15

Similarly, the current language of the 

Commission’s regulations implies that 

the earliest possible time that a contract 

can become dormant, regardless of 

whether a registered entity has entered 

into dormancy and absent affirmative 

action on the part of the registered 

entity, is at the end of a thirty-six month 

contract development period. To 

remedy any uncertainty, the 

Commission proposes to amend 

regulation 40.1(b), the definition of 

dormant product or contract, and 

regulation 40.1(f), the definition of a 

dormant rule, to clearly establish that 

the dormancy of a registered entity will 

automatically and separately trigger the 

dormancy of that entity’s contracts and 

rules. In addition, the Commission is 

proposing a technical amendment to the 

definition of a dormant DCM, DTEF, 

and DCO in regulation 40.1 to conform 

the language used to define those terms 

to the proposed amendments of 

regulations 40.1(b) and 40.1(f). 

C. Definition of Emergency 

The Commission’s regulations give 

registered entities the ability to 

implement rules in response to an 

emergency without certifying, or 

receiving the Commission’s approval of, 

such rules prior to implementation.16

The current definition of emergency 

implies that the full governing board of 

a registered entity must itself make the 

determination as to whether a 

circumstance is an emergency before 

operating under emergency 

procedures.17 This notice of rulemaking 

proposes to amend Commission 

regulation 40.1(g), the definition of 

emergency, to clarify that persons other 

than members of the governing board 

may determine that a particular 

occurrence or circumstance constitutes 

an emergency. In a letter commenting 

on a previous notice of proposed 

rulemaking, the New York Mercantile 

Exchange (NYMEX) suggested that the 

full governing board of an exchange, 

under emergency conditions, may not 

be able to issue an opinion in a timely 

manner to address an emergency.18 In 

such a situation, it may be optimal for 

a duly authorized subcommittee or 

exchange official to have the ability to 

respond to fast developing emergency 

conditions. 

The Commission is in agreement with 

NYMEX. Accordingly, the Commission 

proposes to amend the definition of 

emergency in part 40 to clarify that duly 

authorized persons may determine 

whether a particular occurrence or 

circumstance is an emergency that 

‘‘requires immediate action and 

threatens or may threaten such things as 

the fair and orderly trading in, or the 

liquidation of or delivery pursuant to, 

any agreements, contracts or 

transactions.’’ 19 The amendment would 

require that the rules of the registered 

entity specify in detail (1) the persons 


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20The Commission also proposes to amend the 

definition of emergency to clarify the definition’s 

applicability to all registered entities, including 

DCOs. 

21 7 U.S.C. 7a–2(c). 

22 Id. 

23See 17 CFR 40.4(b) and 40.5(b). 

24These proposed amendments are consistent 

with other Commission regulations that exclude the 

day on which a notice is given or an event occurs 

in computing time periods that begin upon the 

occurrence of that notice or event. See 17 CFR 

1.3(b) and 10.5. 

25See 17 CFR 40.6(a). 

26 17 CFR 40.6(c)(2). 

27Commission regulation 40.4(b)(2) identifies 

rules that are changes in lists of approved delivery 

facilities as immaterial. In conformance with the 

proposed amendments to regulation 40.6(c)(2), the 

Commission proposes to amend regulation 

40.4(b)(2) to also identify rules that are changes to 

lists of approved delivery service providers as 

immaterial. 

authorized to issue an emergency 

opinion on behalf of the governing 

board; and (2) the procedures for the 

exercise of such authority.20

D. Commission Review and Approval of 

Registered Entity Rules 

In contrast to other registered entity 

rules that may be implemented pursuant 

to the self-certification process 

established in part 40, DCM rules that, 

as determined by the Commission, 

materially change a term or condition of 

a contract with open interest that is 

based on an agricultural commodity 

enumerated in section 1a(4) of the Act 

must be approved by the Commission 

prior to implementation.21 Since a 

finding of materiality is by statute at the 

reasonable discretion of the 

Commission, part 40 affords DCMs the 

opportunity to request a materiality 

opinion from the Commission for rules 

that a submitting DCM characterizes as 

non-material. Upon request the 

Commission will determine whether a 

DCM rule submitted under regulation 

40.4(b)(9) at least ten business days 

prior to implementation is material 

within the meaning of section 5c(c) of 

the Act.22

DCMs often simultaneously request 

that agricultural rule changes be 

reviewed for materiality, and if found to 

be material, approved by the 

Commission. Currently, Commission 

regulation 40.5 does not clearly specify 

when the approval period commences 

with respect to rules submitted for 

materiality review under the process 

framed by regulation 40.4(b)(9).23 To 

establish certainty, the amendments to 

regulation 40.5 propose to commence 

the rule approval period at the 

conclusion of the 10-day materiality 

review period under regulation 

40.4(b)(9). The Commission believes 

that commencing the approval period at 

this point is appropriate because the 

determination as to whether a registered 

entity rule should be approved (that is 

whether a rule is consistent with the Act 

and the Commission’s regulations 

thereunder) requires an analysis that is 

qualitatively different from the analysis 

required to determine whether the same 

rule is material within the meaning of 

section 5c(c) of the Act. 

E. Listing of Products and the 

Implementation of Registered Entity 

Rules 

1. The Timing of Submissions 

The Commission understands that 

there may be some confusion as to how 

far in advance of implementation 

registered entities must submit selfcertified products and rules to the 

Commission. Commission regulations 

40.2(a) and 40.6(a) provide that such 

submissions must be filed electronically 

with the Commission at or before the 

close of business on the business day 

preceding implementation. Questions 

have arisen as to whether these 

provisions refer to the Commission’s 

business day or the business day of the 

submitting registered entity. 

The proposed regulations clarify that 

the specified date is the Commission’s 

business day. For clarity and in order to 

ensure proper notice of certified 

products and rules, the Commission 

proposes to define business day in part 

40 and add language to Commission 

regulations 40.2(a) and 40.6(a) to 

expressly require the filing of certified 

submissions with the Commission at 

least one full Commission business day 

prior to implementation.24 In addition, 

to ensure that the appropriate operating 

divisions of the Commission have the 

ability to access electronic copies of 

submissions at the time of filing, the 

proposed regulations add the e-mail 

addresses submissions@cftc.gov and 

DMOSubmissions@cftc.gov to, and 

specify each regional branch chief in, 

Commission regulations 40.2(a)(1) and 

40.6(a)(2) as additional mandatory 

recipients of electronically filed 

submissions. 

2. Implementing Registered Entity Rules 

Without Certification 

a. Additional Rule Categories. As 

discussed above, the Commission’s 

regulations generally permit a registered 

entity to implement a new or dormant 

rule without seeking prior Commission 

approval by certifying to the 

Commission that the rule complies with 

the Act and the regulations thereunder 

on the business day preceding 

implementation.25 Registered entities, 

however, are not required to file 

certified submissions prior to 

implementing several categories of 

registered entity rules that are 

enumerated in regulation 40.6(c)(2).26

Registered entity rules that come within 

these categories typically are limited in 

scope and are implemented under 

enabling rules that have already been 

approved by, or certified with, the 

Commission. In order to lessen the 

burden placed on registered entities as 

well as better utilize Commission 

resources, the Commission proposes to 

codify several additional registered 

entity rule categories that may be 

implemented without prior certification 

or Commission approval if subsequently 

included in a weekly notification of rule 

changes under regulation 40.6(c)(2). The 

Commission proposes to add (1) 

changes in trading months with no open 

interest that are consistent with 

previously approved or certified 

standards; (2) changes in lists of 

producers’ brands or markings that are 

made pursuant to previously approved 

or certified standards or criteria relating 

to quality specifications, and for 

existing delivery locations, (3) changes 

in lists of approved delivery facilities 

and delivery service providers that are 

made pursuant to previously approved 

or certified standards or criteria 27 to the 

categories of rules enumerated in 

regulation 40.6(c)(2). 

A registered entity’s ability to notice 

file changes that relate to trading 

months under proposed regulation 

40.6(c)(2) only extends to trading 

months within currently established 

cycles of trading months. By way of 

example, assume that the currently 

established cycle of trading months for 

a particular contract is December, 

March, May, July and September. Under 

the proposed regulations, the listing of 

a new trading month, such as 

November, would not qualify for notice 

filing under regulation 40.6(c) while an 

earlier than anticipated listing of a July 

contract could properly be notice filed. 

With respect to producers, facilities and 

service providers, the Commission 

reviews the relevant enabling standards 

and criteria to ensure their consistency 

with cash market practices and to 

ensure that their terms do not 

unreasonably restrain trade by 

inappropriately prohibiting the open 

participation of certain producers, 


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28See 17 CFR part 40, Appendix A (Application 

for Designation of Physical Delivery Futures 

Contracts). 

29Registered entities must be able to cite 

registered entity rules that establish standards and 

criteria that are both substantive and clearly 

identifiable in any such submission made under 

regulation 40.6(c)(2). 

30 17 CFR 40.6(c)(iv). 

31See 17 CFR part 16. 

32 17 CFR 16.01(b). 

33See CFTC Staff Letter 06–01 (January 9, 2006). 

34 In July of 2006, the Commission adopted final 

rules to permit the trading of futures contracts 

based on corporate debt securities. 71 FR 39541 

(July 13, 2006) (Debt Futures Release). The 

Commission herein proposes a technical 

amendment that conforms regulation 40.6(c)(2)(iii) 

to the adoption of the Debt Futures Release by 

replacing that regulation’s reference to stock 

indexes with a reference to securities indexes, a 

general term that includes both equity and debt 

securities. Proposed regulation 40.6(c)(2)(iii) 

includes a reference to regulation 40.6(c)(3)(ii)(F) to 

alert registered entities that certain rule changes 

relating to securities indexes may be implemented 

pursuant to notification or without such notice if 

implemented under regulation 40.6(c)(3). 

35As discussed in the previous subsection, the 

Commission is proposing to add such rules to the 

categories of rules that may be implemented 

without certification or prior Commission approval 

if subsequently included in a regulation 40.6(c)(2) 

weekly notification of rule changes. 

36 In addition, the Commission proposes a 

technical amendment to the heading of regulation 

40.6, and that rule’s references to DCMs and DCOs, 

to clarify the potential applicability of that 

regulation to all registered entities, including 

DTEFs. 

facilities or service providers.28 The 

identification of producers’ brands and 

enumerated delivery facilities and 

service providers at a delivery location 

does not alter certified or Commission 

approved qualifying delivery standards 

or criteria, nor does it change exchange 

procedures that verify compliance with 

those standards or criteria. The 

Commission therefore proposes to be 

kept apprised of changes in lists of 

approved producers’ brands or 

markings, changes in lists of delivery 

location delivery facilities and service 

providers, and changes in trading 

months with no open interest that are 

consistent with previously certified or 

approved standards through weekly 

notices of rule changes filed under 

regulation 40.6(c)(2) as opposed to 

requiring that such changes be certified 

with or approved by the Commission 

prior to implementation.29

b. Implementing Rules without 

Notification. Rule changes that may 

appear in a weekly notification pursuant 

to regulation 40.6(c)(2)(iv) also include 

‘‘[c]hanges to option contract rules 

relating to the strike price listing 

procedures, strike price intervals, and 

the listing of strike prices on a 

discretionary basis.’’ 30 The Commission 

currently receives substantially the 

same information under part 16 of the 

Commission’s regulations, which 

specifies the daily reporting 

requirements that apply to DCMs.31 In 

particular, regulation 16.01(b) stipulates 

that each reporting market must submit 

to the Commission on a daily basis 

various trade data, including trade 

volume, open interest and price 

information for all listed option strike 

prices, including discretionary prices.32

In January 2006, DMO staff granted 

no-action relief to permit DCMs to 

satisfy the regulation 40.6(c)(2)(iv) 

notification requirement by complying 

with the daily reporting requirements of 

regulation 16.01 of the Commission’s 

regulations.33 In order to codify the noaction relief granted by DMO and avoid 

duplicative regulatory requirements, the 

Commission proposes to amend 

regulation 40.6(c)(2)(iv) and add 

paragraph (G) to regulation 40.6(c)(3)(ii) 

to allow registered entities that are in 

compliance with regulation 16.01(b) to 

implement the specified changes 

relating to option contract strike prices 

without either prior approval, 

certification or inclusion in a weekly 

notification to the Commission.34

The Commission is making a similar 

proposal with respect to registered 

entity rules denoting changes to contract 

trading months within currently 

established cycles of trading months to 

the categories of rules that may be 

implemented pursuant to a regulation 

40.6(c)(2) notification filing.35 As with 

rules that are changes to option contract 

strike prices, the Commission currently 

receives adequate notification of the 

same information under regulation 

16.01(a). In order to avoid duplicative 

regulatory requirements, the 

Commission proposes to add paragraph 

(H) to regulation 40.6(c)(3)(ii) to provide 

that registered entities that are in 

compliance with regulation 16.01(a) 

may implement changes to the listing of 

contract trading months with no open 

interest, other than the delisting of 

contract trading months or the relisting 

of temporarily delisted contract trading 

months, without prior approval, 

certification or inclusion in a weekly 

notification to the Commission.36

IV. Related Matters 

A. Cost Benefit 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. 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 proposed regulations 

outweigh their costs. Rather, section 

15(a) requires the Commission to 

consider the cost and benefits of the 

subject regulations. Section 15(a) further 

specifies that the costs and benefits of 

the proposed regulations shall be 

evaluated in light of five broad areas of 

market and public concern: (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. The Commission may, 

in its discretion, give greater weight to 

any one of the five enumerated areas of 

concern and may, in its discretion, 

determine that, notwithstanding its 

costs, a particular regulation is 

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 proposed regulations expand the 

set of persons delegated by the 

Commission with the authority to issue 

ECM special calls to include the 

Director of the Division of Enforcement 

and that Director’s designees. The 

proposed rules do not expand the basis 

for issuing ECM special calls; rather, 

they simply expand the set of persons 

authorized to issue such special calls. 

There are no regulatory costs imposed 

by this extension of delegated special 

call authority. 

The proposed regulations clarify that 

a DCM or DCO must generally choose 

either to comply with the rule approval 

process established in part 40 of the 

Commission’s regulations or, in the 

alternative, the certification process 

established in part 40, prior to listing or 

clearing any product, or implementing 

any rule, including any product or rule 

that has become dormant. The proposed 

regulations also clearly establish that 

the dormancy of a registered entity will 

automatically and separately trigger the 

dormancy of that entity’s contracts and 

rules. These clarifications are consistent 

with current Commission practice, do 

not impose any regulatory cost, and 

serve the public interest by facilitating 

regulatory certainty for persons subject 

to the Act and the Commission’s 

regulations thereunder. 

The proposed regulations clarify that 

the definition of emergency allows 

persons other than members of the 

governing board of a registered entity to 

declare an emergency on behalf of the 

governing board. The proposed 

regulations expressly recognize that the 

governing board of an exchange under 

emergency conditions may not be able 

to issue an opinion in a timely manner 

to address an emergency. Accordingly, 

the Commission’s proposed definition 

of emergency in part 40 clearly permits 


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37See 47 FR 18618 (April 30, 1982). 

duly authorized persons to determine 

whether a particular occurrence or 

circumstance is an emergency. The 

proposed regulations facilitate the 

ability of registered entities to undertake 

timely action in response to emergency 

events and thereby better protect market 

participants and the financial integrity 

of transactions executed and cleared on 

registered entities. The proposed 

regulations also limit the potential costs 

that may arise from any misuse of 

authority by requiring registered entities 

to adopt detailed procedural rules to 

effectuate the exercise of this delegated 

authority. 

The proposed regulations clearly set 

forth the duration of the rule approval 

period for DCM rules that may change 

a material term or condition of a 

contract based on the agricultural 

commodities enumerated in section 

1a(4) of the Act by proposing to 

commence the rule approval period at 

the conclusion of the 10-day materiality 

review period under regulation 

40.4(b)(9). Commencing the approval 

period at this point gives the 

Commission additional time to 

effectively discharge its separate 

regulatory responsibilities to review 

registered entity rule changes for their 

impact on contracts with open interest 

and to determine whether such changes 

are consistent with the Act and the 

Commission’s regulations thereunder. 

The proposed review period is 

consistent with current Commission 

regulatory practice and should not place 

any additional cost or burden on 

submitting DCMs. 

The proposed regulations address 

how far in advance of implementation 

registered entities must submit selfcertified contracts and rules to the 

Commission pursuant to regulations 

40.2(a) and 40.6(a) by clarifying that the 

date specified in those regulations refers 

to the Commission’s business day. The 

proposed regulations ensure that there 

is at least one full Commission business 

day between the submission of a 

certified product or rule and such 

product or rule’s listing or 

implementation. The proposed 

regulations provide regulatory clarity 

and impose no additional cost or 

burden. 

The proposed regulations lessen the 

burden placed on registered entities as 

well as better utilize Commission 

resources by codifying several 

additional rule categories that may be 

implemented without prior certification 

or Commission approval if noticed to 

the Commission through other required 

filings or disclosure requirements or 

subsequently included in a weekly 

notification of rule changes to the 

Commission under regulation 40.6(c)(2). 

The proposed regulations add lists of 

approved producers’ brands or 

markings, changes in lists of approved 

delivery facilities and delivery service 

providers, certain changes in contract 

trading months, and certain specified 

changes to option contract strike prices 

to the categories of rules may be 

implemented without prior certification 

or Commission approval, or as 

applicable, notification. Registered 

entity rules that come within these 

categories typically are limited in scope 

and are implemented under enabling 

rules that have already been approved 

by, or certified with, the Commission. 

Permitting their implementation 

without certification or approval, or as 

applicable, notification, avoids 

unnecessary or duplicative regulatory 

requirements and better utilizes the 

Commission’s resources. 

B. The Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA), 

5 U.S.C. 601 et seq., requires that 

agencies consider the impact of their 

regulations on small businesses. The 

requirements related to the proposed 

amendments fall mainly on registered 

entities. The Commission has 

previously determined that registered 

entities are not ‘‘small entities’’ for the 

purposes of the RFA.37 In addition, 

these proposed regulations, collectively, 

tend to relieve regulatory burdens. 

Accordingly, the Chairman, on behalf of 

the Commission, hereby certifies, 

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

actions proposed to be taken herein will 

not have a significant economic impact 

on a substantial number of small 

entities. 

C. Paperwork Reduction Act 

When publicizing proposed 

regulations, the Paperwork Reduction 

Act (PRA) of 1995 (44 U.S.C. 3501 et 

seq.) imposes certain requirements on 

Federal agencies (including the 

Commission) in connection with their 

conducting or sponsoring any collection 

of information as defined by the PRA. 

The information collection requirements 

associated with the proposed 

regulations are administered under 

Office of Management and Budget 

control numbers 3038–0022 and 3038–

0054. These proposed amendments to 

parts 36 and 40 of the Commission’s 

regulations would not impose any new 

or additional recordkeeping or 

information collection requirement that 

would require the approval of the Office 

of Management and Budget under 44 

U.S.C. 3501, et seq. Accordingly, the 

PRA is inapplicable. We solicit 

comment on the accuracy of our 

estimate that no additional 

recordkeeping or information collection 

requirements or changes to existing 

collection requirements would result 

from the amendments proposed herein. 

List of Subjects 

17 CFR Part 36 

Commodity futures. 

17 CFR Part 40 

Commodity futures, Reporting and 

recordkeeping requirements. 

In consideration of the foregoing, and 

pursuant to the authority contained in 

the Act, and, in particular, sections 2, 4, 

5, 5a, 5b, 5c, 5d and 8a of the Act, the 

Commission hereby proposes to amend 

Chapter I of Title 17 of the Code of 

Federal Regulations as follows: 

PART 36—EXEMPT MARKETS 

1. The authority citation for part 36 

continues to read as follows: 

Authority: 7 U.S.C. 2, 5, 6, 6c, and 12a, as 

amended by the Commodity Futures 

Modernization Act of 2000, Appendix E of 

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

2. In § 36.3, revise paragraphs (b)(3)(ii) 

to read as follows: 

§ 36.3 Exempt commercial markets. 

* * * * * 

(b) * * * 

(3) * * * 

(ii) The Commission hereby delegates, 

until the Commission orders otherwise, 

the authority to make special calls as set 

forth in section 2(h)(5)(B)(iii) of the Act 

to the Directors of the Divisions of 

Market Oversight, the Division of 

Clearing and Intermediary Oversight, 

and the Division of Enforcement to be 

exercised by each such Director or by 

such other employee or employees as 

the Director may designate. The 

Directors may submit to the 

Commission for its consideration any 

matter that has been delegated in this 

paragraph. Nothing in this paragraph 

prohibits the Commission, at its 

election, from exercising the authority 

delegated in this paragraph. 

* * * * * 

PART 40—PROVISIONS COMMON TO 

CONTRACT MARKETS, DERIVATIVES 

TRANSACTION EXECUTION 

FACILITIES AND DERIVATIVES 

CLEARING ORGANIZATIONS 

3. The authority citation for part 40 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 5, 6, 6c, 7, 7a, 

7a–1, 7a–2, 8 and 12a, as amended by 


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45190 Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules 

appendix E of Pub. L. 106–554, 114 Stat. 

2763A–365. 

4. In § 40.1, revise paragraph (a) 

through (g) to read as follows: 

§ 40.1 Definitions. 

* * * * * 

(a) Business day means the same-day 

period of time starting at the business 

hour of 8:15 a.m. and ending at the 

business hour of 4:45 p.m.; business 

hour means any hour between 8:15 a.m. 

and 4:45 p.m., Eastern Standard Time or 

Eastern Daylight Savings Time, 

whichever is currently in effect in 

Washington, DC, on all days except 

Saturdays, Sundays and federal 

holidays in Washington, DC. 

(b) Dormant contract or dormant 

product means: 

(1) Any agreement, contract, 

transaction, or instrument, or any 

commodity futures or option contract 

with respect to all future or option 

expiries that has no open interest and in 

which no trading has occurred for a 

period of twelve complete calendar 

months following a certification with, or 

approval by, the Commission; provided, 

however, that no contract or instrument 

under this paragraph (b)(1) initially and 

originally certified with, or approved 

by, the Commission within the 

preceding 36 complete calendar months 

shall be considered to be dormant; or 

(2) Any commodity futures or option 

contract or other agreement, contract, 

transaction or instrument of a dormant 

registered entity; or 

(3) Any commodity futures or option 

contract or other agreement, contract, 

transaction or instrument not otherwise 

dormant that a registered entity selfdeclares through certification to be 

dormant. 

(c) Dormant designated contract 

market means any designated contract 

market on which no trading has 

occurred for a period of twelve complete 

calendar months; provided, however, no 

designated contract market shall be 

considered to be dormant if its initial 

and original Commission order of 

designation was issued within the 

preceding 36 complete calendar months. 

(d) Dormant derivatives clearing 

organization means any derivatives 

clearing organization that has not 

accepted for clearing any agreement, 

contract or transaction that is required 

or permitted to be cleared by a 

derivatives clearing organization under 

Sections 5b(a) and 5b(b) of the Act, 

respectively, for a period of twelve 

complete calendar months; provided, 

however, no derivatives clearing 

organization shall be considered to be 

dormant if its initial and original 

Commission order of registration was 

issued within the preceding 36 

complete calendar months. 

(e) Dormant derivatives transaction 

execution facility means any derivatives 

transaction execution facility on which 

no trading has occurred for a period of 

twelve complete calendar months; 

provided, however, no derivatives 

transaction execution facility shall be 

considered to be dormant if its initial 

and original Commission order of 

designation was issued within the 

preceding 36 complete calendar months. 

(f) Dormant rule means: 

(1) Any registered entity rule which 

remains unimplemented for twelve 

complete calendar months following a 

certification with, or an approval by, the 

Commission; or 

(2) Any rule or rule amendment of a 

dormant registered entity. 

(g) Emergency means any occurrence 

or circumstance that, in the opinion of 

the governing board of a registered 

entity, or a person or persons duly 

authorized to issue such an opinion on 

behalf of the governing board of a 

registered entity under circumstances 

and pursuant to procedures that are 

specified by rule, requires immediate 

action and threatens or may threaten 

such things as the fair and orderly 

trading in, or the liquidation of or 

delivery pursuant to, any agreements, 

contracts or transactions, including: 

(1) Any manipulative or attempted 

manipulative activity; any actual, 

attempted, or threatened corner, 

squeeze, congestion, or undue 

concentration of positions; 

(2) Any circumstances which may 

materially affect the performance of 

agreements, contracts or transactions, 

including failure of the payment system 

or the bankruptcy or insolvency of any 

participant; or 

(3) Any action taken by any 

governmental body, or any other 

registered entity, board of trade, market 

or facility which may have a direct 

impact on trading; and any other 

circumstance which may have a severe, 

adverse effect upon the functioning of a 

registered entity. 

* * * * * 

5. In § 40.2, revise the heading and 

paragraphs (a) introductory text, (a)(1) 

and (a)(2) to read as follows: 

§ 40.2 Listing and accepting products for 

trading or clearing by certification. 

(a) Unless permitted otherwise by 

§ 37.7 of this chapter, a designated 

contract market or a registered 

derivatives transaction execution 

facility must comply with the 

submission requirements of this section 

prior to listing a product for trading that 

has not been approved under § 40.3 of 

this chapter or that remains dormant 

subsequent to being submitted under 

this section or approved under § 40.3 of 

this chapter. A registered clearing 

organization must comply with the 

submission requirements of this section 

prior to accepting a product for clearing 

that is not traded on a registered entity 

and has not been approved for clearing 

under § 40.5 of this chapter or that 

remains dormant subsequent to being 

submitted under this section or 

approved under § 40.5 of this chapter. A 

submission shall comply with the 

following conditions: 

(1) The registered entity has filed its 

submission electronically with the 

Secretary of the Commission at 

submissions@cftc.gov, the Division of 

Market Oversight at 

DMOSubmissions@cftc.gov, and the 

relevant branch chief at the regional 

office having local jurisdiction over the 

registered entity, in a format specified 

by the Secretary of the Commission; 

(2) The Commission has received the 

submission at its headquarters by the 

open of business on the business day 

preceding the product’s listing or 

acceptance for clearing; and 

* * * * * 

6. In § 40.3, revise paragraph (a) 

introductory text to read as follows: 

§ 40.3 Voluntary submission of new 

products for Commission review and 

approval. 

(a) Request for approval. Pursuant to 

Section 5c(c) of the Act and §§ 37.7 and 

38.4 of this chapter, a designated 

contract market or registered derivatives 

transaction execution facility may 

request that the Commission approve a 

new or dormant product prior to listing 

the product for trading, or if initially 

submitted under § 40.2 of this chapter, 

subsequent to listing the product for 

trading. A submission requesting 

approval shall: 

* * * * * 

7. In § 40.4, revise paragraph (a) and 

(b)(2) to read as follows: 

§ 40.4 Amendments to terms or conditions 

of enumerated agricultural contracts. 

(a) Notwithstanding the provisions of 

this part, a designated contract market 

must submit for Commission approval 

under the procedures of § 40.5, prior to 

its implementation, any rule or dormant 

rule that, for a delivery month having 

open interest, would materially change 

a term or condition, as defined in 

§ 40.1(i), of a contract for future delivery 

in an agricultural commodity 

enumerated in Section 1a(4) of the Act, 

or of an option on such a contract or 

commodity. 

* * * * * 


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Federal Register / Vol. 72, No. 155 / Monday, August 13, 2007 / Proposed Rules 45191 

(b) * * * 

(2) For each delivery location, 

changes in lists of approved delivery 

facilities and delivery service providers, 

including weighmasters and inspectors, 

pursuant to previously set standards or 

criteria; 

8. In § 40.5, revise paragraphs (a) 

introductory text and (c) introductory 

text to read as follows: 

§ 40.5 Voluntary submission of rules for 

Commission review and approval. 

(a) Request for approval of rules. 

Pursuant to Section 5c(c) of the Act and 

§§ 37.7, 38.4 and 39.4 of this chapter, a 

registered entity may request that the 

Commission approve a new or dormant 

rule prior to implementation, or if 

initially submitted under §§ 40.2 or 40.6 

of this chapter, subsequent to 

implementation. A submission 

requesting approval shall: 

* * * * * 

(c) Commencement and extension of 

time for review. The Commission shall 

commence the review period in 

paragraph (b) of this section ten 

business days after receipt of a 

compliant submission under § 40.4(b)(9) 

and further may extend the review 

period in paragraph (b) of this section 

for: 

* * * * * 

9. Amend § 40.6 as follows: 

A. Remove the term ‘‘designated 

contract market or registered derivatives 

clearing organization’’ and add in its 

place the term ‘‘registered entity’’ in 

paragraphs (a)(2), (c)(1), and (c)(3)(i); 

B. Remove the term ‘‘designated 

contract market or a registered 

derivatives clearing organization’’ and 

add in its place the term ‘‘registered 

entity’’ in paragraph (c) introductory 

text; 

C. Remove the term ‘‘designated 

contract markets and registered 

derivatives clearing organizations’’ and 

add in its place the term ‘‘registered 

entities’’ in paragraph (c)(3) 

introductory text; 

D. Remove the term ‘‘contract market 

or a derivatives clearing organization’s’’

and add in its place the term ‘‘registered 

entity’s’’ in paragraph (c)(3)(ii)(B); and 

E. In addition, revise the heading and 

paragraphs (a), (c)(2)(iii), and (c)(2)(iv), 

and add paragraphs (c)(2)(vii) through 

(c)(2)(ix), (c)(3)(ii)(G) and (c)(3)(ii)(H) to 

read as follows: 

§ 40.6 Self-certification of rules. 

(a) Required certification. Unless 

permitted otherwise by § 37.7 of this 

chapter, a registered entity must comply 

with the following conditions prior to 

the implementation of any rule that has 

not obtained Commission approval 

under § 40.5 of this chapter or that 

remains dormant subsequent to being 

submitted under this section or 

approved under § 40.5 of this chapter: 

(1) * * * 

(2) The registered entity has filed its 

submission electronically with the 

Secretary of the Commission at 

submissions@cftc.gov, the Division of 

Market Oversight at 

DMOSubmissions@cftc.gov, and the 

relevant branch chief at the regional 

office having local jurisdiction over the 

registered entity, in a format specified 

by the Secretary of the Commission, and 

the Commission has received the 

submission at its headquarters by the 

open of business on the business day 

preceding implementation of the rule; 

provided, however, rules or rule 

amendments implemented under 

procedures of the governing board to 

respond to an emergency as defined in 

§ 40.1, shall, if practicable, be filed with 

the Commission prior to the 

implementation or, if not practicable, be 

filed with the Commission at the earliest 

possible time after implementation, but 

in no event more than twenty-four hours 

after implementation; and 

* * * * * 

(c) * * * 

(2) * * * 

(iii) Index products. Routine changes 

in the composition, computation, or 

method of selection of component 

entities of an index (other than routine 

changes to securities indexes to the 

extent that such changes are not 

described in paragraph (c)(3)(ii)(F) of 

this section) referenced and defined in 

the product’s terms, that do not affect 

the pricing basis of the index, which are 

made by an independent third party 

whose business relates to the collection 

or dissemination of price information 

and which was not formed solely for the 

purpose of compiling an index for use 

in connection with a futures or option 

product; 

(iv) Option contract terms. Changes to 

option contract rules, which may 

qualify for implementation without 

notice pursuant to section (c)(3)(ii)(G) of 

this section, relating to the strike price 

listing procedures, strike price intervals, 

and the listing of strike prices on a 

discretionary basis; 

(v) * * * 

(vii) Approved brands. Changes in 

lists of approved brands or markings 

pursuant to previously certified or 

Commission approved standards or 

criteria; 

(viii) Delivery facilities and delivery 

service providers. Changes in lists of 

approved delivery facilities and delivery 

service providers, including 

weighmasters, assayers, and inspectors, 

pursuant to previously certified or 

Commission approved standards or 

criteria; or 

(ix) Trading Months. Changes to the 

listing of trading months, which may 

qualify for implementation without 

notice pursuant to section (c)(3)(ii)(H), 

within the currently established cycle of 

trading months which do not have open 

interest. 

(3) * * * 

(ii) * * * 

(G) Option contract terms. For 

registered entities that are in 

compliance with the daily reporting 

requirements of § 16.01(b) of this 

chapter, changes to option contract rules 

relating to the strike price listing 

procedures, strike price intervals, and 

the listing of strike prices on a 

discretionary basis. 

(H) Trading Months. For registered 

entities that are in compliance with the 

daily reporting requirements of 

§ 16.01(a) of this chapter, changes to the 

listing of trading months which are 

within the currently established cycle of 

trading months and which do not have 

open interest. 

* * * * * 

Issued in Washington, DC, on August 1, 

2007 by the Commission. 

Eileen A. Donovan, 

Acting Secretary of the Commission. 

[FR Doc. E7–15370 Filed 8–10–07; 8:45 am] 

BILLING CODE 6351–01–P 

SOCIAL SECURITY ADMINISTRATION 

20 CFR Part 411 

[Docket No. SSA–2006–0084] 

RIN 0960–AG44 

Improvements to the Ticket to Work 

and Self-Sufficiency Program 

AGENCY: Social Security Administration. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: We are proposing to revise 

our regulations for the Ticket to Work 

and Self-Sufficiency Program (Ticket to 

Work program), authorized by the 

Ticket to Work and Work Incentives 

Improvement Act of 1999. The Ticket to 

Work program provides beneficiaries 

with disabilities expanded options for 

access to employment, vocational 

rehabilitation, and other support 

services. The program is an important 

part of the comprehensive SSA work 

opportunity initiative which is focused 

on helping beneficiaries with 

disabilities who want to work to do so. 

We are proposing revisions to our 


sroberts on PROD1PC70 with PROPOSALS