Federal Register / Vol. 80, No. 188 / Tuesday, September 29, 2015 / Proposed Rules 58365 

traffic/publications/airspace_

amendments/. 

You may review the public docket 

containing the proposal, any comments 

received, and any final disposition in 

person in the Dockets Office (see the 

ADDRESSES section for the address and 

phone number) between 9:00 a.m. and 

5:00 p.m., Monday through Friday, 

except Federal holidays. An informal 

docket may also be examined during 

normal business hours at the Northwest 

Mountain Regional Office of the Federal 

Aviation Administration, Air Traffic 

Organization, Western Service Center, 

Operations Support Group, 1601 Lind 

Avenue SW., Renton, WA 98057. 

Persons interested in being placed on 

a mailing list for future NPRMs should 

contact the FAA’s Office of Rulemaking, 

(202) 267–9677, for a copy of Advisory 

Circular No. 11–2A, Notice of Proposed 

Rulemaking Distribution System, which 

describes the application procedure. 

Availability and Summary of 

Documents Proposed for Incorporation 

by Reference 

This document proposes to amend 

FAA Order 7400.9Z, Airspace 

Designations and Reporting Points, 

dated August 6, 2015, and effective 

September 15, 2015. FAA Order 

7400.9Z is publicly available as listed in 

the ADDRESSES section of this proposed 

rule. FAA Order 7400.9Z lists Class A, 

B, C, D, and E airspace areas, air traffic 

service routes, and reporting points. 

The Proposal 

The FAA is proposing an amendment 

to Title 14 Code of Federal Regulations 

(14 CFR) Part 71 by establishing Class E 

airspace extending upward from 700 

feet above the surface at U.S. Coast 

Guard Station Neah Bay Heliport, Neah 

Bay, WA. Establishment of a GPS 

approach has made this action 

necessary for the safety and 

management of IFR operations at the 

heliport. Class E airspace would be 

established within a 1-mile radius of the 

U.S. Coast Guard Station Neah Bay 

Heliport, with a segment extending from 

the 1-mile radius to 2.5 miles northeast 

of the heliport. 

Class E airspace designations are 

published in paragraph 6005 of FAA 

Order 7400.9Z, dated August 6, 2015, 

and effective September 15, 2015, which 

is incorporated by reference in 14 CFR 

71.1. The Class E airspace designations 

listed in this document will be 

published subsequently in the Order. 

Regulatory Notices and Analyses 

The FAA has determined this 

proposed regulation only involves an 

established body of technical 

regulations for which frequent and 

routine amendments are necessary to 

keep them operationally current. 

Therefore, this proposed regulation; (1) 

is not a ‘‘significant regulatory action’’ 

under Executive Order 12866; (2) is not 

a ‘‘significant rule’’ under DOT 

Regulatory Policies and Procedures (44 

FR 11034; February 26, 1979); and (3) 

does not warrant preparation of a 

regulatory evaluation as the anticipated 

impact is so minimal. Since this is a 

routine matter that will only affect air 

traffic procedures and air navigation, it 

is certified this proposed rule, when 

promulgated, would not have a 

significant economic impact on a 

substantial number of small entities 

under the criteria of the Regulatory 

Flexibility Act. 

Environmental Review 

This proposal will be subject to an 

environmental analysis in accordance 

with FAA Order 1050.1E, 

‘‘Environmental Impacts: Policies and 

Procedures’’ prior to any FAA final 

regulatory action. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

The Proposed Amendment 

Accordingly, pursuant to the 

authority delegated to me, the Federal 

Aviation Administration proposes to 

amend 14 CFR part 71 as follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for 14 CFR 

part 71 continues to read as follows: 

Authority: 49 U.S.C. 106(f), 106(g), 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

§ 71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of FAA Order 7400.9Z, 

Airspace Designations and Reporting 

Points, dated August 6, 2015, and 

effective September 15, 2015, is 

amended as follows: 

Paragraph 6005 Class E Airspace Areas 

Extending Upward From 700 Feet or More 

Above the Surface of the Earth 

* * * * * 

ANM WA E5 U.S. Coast Guard Station Neah 

Bay Heliport, Neah Bay, WA [New] 

U.S. Coast Guard Station Neah Bay Heliport, 

Neah Bay, WA 

(lat. 48°22′14′′ N., long. 124°35′53′′ W.) 

That airspace extending upward from 700 

feet above the surface within a 1-mile radius 

of the U.S. Coast Guard Station Neah Bay 

Heliport, and within 1 mile each side of the 

055° bearing from the heliport extending 

from the 1-mile radius to 2.5 miles northeast 

of the heliport. 

Issued in Seattle, Washington, on 

September 21, 2015. 

Christopher Ramirez, 

Manager, Operations Support Group, Western 

Service Center. 

[FR Doc. 2015–24431 Filed 9–28–15; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 150 

RIN 3038–AD82 

Aggregation of Positions 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Supplemental notice of 

proposed rulemaking. 

SUMMARY: On November 15, 2013, the 

Commodity Futures Trading 

Commission (‘‘Commission’’ or 

‘‘CFTC’’) published in the Federal 

Register a notice of proposed 

modifications to part 150 of the 

Commission’s regulations. The 

modifications addressed the policy for 

aggregation under the Commission’s 

position limits regime for futures and 

option contracts on nine agricultural 

commodities set forth in part 150. The 

Commission also noted that if the 

Commission’s proposed position limits 

regime for 28 exempt and agricultural 

commodity futures and options 

contracts and the physical commodity 

swaps that are economically equivalent 

to such contracts are finalized, the 

proposed modifications would also 

apply to the position limits regime for 

those contracts and swaps. The 

Commission is now proposing a 

revision to its proposed modification to 

the aggregation provisions of part 150, 

which addresses when aggregation is 

required on the basis of ownership of a 

greater than 50 percent interest in 

another entity. 

DATES: Comments must be received on 

or before November 13, 2015. 

ADDRESSES: You may submit comments, 

identified by RIN 3038–AD82, by any of 

the following methods: 

• CFTC Web site: http://

comments.cftc.gov. Follow the 

instructions for submitting comments 

through the Comments Online process 

on the Web site. 

• Mail: Send to Christopher 

Kirkpatrick, Secretary of the 

Commission, Commodity Futures 


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58366 Federal Register / Vol. 80, No. 188 / Tuesday, September 29, 2015 / Proposed Rules 

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

2See 17 CFR part 150. Part 150 of the 

Commission’s regulations establishes federal 

position limits on certain enumerated agricultural 

contracts; the listed commodities are referred to as 

enumerated agricultural commodities. The 

Commission has proposed to amend its position 

limits regime so that it would extend to 28 exempt 

and agricultural commodity futures and options 

contracts and the physical commodity swaps that 

are economically equivalent to such contracts. See 

Position Limits for Derivatives, 78 FR 75680 (Dec. 

12, 2013). 

3See 17 CFR 150.2. 

4See 17 CFR 150.3. 

5See 17 CFR 150.4. 

6See 17 CFR 150.4(a) and (b). 

7See 17 CFR 150.4(c). 

8See 17 CFR 150.4(d). 

9See 17 CFR 150.3(a)(4). 

10See 17 CFR 150.3(b) and 150.4(e). 

11See Aggregation, Position Limits for Futures 

and Swaps, 78 FR 68946 (Nov. 15, 2013). The 2013 

Aggregation Proposal was substantially similar to 

aggregation rules that had been adopted in part 151 

of the Commission’s regulations in 2011, see 

Position Limits for Futures and Swaps, 76 FR 71626 

(Nov. 18, 2011) as proposed to be amended in May 

2012, see Aggregation, Position Limits for Futures 

and Swaps, 77 FR 31767 (May 30, 2012). 

In an Order dated September 28, 2012, the 

District Court for the District of Columbia vacated 

part 151 of the Commission’s regulations, including 

those aggregation rules. See International Swaps 

and Derivatives Association v. United States 

Commodity Futures Trading Commission, 887 F. 

Supp. 2d 259 (D.D.C. 2012). The revised position 

limit levels in amended section 150.2 were not 

vacated. 

12See 2013 Aggregation Proposal, 78 FR at 

68958–59. 

13See id. at 68959–61. 

14See id. at 68956, citing 7 U.S.C. 6a(a)(1). 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street NW., 

Washington, DC 20581. 

• Hand Delivery/Courier: Same as 

Mail, above. 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow 

instructions for submitting comments. 

Please submit your comments using 

only one of these methods. 

All comments must be submitted in 

English, or if not, accompanied by an 

English translation. Comments will be 

posted as received to www.cftc.gov. You 

should submit only information that 

you wish to make available publicly. If 

you wish the Commission to consider 

information that may be exempt from 

disclosure under the Freedom of 

Information Act (‘‘FOIA’’), a petition for 

confidential treatment of the exempt 

information may be submitted according 

to the procedures established in § 145.9 

of the Commission’s regulations, 17 CFR 

145.9. 

The Commission reserves the right, 

but shall have no obligation, to review, 

pre-screen, filter, redact, refuse or 

remove any or all of your submission 

from www.cftc.gov that it may deem to 

be inappropriate for publication, such as 

obscene language. All submissions that 

have been redacted or removed that 

contain comments on the merits of the 

rulemaking will be retained in the 

public comment file and will be 

considered as required under the 

Administrative Procedure Act and other 

applicable laws, and may be accessible 

under the FOIA. 

FOR FURTHER INFORMATION CONTACT: 

Stephen Sherrod, Senior Economist, 

Division of Market Oversight, (202) 418– 

5452, ssherrod@cftc.gov; Riva Spear 

Adriance, Senior Special Counsel, 

Division of Market Oversight, (202) 418– 

5494, radriance@cftc.gov; or Mark 

Fajfar, Assistant General Counsel, Office 

of General Counsel, (202) 418–6636, 

mfajfar@cftc.gov; Commodity Futures 

Trading Commission, Three Lafayette 

Centre, 1155 21st Street NW., 

Washington, DC 20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Introduction 

The Commission has long established 

and enforced speculative position limits 

for futures and options contracts on 

various agricultural commodities as 

authorized by the Commodity Exchange 

Act (‘‘CEA’’).1 The part 150 position 

limits regime 2 generally includes three 

components: (1) The level of the limits, 

which set a threshold that restricts the 

number of speculative positions that a 

person may hold in the spot-month, 

individual month, and all months 

combined,3 (2) exemptions for positions 

that constitute bona fide hedging 

transactions and certain other types of 

transactions,4 and (3) rules to determine 

which accounts and positions a person 

must aggregate for the purpose of 

determining compliance with the 

position limit levels.5

The Commission’s existing 

aggregation policy under regulation 

150.4 generally requires that unless a 

particular exemption applies, a person 

must aggregate all positions for which 

that person controls the trading 

decisions with all positions for which 

that person has a 10 percent or greater 

ownership interest in an account or 

position, as well as the positions of two 

or more persons acting pursuant to an 

express or implied agreement or 

understanding.6 The scope of 

exemptions from aggregation include 

the ownership interests of limited 

partners in pooled accounts,7

discretionary accounts and customer 

trading programs of futures commission 

merchants (‘‘FCM’’),8 and eligible 

entities with independent account 

controllers that manage customer 

positions (‘‘IAC’’ or ‘‘IAC exemption’’).9

Market participants claiming one of the 

exemptions from aggregation are subject 

to a call by the Commission for 

information demonstrating compliance 

with the conditions applicable to the 

claimed exemption.10

B. Proposed Modifications to the Policy 

for Aggregation Under Part 150 of the 

Commission’s Regulations 

On November 15, 2013, the 

Commission proposed to amend 

regulation 150.4, and certain related 

regulations, to include rules to 

determine which accounts and positions 

a person must aggregate (the ‘‘2013 

Aggregation Proposal’’).11 Among other 

elements, the 2013 Aggregation Proposal 

included a notice filing procedure, 

effective upon submission, to permit a 

person in specified circumstances to 

disaggregate the positions of a 

separately organized entity (‘‘owned 

entity’’), if such person has between a 

10 percent and 50 percent ownership or 

equity interest in the owned entity.12

The notice filing would need to 

demonstrate compliance with certain 

conditions set forth in the proposed 

rule. Under the 2013 Aggregation 

Proposal, persons with a greater than 50 

percent ownership or equity interest in 

the owned entity would have to apply 

on a case-by-case basis to the 

Commission for permission to 

disaggregate, and await the 

Commission’s decision as to whether 

certain conditions specified in the 

proposed rule had been satisfied and 

therefore disaggregation would be 

permitted.13

The 2013 Aggregation Proposal 

reflected the Commission’s longstanding incremental approach to 

exemptions from the aggregation 

requirement for persons owning a 

financial interest in an entity. In the 

2013 Aggregation Proposal, the 

Commission reaffirmed its belief that 

ownership of an entity is an appropriate 

criterion for aggregation of that entity’s 

positions, noting that section 4a(a)(1) of 

the CEA provides that ‘‘[i]n determining 

whether any person has exceeded such 

limits, the positions held and trading 

done by any persons directly or 

indirectly controlled by such person 

shall be included with the positions 

held and trading done by such 

person.’’ 14 The Commission explained 

that as early as 1957, the Commission’s 

predecessor (the Commodity Exchange 

Authority) issued determinations 

requiring that accounts in which a 


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Federal Register / Vol. 80, No. 188 / Tuesday, September 29, 2015 / Proposed Rules 58367 

15See 2013 Aggregation Proposal, 78 FR at 68956, 

citing Administrative Determination 163 (Aug. 7, 

1957) (‘‘[I]n the application of speculative limits, 

accounts in which the firm has a financial interest 

must be combined with any trading of the firm itself 

or any other accounts in which it in fact exercises 

control.’’). The Commission’s predecessor, and later 

the Commission, provided the aggregation 

standards for purposes of position limits in its 

regulation 18.01 (within the large trader reporting 

rules). See Supersedure of Certain Regulations, 26 

FR 2968 (Apr. 7, 1961). 

In its Statement of Policy on Aggregation of 

Accounts and Adoption of Related Reporting Rules, 

44 FR 33839 (June 13, 1979) (‘‘1979 Aggregation 

Policy’’), the Commission discussed regulation 

18.01, stating: 

Financial Interest in Accounts. Consistent with 

the underlying rationale of aggregation, existing 

reporting Rule 18.10(a) a (sic) basically provides 

that if a trader holds or has a financial interest in 

more than one account, all accounts are considered 

as a single account for reporting purposes. Several 

inquiries have been received regarding whether a 

nomial (sic) financial interest in an account requires 

the trader to aggregate. Traditionally, the 

Commission’s predecessor and its staff have 

expressed the view that except for the financial 

interest of a limited partner or shareholder (other 

than the commodity pool operator) in a commodity 

pool, a financial interest of 10 percent or more 

requires aggregation. The Commission has 

determined to codify this interpretation at this time 

and has amended Rule 18.01 to provide in part that, 

‘‘For purposes of this Part, except for the interest 

of a limited partner or shareholder (other than the 

commodity pool operator) in a commodity pool, the 

term ‘financial interest’ shall mean an interest of 10 

percent or more in ownership or equity of an 

account.’’ 

Thus, a financial interest at or above this level 

will constitute the trader as an account owner for 

aggregation purposes. 

1979 Aggregation Policy, 44 FR at 33843. 

The provisions concerning aggregation for 

position limits generally remained part of the 

Commission’s large trader reporting regime until 

1999 when the Commission incorporated the 

aggregation provisions into rule 150.4 with the 

existing position limit provisions in part 150. See 

Revision of Federal Speculative Position Limits, 64 

FR 24038 (May 5, 1999) (‘‘1999 Amendments’’). The 

Commission’s part 151 rulemaking also 

incorporated the aggregation provisions in rule 

151.7 along with the remaining position limit 

provisions in part 151. See Position Limits for 

Futures and Swaps, 76 FR 71626 (Nov. 18, 2011). 

16See 2013 Aggregation Proposal, 78 FR at 68958. 

17See id. at 68951, citing Exemptions from 

Speculative Position Limits for Positions which 

have a Common Owner but which are 

Independently Controlled and for Certain Spread 

Positions; Proposed Rule, 53 FR 13290, 13292 (Apr. 

22, 1988). 

18See 2013 Aggregation Proposal, 78 FR at 68951, 

citing Aggregation, Position Limits for Futures and 

Swaps, 77 FR 31767, 31773 (May 30, 2012). This 

incremental approach to account aggregation 

standards reflects the Commission’s historical 

practice. See, e.g., Exemptions from Speculative 

Position Limits for Positions Which Have a 

Common Owner But Which are Independently 

Controlled and for Certain Spread Positions; Final 

Rule 53 FR 41563, 41567 (Oct. 24, 1988) (the 

definition of eligible entity for purposes of the IAC 

exemption originally only included CPOs, or 

exempt CPOs or pools, but the Commission 

indicated a willingness to expand the exemption 

after a ‘‘reasonable opportunity’’ to review the 

exemption.); Exemption From Speculative Position 

Limits for Positions Which Have a Common Owner, 

But Which Are Independently Controlled, 56 FR 

14308, 14312 (Apr. 9, 1991) (the Commission 

expanded eligible entities to include commodity 

trading advisors, but did not include additional 

entities requested by commenters until the 

Commission had the opportunity to assess the 

current expansion and further evaluate the 

additional entities); and the 1999 Amendments (the 

Commission expanded the list of eligible entities to 

include many of the entities commenters requested 

in the 1991 rulemaking). 

19See 2013 Aggregation Proposal, 78 FR at 

68958–61. 

20For purposes of aggregation, the Commission 

continues to believe that contingent ownership 

rights, such as an equity call option, would not 

constitute an ownership or equity interest. 

21Under the 2013 Aggregation Proposal, and in a 

manner similar to current regulation, if a person 

qualifies for disaggregation relief, the person would 

nonetheless have to aggregate those same accounts 

or positions covered by the relief if they are held 

in accounts with substantially identical trading 

strategies. See proposed rule § 150.4(a)(2). The 

exemptions in proposed rule § 150.4 are set forth as 

alternatives, so that, for example, the applicability 

of the exemption in paragraph (b)(2) would not 

affect the applicability of a separate exemption from 

aggregation (e.g., the independent account 

controller exemption in paragraph (b)(5)). The 

revisions proposed here would not change these 

aspects of the 2013 Aggregation Proposal. 

22See 2013 Aggregation Proposal, 78 FR at 68959. 

person has a financial interest be 

included in aggregation.15

Regarding the threshold level at 

which an exemption from aggregation 

on the basis of ownership would be 

available, the Commission noted in the 

2013 Aggregation Proposal that it has 

generally found that an ownership or 

equity interest of less than 10 percent in 

an account or position that is controlled 

by another person who makes 

discretionary trading decisions does not 

present a concern that such ownership 

interest results in control over trading or 

can be used indirectly to create a large 

speculative position through ownership 

interests in multiple accounts. As such, 

the Commission has exempted an 

ownership interest below 10 percent 

from the aggregation requirement.16

The Commission noted that while 

other of its rulemakings prior to the 

2013 Aggregation Proposal generally 

restricted exemptions from aggregation 

based on ownership to FCMs, limited 

partner investors in commodity pools, 

and independent account controllers 

managing customer funds for an eligible 

entity, a broader passive investment 

exemption has previously been 

considered but not enacted by the 

Commission.17 Further, the Commission 

reiterated its belief in incremental 

development of aggregation exemptions 

over time.18 Consistent with that 

incremental approach, in the 2013 

Aggregation Proposal the Commission 

considered the additional information 

provided and the concerns raised by 

commenters on the May 2012 

aggregation proposal and proposed two 

new tiers of relief from the ownership 

criteria of aggregation—relief on the 

basis of a notice filing, effective upon 

submission, by persons holding an 

interest of between 10 percent and 50 

percent in an owned entity, and relief 

on the basis of an application by 

persons holding an interest of more than 

50 percent in an owned entity.19 Each 

of these procedures for relief in the 2013 

Aggregation Proposal is described 

briefly below. 

1. Disaggregation Relief for Ownership 

or Equity Interests of 50 Percent or Less 

Proposed rule § 150.4(b)(2), as set out 

in the 2013 Aggregation Proposal, 

would continue the Commission’s 

longstanding rule that persons with 

either an ownership or an equity 

interest in an account or position of less 

than 10 percent need not aggregate such 

positions solely on the basis of the 

ownership criteria, and persons with a 

10 percent or greater ownership interest 

would still generally be required to 

aggregate the account or positions.20

However, proposed rule § 150.4(b)(2), as 

set out in the 2013 Aggregation 

Proposal, would establish a notice filing 

procedure, effective upon submission, 

to permit a person with either an 

ownership or an equity interest in an 

owned entity of 50 percent or less to 

disaggregate the positions of an owned 

entity in specified circumstances, even 

if such person has a 10 percent or 

greater interest in the owned entity.21

The notice filing would have to 

demonstrate compliance with certain 

conditions set forth in proposed rule 

§ 150.4(b)(2). Similar to other 

exemptions from aggregation, the notice 

filing would be effective upon 

submission to the Commission, but the 

Commission would be able to 

subsequently call for additional 

information, and to amend, terminate or 

otherwise modify the person’s 

aggregation exemption for failure to 

comply with the provisions of rule 

§ 150.4(b)(2). Further, the person would 

be obligated to amend the notice filing 

in the event of a material change to the 

circumstances described in the filing. 

The Commission preliminarily based 

the 2013 Aggregation Proposal’s limit of 

50 percent on the ownership interest in 

another entity on a belief that the limit 

would be a reasonable, ‘‘bright line’’ 

standard for determining when 

aggregation of positions is required, 

even where the ownership interest is 

passive.22 The 2013 Aggregation 

Proposal explained that majority 

ownership (i.e., over 50 percent) is 

indicative of control, and this standard 

would address the Commission’s 

concerns about circumvention of 


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58368 Federal Register / Vol. 80, No. 188 / Tuesday, September 29, 2015 / Proposed Rules 

23See id. 

24See id. 

25See id. 

26See id. 

27See id. 

28The Commission pointed out that since this 

criterion requires a person to certify that the person 

does not control trading of its owned entity, the 

criterion could not be met by a natural person or 

any entity, such as a partnership, where it is not 

possible to separate knowledge and control of the 

person from that of the owned entity. 

29See 2013 Aggregation Proposal, 78 FR at 68960. 

30See id. 

31See id. Section 4a(a)(7) of the CEA provides 

authority to the Commission to grant relief from the 

position limits regime. 

position limits by coordinated trading or 

direct or indirect influence between 

entities. For these reasons, the 

Commission preliminarily believed that 

aggregation based upon an ownership or 

equity interest of greater than 50 percent 

would be appropriate to address the 

heightened risk of direct or indirect 

influence over the owned entity.23

Referring to commenters who said 

that if an owned entity’s positions are 

aggregated with the owner’s position, 

the aggregation should be pro rata to the 

ownership interest, the Commission 

stated its belief that a pro rata approach 

could be administratively burdensome 

for both owners and the Commission.24

For example, the Commission 

explained, the level of ownership 

interest in a particular owned entity 

may change over time for a number of 

reasons, including stock repurchases, 

stock rights offerings, or mergers and 

acquisitions, any of which may dilute or 

concentrate an ownership interest. 

Thus, it may be burdensome to 

determine and monitor the appropriate 

pro rata allocation on a daily basis. 

Moreover, the Commission also noted 

that it has historically interpreted the 

statute to require aggregation of all the 

relevant positions of owned entities, 

absent an exemption. This is consistent 

with the view that a holder of a 

significant ownership interest in 

another entity may have the ability to 

influence all the trading decisions of the 

entity in which such ownership interest 

is held. 

2. Disaggregation Relief for Ownership 

or Equity Interests of Greater Than 50 

Percent 

The 2013 Aggregation Proposal also 

included a provision for disaggregation 

relief for ownership or equity interests 

of greater than 50 percent, which was 

consistent with the Commission’s 

preliminary view that relief from the 

aggregation requirement should not be 

available merely upon a notice filing by 

a person who has a greater than 50 

percent ownership or equity interest in 

the owned entity. The Commission 

explained that, in its view, a person 

with a greater than 50 percent 

ownership interest in multiple accounts 

would have the ability to hold and 

control a significant and potentially 

unduly large overall position in a 

particular commodity, which position 

limits are intended to prevent. Also, as 

noted above, the Commission believed 

that in general this ‘‘bright line’’ 

approach would provide administrative 

certainty.25

Nonetheless, the Commission 

considered points raised by commenters 

in this regard, and concluded that in 

some situations disaggregation relief 

may be appropriate even for a person 

holding a majority ownership interest, 

on the conditions that the owned entity 

is not required to be, and is not, 

consolidated on the financial statement 

of the person, the person can 

demonstrate that the person does not 

control the trading of the owned entity, 

based on the criteria in proposed rule 

§ 150.4(b)(2)(i), and both the person and 

the owned entity have procedures in 

place that are reasonably effective to 

prevent coordinated trading.26

The Commission acknowledged that 

to provide such relief in order to 

address issues raised by commenters 

would represent a break by the 

Commission from past practice, but it 

explained that it has authority to 

provide such relief pursuant to section 

4a(a)(7) of the CEA, which authorizes 

the Commission to provide relief from 

the requirements of the position limits 

regime.27

Consequently, the 2013 Aggregation 

Proposal included a provision 

(proposed rule § 150.4(b)(3)) that would 

permit a person with a greater than 50 

percent ownership of an owned entity to 

apply to the Commission for relief from 

aggregation on a case-by-case basis. The 

person would be required to 

demonstrate to the Commission that: 

i. The owned entity is not required to 

be, and is not, consolidated on the 

financial statement of the person, 

ii. the person does not control the 

trading of the owned entity (based on 

criteria in rule § 150.4(b)(2)(i)), with the 

person showing that it and the owned 

entity have procedures in place that are 

reasonably effective to prevent 

coordinated trading in spite of majority 

ownership,28

iii. each representative of the person 

(if any) on the owned entity’s board of 

directors attests that he or she does not 

control trading of the owned entity, and 

iv. the person certifies that either (a) 

all of the owned entity’s positions 

qualify as bona fide hedging 

transactions or (b) the owned entity’s 

positions that do not so qualify do not 

exceed 20 percent of any position limit 

currently in effect, and the person 

agrees in either case that: 

D If this certification becomes untrue 

for the owned entity, the person will 

aggregate the owned entity for three 

complete calendar months and if all of 

the owned entity’s positions qualify as 

bona fide hedging transactions for that 

entire time the person would have the 

opportunity to make the certification 

again and stop aggregating, 

D upon any call by the Commission, 

the owned entity(ies) will make a filing 

responsive to the call, reflecting the 

owned entity’s positions and 

transactions only, at any time (such as 

when the Commission believes the 

owned entities in the aggregate may 

exceed a visibility level), and 

D the person will provide additional 

information to the Commission if any 

owned entity engages in coordinated 

activity, short of common control 

(understanding that if there were 

common control, the positions of the 

owned entity(ies) would be aggregated). 

The Commission clarified that the 

proposed relief would not be automatic, 

but rather would be available only if the 

Commission finds, in its discretion, that 

the four conditions above are met. The 

proposed rule would not impose any 

time limits on the Commission’s process 

for making the determination of whether 

relief is appropriately granted, and relief 

would be available only if and when the 

Commission acts on a particular request 

for relief.29

The Commission also explained that, 

under the 2013 Aggregation Proposal, it 

would interpret factors such as the 

owned entity being a newly acquired 

standalone business or a joint venture 

subject to special restrictions on control, 

or two different owned entities 

conducting operations at different levels 

of commerce (such as retail and 

wholesale), to be favorable to granting 

relief from the aggregation 

requirement.30 The Commission also 

noted that if a person with greater than 

50 percent ownership of an owned 

entity could not meet the conditions in 

proposed rule § 150.4(b)(3), the person 

could apply to the Commission for relief 

from aggregation under CEA section 

4a(a)(7).31 The Commission noted that 

CEA section 4a(a)(7) does not impose 

any time limits on the Commission’s 

process for determining whether relief 

under that section is appropriate, nor 

does it prescribe or limit the factors that 


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32See id. The 2013 Aggregation Proposal also 

included amended rule § 150.1(e)(5) and proposed 

rule § 150.4(b)(5) that would allow managers of 

employee benefit plans (i.e., persons that manage a 

commodity pool, the operator of which is excluded 

from registration as a commodity pool operator 

under rule § 4.5(a)(4)) to be treated as an IAC, on 

the condition that an IAC notice filing is made as 

required under rule § 150.4(c). See id. at 68961. The 

aspects of the 2013 Aggregation Proposal related to 

proposed rule §§ 150.1(e)(5) and 150.4(b)(5) are not 

affected by the revisions discussed herein. 

33See 1999 Amendments, 64 FR at 24044 (‘‘[T]he 

Commission . . . interprets the ‘held or controlled’ 

criteria as applying separately to ownership of 

positions or to control of trading decisions.’’). See 

also, Exemptions from Speculative Position Limits 

for Positions which have a Common Owner but 

which are Independently Controlled and for Certain 

Spread Positions; Proposed Rule, 53 FR 13290, 

13292, (Apr. 22, 1988). In response to two separate 

petitions, the Commission proposed the 

independent account controller exemption from 

speculative position limits, but declined to remove 

the ownership standard from its aggregation policy. 

34The comments on the 2013 Aggregation 

Proposal are available on the Commission’s Web 

site at http://comments.cftc.gov/PublicComments/

CommentList.aspx?id=1427. Commenters also 

addressed other aspects of the 2013 Aggregation 

Proposal, but since those other aspects remain the 

same under this revision to the proposal, it is 

unnecessary to address those comments at this 

time. 

35Better Markets, Inc. on February 10, 2014 (‘‘CL– 

Better Markets’’) at 2–3. 

36CL–Better Markets at 3. 

37Occupy the SEC on August 7, 2014 at 5–6. 

Occupy the SEC did not comment on the provision 

for disaggregation relief for owners holding between 

a 10 percent and a 50 percent interest in an owned 

entity. 

Another commenter, Chris Barnard, said that he 

initially took a negative view of providing relief for 

owners of more than 50 percent of an owned entity, 

but concluded such relief was acceptable because 

of the strength of the conditions in proposed rule 

§ 150.4(b)(3). Chris Barnard on January 16, 2014 at 

1–2. 

38Futures Industry Association on February 6, 

2014 (‘‘CL–FIA’’) at 4, 8 and 10–11. 

39CL–FIA at 10. 

40CL–FIA at 10. The FIA commented that because 

the exemption for majority-owned entities would be 

effective only after a Commission determination, 

the Commission would have discretion on a caseby-case basis to review facts and circumstances. 

CL–FIA at 10. 

41CL–FIA at 10–11. 

42The Asset Management Group of the Securities 

Industry and Financial Markets Association on 

February 10, 2014 at 6. The Coalition of Physical 

Energy Companies, on February 10, 2014 at 3–8, 

also said that the ‘‘Greater Than 50 Percent’’ 

category should be eliminated and such situations 

treated in accordance with proposed rule 

§ 150.4(b)(2). 

43Center for Capital Markets Competitiveness of 

the U.S. Chamber of Commerce on February 10, 

2014 at 9. ICE Futures U.S., Inc., a designated 

contract market (‘‘DCM’’), agreed that the 

requirements in proposed rule § 150.4(b)(3) would 

Continued 

the Commission may consider to be 

relevant in determining whether to grant 

relief.32

II. Proposed Rules 

A. Proposed Revision To Allow for 

Relief to Owners of More Than 50 

Percent of an Owned Entity Based on 

Notice Filing 

In light of the language in section 4a 

of the CEA, its legislative history, 

subsequent regulatory developments, 

and the Commission’s historical 

practices in this regard, the Commission 

continues to believe that section 4a 

requires aggregation on the basis of 

either ownership or control of an entity. 

The Commission also believes that 

aggregation of positions across accounts 

based upon ownership is a necessary 

part of the Commission’s position limit 

regime.33 However, the Commission is 

also mindful that, as discussed by 

commenters on the 2013 Aggregation 

Proposal, aggregation of positions held 

by owned entities may in some cases be 

impractical, burdensome, or not in 

keeping with modern corporate 

structures. Therefore, the Commission is 

proposing a limited revision to the 2013 

Aggregation Proposal that would permit 

all owners of 10 percent or more of an 

owned entity (i.e., the owners of up to 

and including 100 percent of an owned 

entity) to disaggregate the positions of 

the owned entity in the circumstances 

specified in proposed rule § 150.4(b)(2). 

All other aspects of the 2013 

Aggregation Proposal, including the 

proposed criteria for disaggregation 

relief and other aspects not discussed 

herein, remain the same. 

The Commission has the authority to 

revise its proposed relief under section 

4a(a)(7) of the CEA, which authorizes 

the Commission to provide relief from 

the requirements of the position limits 

regime. The reasons for this proposed 

revision are discussed below. 

B. Commenters’ Views 

Commenters on the 2013 Aggregation 

Proposal generally praised the proposed 

relief for owners of between 10 percent 

and 50 percent of an owned entity, but 

asserted that the proposed application 

procedures for owners of a more than 50 

percent equity or ownership interest 

were unnecessary and inappropriate.34

A few commenters opposed providing 

aggregation relief for owners of more 

than 10 percent of an owned entity. 

Better Markets, Inc. (‘‘Better Markets’’), 

an organization that advocates for 

financial reform, commented that 

allowing disaggregation of majorityowned subsidiaries would ignore the 

clear language of CEA section 4a(a)(1) 

and ‘‘would allow traders to easily 

circumvent Position Limits by creating 

multiple subsidiaries and dividing its 

positions among them.’’ 35 Better 

Markets said the Commission must 

therefore not allow any disaggregation 

relief for owners holding a more than 10 

percent interest in an owned entity.36

Occupy the SEC, another organization 

that advocates for financial reform, said 

that the provision for relief for owners 

of more than 50 percent of an owned 

entity should be removed because 

‘‘there can be no plausible justification 

for exempting largely interconnected 

firms from the position limits regime,’’ 

and in any case the proposed relief for 

greater than 50 percent owners would 

be of little use because it ‘‘adds a 

veritable gauntlet of conditions [in 

proposed rule 150.4(b)(3)] that few 

companies will be able to pass.’’ 37

The Futures Industry Association 

(‘‘FIA’’), a trade association, commented 

that the Commission should permit 

majority-owned affiliates to be 

disaggregated regardless of whether the 

entities are required to consolidate 

financial statements.38 The FIA opined 

that conditioning disaggregation of 

majority-owned affiliates on the lack of 

a requirement for consolidated financial 

statements would be arbitrary, because 

the accounting principles ‘‘are wholly 

unrelated to the question of actual 

control of day-to-day trading decisions 

and positions.’’ 39 The FIA requested 

that the Commission amend the 

proposal to allow a person to rebut the 

presumption of control of a majorityowned affiliate solely by demonstrating 

that the person does not control the 

trading and positions of the owned 

entity through, among other things, 

effective procedures that prevent 

coordinated trading.40 The FIA 

recommended that the Commission 

remove the condition for each 

representative of the board of directors 

to certify that he or she does not control 

the trading decisions of the owned 

entity.41

Other commenters said that the 

Commission should provide the same 

disaggregation relief for owners of more 

than 50 percent of an owned entity as 

is proposed to be provided for owners 

of 50 percent or less. For example, the 

Asset Management Group of the 

Securities Industry and Financial 

Markets Association said that the 

Commission should extend ‘‘the owned 

entity exemption at proposed [rule] 

150.4(b)(2) to include all third party 

ownership interests (greater than 50 

[percent]) that do not involve actual 

common trading control.’’ 42 The Center 

for Capital Markets Competitiveness of 

the U.S. Chamber of Commerce said that 

the requirement in proposed rule 

§ 150.4(b)(3) to submit an application to 

the Commission and await its approval 

would be unworkable in practice and 

not provide any apparent regulatory 

benefit.43


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be unworkable, and suggested that the Commission 

should ‘‘[a]t a minimum,’’ revise the rule to reflect 

an objective process for action within a specified 

time. ICE Futures U.S., Inc. on February 10, 2014 

at 3. 

Similar comments were made by the American 

Gas Association on February 10, 2014 at 5–11, the 

Commercial Energy Working Group on February 10, 

2014 at 2–8, the Managed Funds Association on 

February 10, 2014 at 9–15, and the Private Equity 

Growth Capital Council on February 10, 2014 (‘‘CL– 

PEGCC’’) at 3–8. 

44Commodity Markets Council on February 10, 

2014 (‘‘CL–CMC’’) at 16–17. In a separate comment 

letter, the Commodity Markets Council 

recommended that affiliated companies not be 

required to aggregate their positions when (1) the 

companies are authorized to control trading 

decisions on their own, (2) the owner maintains 

only such minimum control as is consistent with 

its fiduciary responsibilities to supervise diligently 

the trading of the owned entity (or other applicable 

responsibilities), (3) the companies actually trade 

independently, and (4) the companies have no 

knowledge of each other’s trading decisions. 

Commodity Markets Council on July 25, 2014 (‘‘CL– 

CMC II’’) at 5–6. 

45Natural Gas Supply Association on February 

10, 2014 (‘‘CL–NGSA’’) at 39–43. 

46MidAmerican Energy Holdings Company on 

February 7, 2014 (‘‘CL-MidAmerican’’) at 1–2. 

47CL-MidAmerican at 2. 48CL-MidAmerican at 3. MidAmerican 

recommended an application for relief by majorityowned affiliates not meeting all four criteria would 

need to rebut the assumption of control over 

majority-owned subsidiaries and meet two 

conditions: (1) The requirements applicable to 

entities with 50 percent or less common ownership; 

and (2) The requirement that representatives of 

board members of an entity covered by the relief 

request attest to the absence of trading control. 

MidAmerican recommended that the Commission 

consider the following factors that may rebut the 

assumption of control over majority-owned 

subsidiaries: (1) Separate trading accounts and 

broker relationships for each entity; (2) periodic 

certification from an officer of the requesting entity 

that the policies and procedures designed to 

prevent trading-level control or coordination 

remain in place and are effective; (3) lack of 

common guarantor and/or provision of independent 

credit support; (4) lack of cross-default or crossacceleration provisions in trading contracts; (5) 

maintenance of separate identifiable assets; (6) 

maintenance of separate lines of business (i.e., the 

business of one entity is not dependent upon the 

other); and (7) any other structural, legal, or 

regulatory barriers limiting control and 

interdependencies among affiliated entities. CLMidAmerican at 4–5. 

49CME Group on February 10, 2014 (‘‘CL–CME’’) 

at 9. 

50CL–CME at 2, 6, and 10–11. CME opined that 

under the Commission’s precedent, a 10 percent or 

more ownership or equity interest in an account is 

an indicia of trading control, but this precedent 

does not support a requirement for aggregation 

based on a 10 percent or more ownership or equity 

interest in an entity. CL–CME at 11. CME reasoned 

that the Commission’s use of the term ‘‘account’’ 

has never referred to an owned entity that itself has 

accounts, that the 1979 Aggregation Policy suggests 

the Commission contemplated a definition of 

‘‘account’’ that means no more than a personally 

owned futures trading account, and that the 1999 

Amendments to the aggregation rules were focused 

on directly owned accounts. CL–CME at 11–12. 

51The Commodity Markets Council said that 

under the Commission’s precedents ‘‘[l]egal 

affiliation [between companies] has been an 

indicium but not necessarily sufficient for position 

aggregation.’’ CL–CMC at 16. 

NGSA said that the Commission has never 

specifically required aggregation solely on the basis 

of ownership of another legal person. CL–NGSA at 

42. To support its view, NGSA said that the 1979 

Aggregation Policy and the 1999 Amendments 

apply to only trading accounts that are directly or 

personally held or controlled by an individual or 

legal entity, the Commission’s large trader rules 

require aggregation of multiple accounts held by a 

particular person, not the accounts of a person and 

its owned entities, and regulation § 18.04(b) 

distinguishes between owners of the ‘‘reporting 

trader’’ and the owners of the ‘‘accounts of the 

reporting trader.’’ Id. at 42–43. 

52CL–CME at 5–6; CL–NGSA at 41. CME 

commented that the Commission failed to consider 

the statutorily required factors, because CME asserts 

it is false that prior rules required aggregation of 

owned entity positions at a 10 percent ownership 

level. CL–CME at 8. 

NGSA contended that ‘‘CEA section 4a(a)(1) only 

allows the Commission to require the aggregation of 

positions on ownership alone when those positions 

are directly owned by a person. The positions of 

another person are only to be aggregated when the 

person has direct or indirect control over the 

trading of another person.’’ CL–NGSA at 41. 

53CL–CME at 13. CME noted that 63 FR 38525 

at 38532 n. 27 (July 17, 1998) (proposal to amend 

regulation 150.3 to include the separately 

incorporated affiliates of a CPO, CTA or FCM as 

eligible entities for the exemption relief of 

regulation 150.3) states: ‘‘Affiliated companies are 

generally understood to include one company that 

owns, or is owned by, another or companies that 

share a common owner.’’ CL–CME at 13 n. 52. CME 

also asserted that the term ‘‘principals’’ under 

regulation § 3.1(a)(2)(ii) include entities that have a 

direct ownership interest that is 10 percent or 

greater in a lower tier entity, such as the parent of 

a wholly-owned subsidiary. From these two 

provisions, CME concluded that the corporate 

parent of a wholly-owned CPO would be affiliated 

with, and a principal of, its wholly-owned 

subsidiary. 

54See CL–CME at 14–15, citing In the Matter of 

Vitol Inc. et al., Docket No. 10–17 (Sept. 14, 2010), 

available at http://www.cftc.gov/ucm/groups/

public/@lrenforcementactions/documents/

legalpleading/enfvitolorder09142010.pdf (‘‘In the 

Matter of Vitol’’) and In the Matter of Citigroup Inc. 

et al., Docket No. 12–34 (Sept. 21, 2012), available 

at http://www.cftc.gov/ucm/groups/public/@

lrenforcementactions/documents/legalpleading/

The Commodity Markets Council 

recommended that the Commission not 

require aggregation based solely on 

ownership of legal entities, but instead 

extend the IAC exemption to all 

separately organized companies, 

whether or not they are affiliated.44 The 

Natural Gas Supply Association 

(‘‘NGSA’’) recommended that the 

Commission leave the current rules on 

aggregation in place unchanged, because 

‘‘[u]nder the status quo, the Commission 

may bring enforcement action against an 

investor if it directs or otherwise 

controls the trading of an owned entity 

whose positions it claims it does not 

control.’’ 45

MidAmerican Energy Holdings 

Company (‘‘MidAmerican’’), an energy 

services company which is controlled 

by Berkshire Hathaway, Inc. 

(‘‘Berkshire’’), commented that, absent 

aggregation relief for majority-owned 

affiliates that are consolidated for 

accounting purposes, the proposed 

position limits would impose ‘‘serious 

regulatory costs and consequences’’ to 

establish an extensive compliance 

monitoring and coordination program 

across independently managed, 

disparate businesses, and would be 

contrary to policies, procedures, 

systems, and controls established to 

provide functional and legal separation 

for individual operating businesses.46

MidAmerican explained that Berkshire 

and its industrial operating businesses 

are generally managed on a 

decentralized basis, with no centralized 

or integrated business functions and 

minimal involvement by Berkshire’s 

corporate headquarters in day-to-day 

business activities of MidAmerican or 

Berkshire’s other operating 

businesses.47 MidAmerican 

recommended that the Commission 

provide for disaggregation upon a notice 

filing by a group of majority-owned 

entities that meet the four criteria in the 

proposal or, if the group does not meet 

all four criteria in the proposal, provide 

for the group to rely on the submission 

of an application for relief until the 

Commission has acted on the 

application.48

CME Group (‘‘CME’’), a holding 

company for a number of DCMs, stated 

that the Commission did not identify 

any basis or justification for the various 

features of the proposed aggregation 

regime.49 CME contended that features 

of the 2013 Aggregation Proposal 

(regarding the owned entity aggregation 

rules, the IAC exemption, and the 

‘‘substantially identical trading 

strategies’’ rule) are not in accordance 

with law, arbitrary and capricious, an 

unexplained departure from the 

Commission’s administrative precedent, 

and not more permissive than existing 

aggregation standards.50 The 

Commodity Markets Council and the 

NGSA were also of the opinion that the 

2013 Aggregation Proposal was not 

supported by the Commission’s 

administrative precedent.51 CME and 

NGSA asserted that section 4a(a)(1) of 

the CEA provides no basis for requiring 

aggregation of positions held by another 

person in the absence of control of such 

other person.52 CME also stated that rule 

§ 150.4(b) generally exempts a 

commodity pool’s participants with an 

ownership interest of 10 percent or 

greater from aggregating the positions 

held by the pool.53 Finally, CME and 

NGSA contended that two of the 

Commission’s enforcement cases 

indicate that the Commission has 

viewed aggregation as being required 

only where there is common trading 

control.54


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enfcitigroupcgmlorder092112.pdf (‘‘In the Matter of 

Citigroup’’). 

NGSA contended that In the Matter of Vitol was 

based on facts that would be relevant only if 

common trading control was necessary for 

aggregating the positions of affiliated companies. 

See CL–NGSA at 43. NGSA did not discuss In the 

Matter of Citicorp. 

55The Commission also proposes to delete a 

cross-reference to proposed rule § 150.4(b)(3)(vii) in 

proposed rule § 150.4(c)(1). 

56The Commission notes in this regard that there 

may be significant burdens in meeting the 

requirements of proposed rule § 150.4(b)(3) even 

where there is no control the trading of the owned 

entity, as was suggested by the Center for Capital 

Markets Competitiveness of the U.S. Chamber of 

Commerce, the Asset Management Group of the 

Securities Industry and Financial Markets 

Association and the other commenters. See supra 

nn. 42 and 43. 

57See 2013 Aggregation Proposal, 78 FR at 68961, 

referring to regulation § 150.3(a)(4) (proposed to be 

replaced by proposed rule § 150.4(b)(5)). Such 

conditions have been useful in ensuring that trading 

is not coordinated through the development of 

similar trading systems, and that procedures are in 

place to prevent the sharing of trading decisions 

between entities. 

58The Commission noted in the 2013 Aggregation 

Proposal that if there were no aggregation on the 

basis of ownership, it would have to apply a control 

test in all cases, which would pose significant 

administrative challenges to individually assess 

control across all market participants. See 2013 

Aggregation Proposal, 78 FR at 68956. Further, the 

Commission considered that if the statute required 

aggregation only if the existence of control were 

proven, market participants may be able to use an 

ownership interest to directly or indirectly 

influence the account or position and thereby 

circumvent the aggregation requirement. See id. On 

further review and after considering the comments 

of the FIA and others, the Commission believes that 

the disaggregation criteria in proposed rule 

§ 150.4(b)(2)(i) provide an effective, easily 

implemented means of applying a ‘‘control test’’ to 

determine if disaggregation should be allowed, 

without creating a loophole through which market 

participants could circumvent the aggregation 

requirement. 

C. Revised Proposed Rule 

In view of the points raised by 

commenters on the 2013 Aggregation 

Proposal and upon further review of the 

matter, the Commission is proposing to 

revise the proposal to delete proposed 

rule §§ 150.4(b)(3) and 150.4(c)(2), and 

to change proposed rule § 150.4(b)(2) so 

that it would apply to all persons with 

an ownership or equity interest in an 

owned entity of 10 percent or greater 

(i.e., an interest of up to and including 

100%) in the same manner as proposed 

rule § 150.4(b)(2) would apply, before 

this revision, to owners of an interest of 

between 10 percent and 50 percent. The 

Commission is also proposing 

conforming changes in proposed rule 

§ 150.4(b)(7), to delete a cap of 50 

percent on the ownership or equity 

interest for broker-dealers to 

disaggregate, and in proposed rule 

§ 150.4(e)(1)(i), to delete a delegation of 

authority referencing proposed rule 

§ 150.4(b)(3).55 The entirety of the 

Commission’s aggregation-related 

proposed amendments to part 150, as 

set out in the 2013 Aggregation Proposal 

as revised herein, is set forth at the end 

of this notice. 

The Commission finds merit in the 

comments of the FIA that ownership of 

a greater than 50 percent interest in an 

entity (and the related consolidation of 

financial statements) may not mean that 

the owner actually controls day-to-day 

trading decisions of the owned entity. 

The Commission believes that, on 

balance, the overall purpose of the 

position limits regime (to diminish the 

burden of excessive speculation which 

may cause unwarranted changes in 

commodity prices) would be better 

served by focusing the aggregation 

requirement on situations where the 

owner is, in view of the circumstances, 

actually able to control the trading of 

the owned entity.56 The Commission 

reasons that the ability to cause 

unwarranted changes in the price of a 

commodity derivatives contract would 

result from the owner’s control of the 

owned entity’s trading activity. 

The Commission has considered the 

views of Better Markets and other 

commenters who warned that 

inappropriate relief from the aggregation 

requirements could allow 

circumvention of position limits 

through the use of multiple subsidiaries. 

However, the Commission believes that 

the criteria in proposed rule 

§ 150.4(b)(2)(i), which must be satisfied 

in order to disaggregate, will 

appropriately indicate whether an 

owner has control of or knowledge of 

the trading activity of the owned entity. 

The disaggregation criteria require that 

the two entities not have knowledge of 

each other’s trading and, moreover, have 

and enforce written procedures to 

preclude such knowledge.57 And, in 

fact, as noted in the 2013 Aggregation 

Proposal, the Commission has applied, 

and expects to continue to apply, 

certain of the same conditions in 

connection with the IAC exemption to 

ensure independence of trading between 

an eligible entity and an affiliated 

independent account controller. If the 

disaggregation criteria are satisfied, 

therefore, the Commission preliminarily 

believes that disaggregation may be 

permitted even if the owner has a 

greater than 50 percent ownership or 

equity interest in the owned entity. 

Even in the case of majority ownership, 

if the disaggregation criteria are 

satisfied, the ability of an owner and the 

owned entity to act together to engage 

in excessive speculation or to cause 

unwarranted price changes should not 

differ significantly from that of two 

separate individuals. 

The Commission points out that 

finalization of proposed rule 

§ 150.4(b)(2), which would allow 

persons with ownership or equity 

interests in an owned entity of up to and 

including 100 percent to disaggregate 

the positions of the owned entity if 

certain conditions were satisfied, would 

not mean that there would be no 

aggregation on the basis of ownership. 

Rather, aggregation would still be the 

‘‘default requirement’’ for the owner of 

a 10 percent or greater interest in an 

owned entity, unless the conditions of 

proposed rule § 150.4(b)(2) are 

satisfied.58

Furthermore, satisfaction of the 

criteria of proposed rule § 150.4(b)(2) 

would not mean that an owner and 

owned entity would be entirely immune 

from aggregation in all circumstances. 

For example, aggregation is and would 

continue to be required under both 

current regulation § 150.4(a) and 

proposed rule § 150.4(a)(1) if two or 

more persons act pursuant to an express 

or implied agreement; and this 

aggregation requirement would apply 

whether the two or more persons are an 

owner and owned entity(ies) that meet 

the conditions in proposed rule 

§ 150.4(b)(2), or are unaffiliated 

individuals. The Commission intends to 

continue to enforce the requirement of 

aggregation when two persons are acting 

together pursuant to an express or 

implied agreement regardless of 

whether the two persons are unaffiliated 

or if one person has an ownership 

interest in the other. 

In determining whether the criteria in 

proposed rule § 150.4(b)(2) are an 

appropriate test for owners of more than 

50 percent of an owned entity, the 

Commission notes the comments of 

MidAmerican regarding the relevant 

variances in corporate structures. 

MidAmerican stated that there are 

instances where one entity has a 100 

percent ownership interest in another 

entity, yet does not control day-to-day 

business activities of the owned entity. 

Also, in this situation the owned entity 

would not have knowledge of the 

activities of other entities owned by the 

same owner, nor would it raise the 

heightened concerns, triggered when 

one entity both owns and controls 

trading of another entity, that the owner 

would necessarily act in a coordinated 

manner with other owned entities. 

The Commission also appreciates that 

a requirement to aggregate the positions 

of majority-owned subsidiaries could 


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59 In the 2013 Aggregation Proposal, the 

Commission noted that if the aggregation rules 

adopted by the Commission would be a precedent 

for aggregation rules enforced by designated 

contract markets and swap execution facilities, it 

would be even more important that the aggregation 

rules set out, to the extent feasible, ‘‘bright line’’ 

rules that are capable of easy application by a wide 

variety of market participants while not being 

susceptible to circumvention. See 2013 Aggregation 

Proposal, 78 FR at 68596, n. 103. The Commission 

believes that by implementing an approach to 

aggregation that is in keeping with longstanding 

corporate practices, the proposed revisions promote 

the goal of setting out ‘‘bright line’’ rules that are 

relatively easy to apply while not being susceptible 

to circumvention. 

60See, e.g., CL-MidAmerican at 4–5, CL–CMC II 

at 5–6. 

61For example, MidAmerican recommended 

factors such as whether the owner and the owned 

entity have separate trading accounts, separate 

assets, separate lines of business, independent 

credit support and other specific indications of 

separation. See CL-MidAmerican at 4–5. In the 

Commission’s view, criteria such as these are 

specific manifestations of the general principles 

stated in proposed rule § 150.4(b)(2)(i) that the 

owner and the owned entity not have knowledge of 

the trading decisions of the other and trade 

pursuant to separately developed and independent 

trading systems. Similarly, whether the two entities 

do or do not have separate assets or separate lines 

of business would not necessarily indicate whether 

they are engaged in coordinated trading. 

62As stated in the 2013 Aggregation Proposal, the 

Commission proposes that the criteria in proposed 

rule § 150.4(b)(2)(i) would be interpreted and 

applied in accordance with the Commission’s past 

practices. See, e.g., 1979 Aggregation Policy, 44 FR 

33839 (providing indicia of independence); CFTC 

Interpretive Letter No. 92–15 (CCH ¶ 25,381) 

(ministerial capacity overseeing execution of trades 

not necessarily inconsistent with indicia of 

independence); 1999 Amendments, 64 FR at 24044 

(intent in issuing final aggregation rule ‘‘merely to 

codify the 1979 Aggregation Policy, including the 

continued efficacy of the [1992] interpretative 

letter’’). 

63See 2013 Aggregation Proposal, 78 FR at 68956. 

64See Pub. L. 90–258, Sec. 2, 82 Stat. 26 (1968). 

The Senate Report accompanying the 1968 

amendment stated that ‘‘all of the changes made by 

this section incorporate longstanding administrative 

interpretations reflected in orders of the 

[Commodity Exchange] Commission.’’ S. Rep. No. 

947, 90th Cong. 2d Sess. (1968) at page 5. 

65See H.R. Rep. No. 624, 99th Cong., 2d Sess. 

(1986) at page 43. The Report noted that: 

During the subcommittee hearings on 

reauthorization, several witnesses expressed 

dissatisfaction with the manner in which certain 

market positions are aggregated for purposes of 

determining compliance with speculative limits 

fixed under Section 4a of the Act. The witnesses 

suggested that, in some instances, aggregation of 

positions based on ownership without actual 

control unnecessarily restricts a trader’s use of the 

futures and options markets. In this connection, 

concern was expressed about the application of 

speculative limits to the market positions of certain 

commodity pools and pension funds using multiple 

trading managers who trade independently of each 

other. The Committee does not take a position on 

the merits of the claims of the witnesses. 

Id. 

66The Managed Futures Trade Association 

petition requested that the Commission amend the 

aggregation standard for exchange-set speculative 

position limits in regulation § 1.61(g) (now 

regulation § 150.5(g)), by adding a proviso to 

exclude the separate accounts of a commodity pool 

where trading in those accounts is directed by 

unaffiliated CTAs acting independently. See 

Exemption From Speculative Position Limits for 

Positions Which Have a Common Owner but Which 

Are Independently Controlled; Proposed Rule, 53 

FR 13290, 13291–92 (Apr. 22, 1988). The petition 

argued the ownership standard, as applied to 

‘‘multiple-advisor commodity pools, is unfair and 

unrealistic’’ because while the commodity pool may 

own the positions in the separate accounts, the CPO 

does not control trading of those positions (the 

unaffiliated CTA does) and therefore the pool’s 

ownership of the positions will not result in 

unwarranted price fluctuations. See id. at 13292. 

The petition from the Chicago Board of Trade 

(which is now a part of CME) sought to revise the 

aggregation standard so as not to require aggregation 

based solely on ownership without control. See id. 

67See id. In response to the petitions, however, 

the Commission proposed the IAC exemption, 

which provides ‘‘an additional exemption from 

speculative position limits for positions of 

commodity pools which are traded in separate 

accounts by unaffiliated account controllers acting 

independently.’’ Id. 

require corporate groups to establish 

procedures to monitor and coordinate 

trading activities across disparate 

owned entities, which could have 

unpredictable consequences. The 

Commission recognizes that these 

consequences could include not only 

the cost of establishing these 

procedures, but also the impairment of 

corporate structures which were 

established to insure that the various 

owned entities engage in business 

independently. This independence may 

serve important purposes which could 

be lost if the aggregation requirement 

were imposed too widely. 

Further, the Commission notes that 

for those corporate groups that establish 

policies and controls to separate 

different operating businesses, the 

disaggregation criteria in proposed rule 

§ 150.4(b)(2)(i) should be relatively 

familiar and easy to satisfy. That is, the 

disaggregation criteria and their 

application to corporate groups like 

MidAmerican’s group are in line with 

prudent corporate practices that are 

maintained for longstanding, wellaccepted reasons. The Commission does 

not intend that the aggregation 

requirement interfere with these 

structures.59

MidAmerican and the Commodity 

Markets Council proposed various 

alternative criteria which could be used 

to determine whether the positions of an 

owner and owned entity could be 

disaggregated.60 However, after 

considering these suggestions, the 

Commission does not believe that the 

suggested criteria are significantly 

different from the criteria in proposed 

rule § 150.4(b)(2)(i) in the 2013 

Aggregation Proposal. Also, some of the 

suggested criteria appear to be suitable 

for particular situations, but not 

necessarily all corporate groups.61

Overall, the Commission believes that 

the criteria in proposed rule 

§ 150.4(b)(2)(i) are appropriate and 

suitable for determining when 

disaggregation is permissible due to a 

lack of control and shared knowledge of 

trading activities. 62

In response to the assertions of CME 

and NGSA, the Commission reiterates 

its belief, as stated in the 2013 

Aggregation Proposal, that ownership of 

an entity is an appropriate criterion for 

aggregation of that entity’s positions, 

due in part to the direction in section 

4a(a)(1) of the CEA that all positions 

held by a person should be aggregated. 

The Commission has explained that 

this interpretation is supported by 

Congressional direction and 

Commission precedent from as early as 

1957 and continued through 1999.63 For 

example, in 1968, Congress amended 

the aggregation standard in CEA section 

4a to include positions ‘‘held by’’ one 

trader for another,64 supporting the view 

that an owner should aggregate the 

positions held by an owned entity 

(because the owned entity is holding the 

positions for the owner). During the 

Commission’s 1986 reauthorization, 

points similar to those raised now by 

CME and NGSA were considered and 

rejected. At that time, witnesses at 

Congressional hearings suggested that 

‘‘aggregation of positions based on 

ownership without actual control 

unnecessarily restricts a trader’s use of 

the futures and options markets,’’ but 

the Congressional committee did not 

recommend any changes to the statute 

based on these suggestions.65

In 1988, the Commission reviewed 

petitions by the Managed Futures Trade 

Association and the Chicago Board of 

Trade which argued against aggregation 

based only on ownership.66 In response 

to the petition, however, the 

Commission stated that: 

Both ownership and control have long 

been included as the appropriate aggregation 

criteria in the Act and Commission 

regulations. Generally, inclusion of both 

criteria has resulted in a bright-line test for 

aggregating positions. And as noted above, 

although the factual circumstances 

surrounding the control of accounts and 

positions may vary, ownership generally is 

clear. 

. . . In the absence of an ownership 

criterion in the aggregation standard, each 

potential speculative position limit violation 

would have to be analyzed with regard to the 

individual circumstances surrounding the 

degree of trading control of the positions in 

question. This would greatly increase 

uncertainty.67

Contrary to CME’s and NGSA’s 

contentions, the aggregation 


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68As noted above, section 4a(a)(1) of the CEA 

provides that ‘‘In determining whether any person 

has exceeded such limits, the positions held and 

trading done by any persons directly or indirectly 

controlled by such person shall be included with 

the positions held and trading done by such 

person.’’ 7 U.S.C. 6a(a)(1). 

69See Reports Filed by Contract Markets, Futures 

Commission Merchants, Clearing Members, Foreign 

Brokers and Large Traders; Final Rule, 51 FR 4712, 

4716 (Feb. 7, 1986) (referring to the use of the term 

‘‘account’’ in regulation 18.04, which required 

reports relating to persons whose accounts are 

controlled by the reporting trader and persons who 

have a financial interest of 10 percent or more in 

the account of the trader) (emphasis added). 

70See 1999 Amendments, 64 FR at 24043 and fn. 

26 (referring to rule 18.01 requirement of 

aggregation for reporting purposes when a trader 

‘‘holds, has a financial interest in or controls 

positions in more than one account’’). 

71See CL–CME at 12, citing the 1999 

Amendments, 64 FR at 24043. 

72The Commission stated that its ‘‘routine large 

trader reporting system is set up so that it does not 

double count positions which may be controlled by 

one and traded for the beneficial ownership of 

another. In such circumstances, although the 

routine reporting system will aggregate the 

positions reported by FCMs using only the control 

criterion, the staff may determine that certain 

accounts or positions should also be aggregated 

using the ownership criterion or may by special call 

receive reports directly from a trader.’’ 1999 

Amendments, 64 FR at 24043 and fn. 26. 

73See CL–CME at 13, citing rule § 150.4(b) and 

(c). 

74See In the Matter of Vitol at 2. 

75See id. 

76See In the Matter of Citigroup at 2–3. The 

Commission’s order specifically stated that ‘‘The 

positions of Citigroup’s wholly-owned subsidiaries, 

including CGML, in December 2009 are subject to 

aggregation pursuant to Commission Regulation 

§ 150.4(a)–(b).’’ See id. at 2, n. 2. 

77See CL–CME at 15. 

78See id. Rather, the Commission’s order found 

the parent company liable for the violations of its 

wholly-owned subsidiaries under section 2(a)(1)(B) 

of the CEA because the actions of the wholly-owned 

subsidiaries occurred within the scope of their 

employment, office, or agency with respect to the 

parent company. See In the Matter of Citigroup at 

4, citing CEA section 2(a)(1)(B) and regulation 1.2. 

79See 2013 Aggregation Proposal, 78 FR at 

68958–59. 

requirement in CEA section 4a is not 

phrased in terms of whether the owner 

holds an interest in a trading account. 

In fact, the word ‘‘account’’ does not 

even appear in the statute.68 CME and 

NGSA incorrectly contend that the 

Commission has limited its 

interpretation of the term ‘‘account’’ to 

include only a personally owned futures 

trading account; the Commission has 

not. In 1986, for example, the 

Commission considered a comment that 

the use of the term ‘‘account’’ means a 

direct interest in a specific futures 

trading account, and rejected this view, 

writing that the Commission ‘‘has 

generally interpreted and applied these 

rules more broadly’’ and that ‘‘[t]o 

conduct effective market surveillance 

and enforce speculative limits, the 

Commission must know the relationship 

in terms of financial interest or control 

between traders as well as that between 

a trader and trading accounts.’’ 69 CME 

and NGSA also misread the 1999 

Amendments, which specifically stated 

that ‘‘the Commission. . . interprets the 

‘held or controlled’ criteria as applying 

separately to ownership of positions or 

to control of trading decisions .’’ 70 CME 

misconstrues the 1999 amendments’ 

reference to the Commission’s largetrader reporting system as being related 

to the aggregation rules for the position 

limits regime.71 But the 1999 

amendments are consistent, because 

they included an explanation of 

situations in which reporting could be 

required based on both control and 

ownership.72 And, CME’s citation to 

exemptions for aggregation for certain 

commodity pools 73 simply prove too 

much—the reason these exemptions are 

in place is because aggregation would be 

required due to ownership or control of 

the commodity pools if the exemptions 

were not available. 

Last, CME and NGSA misread the 

Commission’s enforcement history, 

which in fact does not contradict the 

Commission’s traditional view of 

aggregation of owned entity positions as 

being required on the basis of either 

control or ownership. The first case 

cited by CME and NGSA did not enforce 

the Commission’s aggregation standard, 

but rather section 9(a)(4) of the CEA, 

which makes it unlawful for any person 

willfully to conceal any material fact to 

a board of trade acting in furtherance of 

its official duties under the Act.74 In this 

case, respondent companies willfully 

failed to disclose to a DCM the true 

nature of the relationship and the 

limited nature of the barriers to trading 

information flow between two 

companies.75 Nowhere does the case 

speak to whether aggregation standards 

may be applied based on either or both 

of ownership or control. 

In describing the second case it cites, 

CME seems to have made assumptions 

that never appear in the Commission’s 

decision. The only facts actually cited as 

relevant in this case were that a 

company and its two wholly-owned 

subsidiaries acted as counterparties in 

over-the-counter swaps contracts, 

engaged in futures trading, and held 

aggregate net-long positions in excess of 

the Commission’s all-months position 

limits.76 Nowhere did the Commission 

find, as erroneously described by CME, 

that the companies off-set the ‘‘same 

risk acquired from similarly situated 

counterparties.’’ 77 Nor did the 

Commission find, as CME incorrectly 

asserts, that the subsidiaries traded as 

agents for the corporate parent.78

The Commission solicits comment on 

all aspects of the revision to its 

proposed modification of rule 150.4 

described herein. Commenters are 

invited to address whether proposed 

rule § 150.4(b)(2), as revised, 

appropriately furthers the overall 

purposes of the position limits regime 

while not creating opportunities for 

circumvention of the aggregation 

requirement. 

III. Related Matters 

A. Considerations of Costs and Benefits 

Section 15(a) of the CEA requires the 

Commission to consider the costs and 

benefits of its actions before 

promulgating a regulation under the 

CEA or issuing certain orders. Section 

15(a) further specifies that the costs and 

benefits shall be evaluated in light of the 

following 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 considers the costs and 

benefits resulting from its discretionary 

determinations with respect to the 

section 15(a) factors. 

On November 15, 2013, the 

Commission proposed certain 

modifications to its policy for 

aggregation under the part 150 position 

limits regime (i.e., the 2013 Aggregation 

Proposal).79 The 2013 Aggregation 

Proposal provided the public with an 

opportunity to comment on the 

Commission’s cost-and-benefit 

considerations of the proposed 

amendments, including identification 

and assessment of any costs and benefits 

not discussed therein. In particular, the 

Commission requested that commenters 

provide data or any other information 

that they believe supports their 

positions with respect to the 

Commission’s considerations of costs 

and benefits. 

In this release, the Commission 

proposes to revise the 2013 Aggregation 

Proposal so that any person who owns 

10 percent or more of another entity 

would be permitted to disaggregate the 

positions of the entity under a unified 

set of conditions and procedures. All 

other aspects of the 2013 Aggregation 

Proposal, including the proposed 

criteria for disaggregation relief, remain 

the same. 

In the following, the Commission 

provides a general background for the 

2013 proposed amendments and the 


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80 17 CFR 150.4. 

81As expressed throughout this preamble, all 

aspects of the amendments as proposed in the 2013 

Aggregation Proposal, except as explicitly modified 

by the revisions discussed in this 2015 release, 

remain the same. 

82 17 CFR 150.4. 

83 17 CFR 150.4(b), (c), and (d). 

84Note that no aggregation would be required if 

the ownership or equity interest is below 10 

percent. 

85CL–CME at 6. See also CL–MidAmerican at 1. 

86CL–SIFMA at 1. 

87CL–MidAmerican at 2. 

88CL–NGSA at 39; CL–PEGCC. 

89CL–NGSA at 39; CL-MidAmerican at 2. 

90CL–NGSA at 40. 

91CL–PEGCC at 4, 5. 

92CL–PEGCC at 4. 

93 Id. 

94See, e.g., CL–PEGCC at 6. 

95CL–PEGCC at 7. 

96 Id. 

97 Id. 

current 2015 proposed revisions and 

discusses commenters’ responses to the 

2013 Aggregation Proposal that are 

relevant to its considerations of costs 

and benefits. The Commission further 

considers the expected costs and 

benefits of the 2015 proposed revisions 

in light of the five factors outlined in 

section 15(a). 

Using the existing regulation 150.4 as 

the baseline for comparison,80 the 

Commission considers in this section 

the incremental costs and benefits that 

arise from the proposed 2015 

revisions.81 That is, if the proposed 

2015 revisions are not adopted, the 

aggregation standards that would apply 

would be those described in the 

Commission’s existing regulation 150.4. 

The 2013 Aggregation Proposal set forth 

the costs and benefits of the 

Commission’s proposed amendments of 

existing regulation 150.4. All aspects of 

the 2013 Aggregation Proposal’s 

considerations of costs and benefits 

remain the same other than those 

related specifically to the instant 

proposal to allow persons owning 10 

percent or more of another entity to 

disaggregate the positions of the entity 

under a unified set of conditions and 

procedures. Thus, while the existing 

regulation 150.4 serves as the baseline 

for this consideration of costs and 

benefits, we also discuss as appropriate 

for clarity the differences from the 2013 

Aggregation Proposal. 

1. Background 

As discussed in the preamble, the 

Commission’s historical approach to 

position limits in current part 150 

generally consists of three components: 

(1) The level of each limit, which sets 

a threshold that restricts the number of 

speculative positions that a person may 

hold in the spot-month, in any 

individual month, and in all months 

combined; (2) an exemption for 

positions that constitute bona fide 

hedging transactions and certain other 

types of transactions; and (3) standards 

to determine which accounts and 

positions a person must aggregate for 

the purpose of determining compliance 

with the position limit levels. 

The third component of the 

Commission’s position limits regime— 

aggregation—is set out in regulation 

150.4.82 Regulation 150.4 requires that 

unless a particular exemption applies, a 

person must aggregate all positions for 

which that person: (1) Controls the 

trading decisions, or (2) has at least a 10 

percent ownership or equity interest in 

an account or position; and in doing so 

the person must treat positions that are 

held by two or more persons pursuant 

to an express or implied agreement or 

understanding as if they were held by a 

single person.83

The 2013 Aggregation Proposal set 

forth conditions and procedures to grant 

a person permission to disaggregate the 

positions of a separately organized 

entity (‘‘owned entity’’). The permission 

or exemption is dependent on the 

person’s level of ownership or equity 

interest in the owned entity. In the 2013 

Aggregation Proposal, the ownership or 

equity-interest levels were divided into 

two categories: (1) A person with an 

interest of between 10 percent and 50 

percent would be permitted to 

disaggregate the positions, upon filing a 

notice demonstrating compliance with 

certain requirements specified in the 

proposed amendments; (2) a person 

with a greater than 50 percent interest 

would have to apply on a case-by-case 

basis to the Commission for permission, 

and await the Commission’s decision as 

to whether certain prerequisites 

enumerated in the 2013 Aggregation 

Proposal had been met.84

2. Comments on the 2013 Aggregation 

Proposal 

In response to the 2013 Aggregation 

Proposal, several commenters raised 

concerns about the costs and benefits 

associated with the proposed changes to 

regulation 150.4. CME declared that the 

Commission failed to consider 

adequately the costs and benefits of 

‘‘every aspect’’ of the 2013 Aggregation 

Proposal.85 Yet, for the most part, 

commenters did not identify specific 

monetary costs or provide any 

quantitative information to support their 

arguments. Instead, they made the 

general statements that requiring owners 

without actual control to aggregate 

positions would weaken the ability of 

largely passive investors to provide 

capital investment and generate returns 

for their beneficiaries,86 and that it 

would run contrary to certain 

established corporate structures to 

provide functional and legal separation 

for individual operating businesses.87

NGSA and PEGCC expressed concern 

over attendant compliance costs for 

persons with greater than 50 percent 

interest in an owned entity.88 NGSA and 

MidAmerican asserted that the proposal 

would require new position-trading 

surveillance and compliance systems for 

owned entities, and involve more 

intraday coordination.89 NGSA 

identified another general cost: 

constraints on risk management 

programs when an owned entity’s 

commodity trading is restricted to 20 

percent of positions.90 PEGCC 

characterized the exemption-application 

process as unworkable because of the 

unlimited waiting period for 

Commission review and approval.91 As 

a result, the Commission’s approach 

would create uncertainty for applicants 

and burden Commission staff 

resources.92 Furthermore, during the 

waiting period, applicants would have 

to expend costs to develop interim 

compliance programs.93

Commenters also suggested 

alternatives to the exemption processes 

proffered in the 2013 Aggregation 

Proposal. Several commenters advised 

the Commission to accept a notice 

filing.94 PEGCC also recommended that 

the Commission modify the 

certifications requirement for the 

proposed greater than 50 percent 

ownership exemption. Instead of 

producing certifications from the owner 

entity and board members, PEGCC 

proposed that the Commission require a 

certification from the owner entity 

only.95 They also recommended that the 

Commission eliminate the grace period 

for seeking re-certification after the 

person loses its greater than 50 percent 

ownership exemption for failing to meet 

a condition.96 PEGCC remarked that the 

Commission had failed to provide any 

rationale for the grace period, and stated 

that the person should be able to apply 

for re-certification once it loses its 

status.97

3. The Current Proposal 

The Commission is proposing to 

revise the 2013 Aggregation Proposal to 

delete proposed rule § 150.4(b)(3) and 

§ 150.4(c)(2), and to change proposed 

rule § 150.4(b)(2), so that the latter 

provision would apply to all persons 

with an ownership or equity interest in 

an owned entity of 10 percent or greater. 

More precisely, under these proposed 

revisions, a person with at least a 10 


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98See earlier sections of this preamble for a 

discussion on all proposed revisions to regulation 

150.4. 

99SIFMA Letter at p. 1. 

100MidAmerican Letter at p. 2. 

101The 10 percent threshold has been in place for 

the nine agricultural contracts with federal limits 

for decades, and for other contracts where limits 

were imposed by DCMs and enforced by the 

Commission. See supra, note 15 (citing to the 1979 

Aggregation Policy, 44 FR at 33843, where the 

Commission codified its view that, except in certain 

limited circumstances, a financial interest in an 

account at or above 10 percent ‘‘will constitute the 

trader as an account owner for aggregation 

purposes’’). 

percent interest would not be required 

to aggregate an owned entity’s positons, 

if such person files a notice attesting to 

no trading control and implementation 

of firewalls to prevent access to relevant 

information, among other conditions. 

The Commission is also proposing 

conforming changes in other sections of 

proposed rule 150.4.98

As discussed in Section III.A.2, 

commenters raised concerns and 

suggested several alternatives for the 

exemptive category covering owners 

with a greater-than-50-percent interest. 

The Commission recognizes that the 

proposed amendments for this category 

in the 2013 Aggregation Proposal may 

impose burdens on certain market 

participants. It has embraced some of 

the commenters’ suggestions and 

revised the requirements for those 

market participants seeking relief from 

the aggregation obligations accordingly. 

The Commission welcomes comment on 

all aspects regarding the cost-andbenefit considerations of the 2015 

proposed revisions. Commenters are 

encouraged to suggest additional 

alternatives that may result in a superior 

cost-and-benefit profile, and provide 

support for their position both 

qualitatively and quantitatively. 

4. Costs and Benefits 

As noted in the preamble, the 

Commission’s general policy on 

aggregation is derived from CEA section 

4a(a)(1), which directs the Commission 

to aggregate positions based on separate 

considerations of ownership, control, or 

persons acting pursuant to an express or 

implied agreement. The Commission’s 

historical approach to its statutory 

aggregation obligation has thus included 

both ownership and control factors 

designed to prevent evasion of 

prescribed position limits. The 

Commission continues to believe that 

these factors together constitute an 

appropriate criterion for aggregation of 

that entity’s positions. 

The Commission believes that the 

revisions proposed herein would 

maintain the Commission’s historical 

approach to aggregation while adding 

thoughtful exemptions to relieve market 

participants from unnecessary burdens 

due to aggregation. Moreover, the 

proposed exemptions would only apply 

under legitimate conditions. As a result, 

the Commission’s aggregation policy is 

more focused on targeting market 

participants that pose an actual risk of 

engaging in the activities which the 

position limits regime is intended to 

prevent. 

a. Benefits 

The primary purpose of requiring 

positions of owned entities to be 

aggregated is to prevent evasion of 

prescribed position limits through 

coordinated trading. The Commission 

recognizes, however, that an overly 

restrictive or prescriptive aggregation 

policy may result in unnecessary 

burdens or unintended consequences. 

Such unintended consequences may 

take the form of reduced liquidity 

because imposing aggregation 

requirements on owned entities that are 

not susceptible to coordinated trading 

would unnecessarily restrict their 

ability to trade commodity derivatives 

contracts. Moreover, as argued by some 

commenters, requiring passive investors 

to aggregate the positions of entities 

they own may potentially diminish 

capital investments in their 

businesses,99 or interfere with existing 

decentralized business structures.100 By 

providing exemptive relief to market 

participants under legitimate 

circumstances—for instance, the 

demonstration of no control over 

trading—potential negative effects on 

derivatives markets would be reduced. 

The proposed 2015 revisions would 

also benefit market participants by 

mitigating their compliance burdens 

associated with the aggregation 

requirements as well as the position 

limits requirements more generally. 

Under the proposed exemptions, 

eligible market participants would not 

have to establish and maintain the 

infrastructure necessary to aggregate 

positions across owned entities. Further, 

an eligible entity with legitimate 

hedging needs and whose aggregated 

positions are above the position limits 

thresholds in the absence of any 

exemption would have the option of 

applying for an aggregation exemption 

instead of applying for a bona fide 

hedging exemption. 

Finally, under the proposed 2015 

revisions, the same set of exemption 

standards and procedures would apply 

to a person with any level of ownership 

or equity interest in the owned entity 

being considered—as long as the level is 

high enough to trigger the aggregation 

requirements (i.e., at least 10 percent). 

This unified exemptive framework 

facilitates legal clarity and consistency. 

It also further mitigates the burdens 

facing market participants. Consider, for 

example, a parent-holding company that 

has different levels of ownership or 

equity interest in its various 

subsidiaries. Under the proposed 

unified framework, such parent-holding 

company would not need to establish 

and maintain multiple sets of systems 

for the purpose of obtaining aggregation 

exemptions for each of these 

subsidiaries. 

The Commission requests comment 

on its considerations of the benefits of 

the proposed 2015 revisions. 

Commenters are specifically encouraged 

to include both quantitative and 

qualitative assessments of these 

benefits, as well as data or other 

information to support such 

assessments. 

b. Costs 

To a large extent, market participants 

may already have incurred many of the 

compliance costs associated with 

existing regulation 150.4. The 

Commission and DCMs generally have 

required aggregation of positions 

starting at a 10 percent interest 

threshold under the current regulatory 

requirements of part 150 as well as the 

acceptable practices found in the prior 

version of part 38. The Commission 

therefore believes that market 

participants active on DCMs have 

already developed systems for 

aggregating positions across owned 

entities.101

The Commission anticipates there are 

two main types of direct costs 

associated with the 2015 proposed 

revisions. First, there would be initial 

costs incurred by entities as they 

develop and maintain systems to 

determine whether they may be eligible 

for the proposed exemptions. Second, 

there would be costs related to 

subsequent filings required by the 

exemptions. In addition, some entities 

may also sustain direct costs for 

modifying existing operational 

protocols—such as firewalls and 

reporting schemes—to be eligible to 

claim an exemption. It is difficult to 

quantify these direct costs because such 

costs are heavily dependent on the 

individual characteristics of each 

entity’s current systems, its corporate 

structure, and its use of commodity 

derivatives, among other attributes. 

Should the Commission’s other 

proposed amendments to the position 


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102See Position Limits for Derivatives, 78 FR 

75680 (December 12, 2013). 

103See Section III.C of this release for a more 

detailed summary of the Commission’s PRA burden 

estimates. 

104 44 U.S.C. 601 et seq. 

105 5 U.S.C. 601(2), 603–05. 

106See Policy Statement and Establishment of 

Definitions of ‘‘Small Entities’’ for Purposes of the 

Regulatory Flexibility Act, 47 FR 18618, 18619, 

Apr. 30, 1982 (DCMs, FCMs, and large traders) 

(‘‘RFA Small Entities Definitions’’); Opting Out of 

Segregation, 66 FR 20740, 20743, Apr. 25, 2001 

(eligible contract participants); Position Limits for 

Futures and Swaps; Final Rule and Interim Final 

Rule, 76 FR 71626, 71680, Nov. 18, 2011 (clearing 

limits regime in part 150 be adopted as 

proposed,102 the aggregation 

requirements would cover a greater set 

of commodity derivative contracts. Part 

150 applies currently to futures and 

options contracts referencing nine 

commodities as stated in regulation 

150.2. The other 2013 proposed 

amendments would expand the list, and 

would apply on a federal level to 

commodity derivative contracts, 

including swaps, based on an additional 

19 commodities. This expansion would 

likely create additional compliance 

costs for futures market participants 

because they would have to broaden 

current procedures for aggregating 

futures positions to include swaps 

positions, as well as for swaps market 

participants, who would be required to 

develop and maintain systems to 

comply with the aggregation rules. 

Further, exchanges would be required to 

conform their aggregation policies to the 

Commission’s aggregation policy. 

However, the revisions proposed herein 

provide exemptive relief from these 

requirements. 

In accordance with the Paperwork 

Reduction Act, the Commission has 

quantified the filing costs required to 

claim the proposed exemptions 

discussed in Section III.C below. The 

Commission estimates that 240 entities 

will submit exemption claims for a total 

of 340 responses per year. The 240 

entities will incur a total burden of 

6,850 labor hours at a cost of 

approximately $822,000 annually to 

claim exemptive relief under regulation 

150.4, as proposed herein.103

The Commission requests comment 

on its consideration of the costs 

imposed by the proposed 2015 

revisions. Commenters are specifically 

encouraged to submit both qualitative 

and quantitative estimates of the 

potential costs, as well as data or other 

information to support such estimates. 

5. Section 15(a) Considerations 

a. Protection of Market Participants and 

the Public 

As pointed out above, the proposed 

aggregation exemptions would be 

granted to an entity only upon 

demonstrating lack of trading control as 

well as the implementation of 

information firewalls. These conditions 

help to ensure that the effectiveness of 

the Commission’s aggregation policy is 

not jeopardized, thereby protecting the 

public. 

b. Efficiency, Competition, and 

Financial Integrity of Markets 

An important rationale for providing 

aggregation exemptions is to avoid 

overly restricting commodity derivatives 

trading of owned entities not 

susceptible to coordinated trading. As 

discussed above, such trading 

restrictions may potentially result in 

reduced liquidity in commodity 

derivatives markets, diminished 

investment by largely passive investors, 

or distortions of existing decentralized 

business structures. Thus, the proposed 

exemptions help promote efficiency and 

competition, and protect market 

integrity by helping to prevent these 

undesirable consequences. 

c. Price Discovery 

By avoiding overly restricting 

commodity derivatives trading of those 

entities that are not susceptible to 

coordinated trading, the proposed 

exemptions may help improve liquidity 

by encouraging more market 

participation. This might improve the 

price discovery function or it might 

have only a negligible effect on the price 

discovery function of relevant derivative 

markets. 

d. Risk Management 

The imposition of position limits 

helps to restrict market participants 

from amassing positions that are of 

sufficient size potentially to cause 

sudden or unreasonable fluctuations or 

unwarranted changes in the price of a 

commodity derivatives contract, or to be 

used to manipulate the market price. 

The proposed exemptions would allow 

an owner to disaggregate the positions 

of an owned entity in circumstances 

where the Commission has determined 

that the positions are less of a risk of 

disrupting market operation through 

coordinated trading. The Commission 

believes that the proposed exemptions 

would not materially inhibit the use of 

commodity derivatives for hedging, as 

bona fide hedging exemptions are 

available to any entity regardless of 

aggregation of positions and exemptions 

from aggregation. 

e. Other Public Interest Considerations 

As pointed out above, the proposed 

aggregation exemptions would mitigate 

market participants’ compliance 

burdens with the aggregation 

requirements and the position limits 

requirements more generally. The 

Commission has not identified any 

other public interest considerations 

related to the costs and benefits of the 

proposed exemptive relief. The 

Commission requests comment on any 

potential public interest considerations, 

as well as data or other information to 

support such considerations. 

6. Section 15(b) Considerations 

Section 15(b) of the CEA requires the 

Commission to consider the public 

interest to be protected by the antitrust 

laws and to endeavor to take the least 

anticompetitive means of achieving the 

objectives, policies and purposes of the 

CEA, before promulgating a regulation 

under the CEA or issuing certain orders. 

The Commission preliminarily believes 

that the proposed exemptive relief will 

be consistent with the public interest 

protected by the antitrust laws. The 

proposal would broaden the availability 

of one category of relief from the 

aggregation requirement to more owners 

and owned entities, retaining conditions 

intended to address the Commission’s 

concerns about circumvention of 

position limits by coordinated trading or 

direct or indirect influence between 

entities. The Commission requests 

comment on any considerations related 

to the public interest to be protected by 

the antitrust laws and potential 

anticompetitive effects of the proposal, 

as well as data or other information to 

support such considerations. 

B. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) requires that agencies consider 

whether the rules they propose will 

have a significant economic impact on 

a substantial number of small entities 

and, if so, provide a regulatory 

flexibility analysis respecting the 

impact.104 A regulatory flexibility 

analysis or certification typically is 

required for ‘‘any rule for which the 

agency publishes a general notice of 

proposed rulemaking pursuant to’’ the 

notice-and-comment provisions of the 

Administrative Procedure Act, 5 U.S.C. 

553(b).105 The requirements related to 

the proposed amendments fall mainly 

on registered entities, exchanges, FCMs, 

swap dealers, clearing members, foreign 

brokers, and large traders. The 

Commission has previously determined 

that registered DCMs, FCMs, swap 

dealers, major swap participants, 

eligible contract participants, SEFs, 

clearing members, foreign brokers and 

large traders are not small entities for 

purposes of the RFA.106 While the 


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members); Core Principles and Other Requirements 

for Swap Execution Facilities, 78 FR 33476, 33548, 

June 4, 2013 (SEFs); A New Regulatory Framework 

for Clearing Organizations, 66 FR 45604, 45609, 

Aug. 29, 2001 (DCOs); Registration of Swap Dealers 

and Major Swap Participants, 77 FR 2613, Jan. 19, 

2012, (swap dealers and major swap participants); 

and Special Calls, 72 FR 50209, Aug. 31, 2007 

(foreign brokers). 

107See 78 FR 68973. 

108The Bureau of Labor Statistics reports that an 

average of 32.8% of all compensation in the 

financial services industry is related to benefits. 

This figure may be obtained on the Bureau of Labor 

Statistics Web site, at http://www.bls.gov/

news.release/ecec.t06.htm. The Commission 

rounded this number to 33% to use in its 

calculations. 

109Other estimates of this figure have varied 

dramatically depending on the categorization of the 

expense and the type of industry classification used 

(see, e.g., BizStats at http://www.bizstats.com/

corporation-industry-financials/finance-insurance52/securities-commodity-contracts-other-financialinvestments-523/commodity-contracts-dealing-andbrokerage-523135/show and Damodaran Online at 

http://pages.stern.nyu.edu/∼adamodar/pc/datasets/

uValuedata.xls. The Commission has chosen to use 

a figure of 50% for overhead and administrative 

expenses to attempt to conservatively estimate the 

average for the industry. 

requirements under the proposed 

rulemaking may impact non-financial 

end users, the Commission notes that 

position limits levels apply only to large 

traders. Accordingly, the Chairman, on 

behalf of the Commission, hereby 

certifies, on behalf of the Commission, 

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

actions proposed to be taken herein 

would not have a significant economic 

impact on a substantial number of small 

entities. The Chairman made the same 

certification in the 2013 Aggregation 

Proposal,107 and the Commission did 

not receive any comments on the RFA. 

C. Paperwork Reduction Act 

1. Overview 

The Paperwork Reduction Act 

(‘‘PRA’’), 44 U.S.C. 3501 et seq., imposes 

certain requirements on Federal 

agencies in connection with their 

conducting or sponsoring any collection 

of information as defined by the PRA. 

An agency may not conduct or sponsor, 

and a person is not required to respond 

to, a collection of information unless it 

displays a currently valid control 

number issued by the Office of 

Management and Budget (‘‘OMB’’). 

Certain provisions of the proposed rules 

would result in amendments to 

previously-approved collection of 

information requirements within the 

meaning of the PRA. Therefore, the 

Commission is submitting to OMB for 

review in accordance with 44 U.S.C. 

3507(d) and 5 CFR 1320.11 the 

information collection requirements 

proposed in this rulemaking proposal as 

an amendment to the previouslyapproved collection associated with 

OMB control number 3038–0013. 

If adopted, responses to this 

collection of information would be 

mandatory. The Commission will 

protect proprietary information 

according to the Freedom of Information 

Act and 17 CFR part 145, titled 

‘‘Commission Records and 

Information.’’ In addition, the 

Commission emphasizes that section 

8(a)(1) of the Act strictly prohibits the 

Commission, unless specifically 

authorized by the Act, from making 

public ‘‘data and information that 

would separately disclose the business 

transactions or market positions of any 

person and trade secrets or names of 

customers.’’ The Commission also is 

required to protect certain information 

contained in a government system of 

records pursuant to the Privacy Act of 

1974. 

On November 15, 2013, the 

Commission published in the Federal 

Register a notice of proposed 

modifications to part 150 of the 

Commission’s regulations (i.e., the 2013 

Aggregation Proposal). The 

modifications addressed the policy for 

aggregation under the Commission’s 

position limits regime for futures and 

option contracts on nine agricultural 

commodities set forth in part 150, and 

noted that the modifications would also 

apply to the position limits regimes for 

28 exempt and agricultural commodity 

futures and options contracts and the 

physical commodity swaps that are 

economically equivalent to such 

contracts, if such regimes are finalized. 

The Commission is now proposing a 

revision to its 2013 Aggregation 

Proposal. 

Specifically, the Commission is now 

proposing that all persons holding a 

greater than 10 percent ownership or 

equity interest in another entity could 

avail themselves of an exemption in 

proposed rule § 150.4(b)(2) to 

disaggregate the positions of the owned 

entity. To claim the exemption, a person 

would need to meet certain criteria and 

file a notice with the Commission in 

accordance with proposed rule 

§ 150.4(c). The notice filing would need 

to demonstrate compliance with certain 

conditions set forth in proposed rule 

§ 150.4(b)(2)(i)(A) through (E). Similar to 

other exemptions from aggregation, the 

notice filing would be effective upon 

submission to the Commission, but the 

Commission may call for additional 

information as well as reject, modify or 

otherwise condition such relief. Further, 

such person is obligated to amend the 

notice filing in the event of a material 

change to the filing. The Commission 

now proposes to delete rule § 150.4(b)(3) 

from its proposal. This rule would have 

established a similar but separate 

owned-entity exemption with more 

intensive qualifications for exemption. 

2. Methodology and Assumptions 

It is not possible at this time to 

precisely determine the number of 

respondents affected by the proposed 

revision to the 2013 Aggregation 

Proposal. The proposed revision relates 

to exemptions that a market participant 

may elect to take advantage of, meaning 

that without intimate knowledge of the 

day-to-day business decisions of all its 

market participants, the Commission 

could not know which participants, or 

how many, may elect to obtain such an 

exemption. Further, the Commission is 

unsure of how many participants not 

currently in the market may be required 

to or may elect to incur the estimated 

burdens in the future. 

These limitations notwithstanding, 

the Commission has made best-effort 

estimations regarding the likely number 

of affected entities for the purposes of 

calculating burdens under the PRA. The 

Commission used its proprietary data, 

collected from market participants, to 

estimate the number of respondents for 

each of the proposed obligations subject 

to the PRA by estimating the number of 

respondents who may be close to a 

position limit and thus may file for 

relief from aggregation requirements. 

The Commission’s estimates 

concerning wage rates are based on 2011 

salary information for the securities 

industry compiled by the Securities 

Industry and Financial Markets 

Association (‘‘SIFMA’’). The 

Commission is using a figure of $120 

per hour, which is derived from a 

weighted average of salaries across 

different professions from the SIFMA 

Report on Management & Professional 

Earnings in the Securities Industry 

2011, modified to account for an 1800- 

hour work-year, adjusted to account for 

the average rate of inflation in 2012. 

This figure was then multiplied by 1.33 

to account for benefits 108 and further by 

1.5 to account for overhead and 

administrative expenses.109 The 

Commission anticipates that compliance 

with the provisions would require the 

work of an information technology 

professional; a compliance manager; an 

accounting professional; and an 

associate general counsel. Thus, the 

wage rate is a weighted national average 

of salary for professionals with the 

following titles (and their relative 

weight); ‘‘programmer (average of senior 

and non-senior)’’ (15% weight), ‘‘senior 

accountant’’ (15%) ‘‘compliance 

manager’’ (30%), and ‘‘assistant/

associate general counsel’’ (40%). All 


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110 In the 2013 Aggregation Proposal, the 

Commission estimated that 75 entities would each 

file one notice annually under proposed rule 

§ 150.4(b)(5) at an average of 10 labor hours and 

cost of approximately $1,200 per filing, and that 40 

entities would each file one notice annually under 

proposed rule § 150.4(b)(8) at an average of 40 labor 

hours and cost of approximately $4,800 per filing. 

These estimates remain unchanged. 

111See Position Limits for Derivatives, 78 FR 

75680 (December 12, 2013). 

monetary estimates have been rounded 

to the nearest hundred dollars. 

The Commission welcomes comment 

on its assumptions and estimates. 

3. Collections of Information 

Proposed rule § 150.4(b)(2) would 

require qualified persons to file a notice 

in order to claim exemptive relief from 

aggregation. Further, proposed rule 

§ 150.4(b)(2)(ii) states that the notice is 

to be filed in accordance with proposed 

rule § 150.4(c), which requires a 

description of the relevant 

circumstances that warrant 

disaggregation and a statement that 

certifies that the conditions set forth in 

the exemptive provision have been met. 

Previously proposed rule § 150.4(b)(3) 

(which the Commission is now deleting 

from the proposal) would have specified 

that qualified persons may request an 

exemption from aggregation in 

accordance with proposed rule 

§ 150.4(c). Such a request would be 

required to include a description of the 

relevant circumstances that warrant 

disaggregation and a statement 

certifying the conditions have been met. 

Persons claiming these exemptions 

would be required to submit to the 

Commission, as requested, such 

information as relates to the claim for 

exemption. An updated or amended 

notice must be filed with the 

Commission upon any material change. 

In the 2013 Aggregation Proposal, the 

Commission estimated that 100 entities 

will each file two notices annually 

under proposed rule § 150.4(b)(2), at an 

average of 20 hours per filing. Thus, the 

Commission approximates a total per 

entity burden of 40 labor hours 

annually. At an estimated labor cost of 

$120, the Commission estimates a cost 

of approximately $4,800 per entity for 

filings under proposed rule 

§ 150.4(b)(2). 

The Commission also estimated that 

25 entities would each file one notice 

annually under proposed rule 

§ 150.4(b)(3), at an average of 30 hours 

per filing. Thus, the Commission 

approximates a total per entity burden 

of 30 labor hours annually. At an 

estimated labor cost of $120, the 

Commission estimates a cost of 

approximately $3,600 per entity for 

filings under proposed rule 

§ 150.4(b)(3). 

For this proposed revision to the 2013 

Aggregation Proposal, the Commission 

estimates that the 25 entities that would 

have filed one notice annually under 

proposed rule § 150.4(b)(3) will instead 

file those notices under proposed rule 

§ 150.4(b)(2). The burden for each such 

filing would be reduced by 10 hours 

(i.e., 30 hours minus 20 hours) and 

$1,200 (i.e., 10 hours times $120 per 

hour). 

Thus, while the Commission 

estimates that the effect of this proposed 

revision will not change the number of 

entities making filings or the number of 

responses in order to claim exemptive 

relief under proposed rule 150.4 (so the 

estimate in the 2013 Aggregation 

Proposal that 240 entities will submit a 

total of 340 responses per year will 

remain the same),110 the total burden 

will be reduced to 6,850 labor hours 

(from 7,100 labor hours) at a cost of 

approximately $822,000 (instead of 

$852,000) annually. 

4. Information Collection Comments 

The Commission invites the public 

and other federal agencies to comment 

on any aspect of the reporting and 

recordkeeping burdens discussed above. 

Pursuant to 44 U.S.C. 3506(c)(2)(B), the 

Commission solicits comments in order 

to: (1) Evaluate whether the proposed 

collections of information are necessary 

for the proper performance of the 

functions of the Commission, including 

whether the information will have 

practical utility; (2) evaluate the 

accuracy of the Commission’s estimate 

of the burden of the proposed 

collections of information; (3) determine 

whether there are ways to enhance the 

quality, utility, and clarity of the 

information to be collected; and (4) 

minimize the burden of the collections 

of information on those who are to 

respond, including through the use of 

automated collection techniques or 

other forms of information technology. 

Comments may be submitted directly 

to the Office of Information and 

Regulatory Affairs, by fax at (202) 395– 

6566 or by email at OIRA-submissions@

omb.eop.gov. Please provide the 

Commission with a copy of comments 

submitted so that all comments can be 

summarized and addressed in the final 

regulation preamble. Refer to the 

ADDRESSES section of this document for 

comment submission instructions to the 

Commission. A copy of the supporting 

statements for the collection of 

information discussed above may be 

obtained by visiting RegInfo.gov. OMB 

is required to make a decision 

concerning the collection of information 

between 30 and 60 days after 

publication of this release. 

Consequently, a comment to OMB is 

most assured of being fully considered 

if received by OMB (and the 

Commission) within 30 days after the 

publication of this notice of proposed 

rulemaking. 

Finally, it should be noted that the 

following proposed amendments to part 

150 may require conforming technical 

changes if the Commission also adopts 

any proposed amendments to its 

regulations regarding position limits.111

List of Subjects in 17 CFR Part 150 

Bona fide hedging, Position limits, 

Referenced contracts. 

For the reasons discussed in the 

preamble, the Commodity Futures 

Trading Commission proposes to amend 

17 CFR part 150 as follows: 

PART 150—LIMITS ON POSITIONS 

■ 1. The authority citation for part 150 

is revised to read as follows: 

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

amended by Title VII of the Dodd-Frank Wall 

Street Reform and Consumer Protection Act, 

Pub. L. 111–203, 124 Stat. 1376 (2010). 

■ 2. Revise paragraphs (d) and (e)(2) and 

(5) of § 150.1 to read as follows: 

§ 150.1 Definitions. 

* * * * * 

(d) Eligible entity means a commodity 

pool operator; the operator of a trading 

vehicle which is excluded, or which 

itself has qualified for exclusion from 

the definition of the term ‘‘pool’’ or 

‘‘commodity pool operator,’’ 

respectively, under § 4.5 of this chapter; 

the limited partner, limited member or 

shareholder in a commodity pool the 

operator of which is exempt from 

registration under § 4.13 of this chapter; 

a commodity trading advisor; a bank or 

trust company; a savings association; an 

insurance company; or the separately 

organized affiliates of any of the above 

entities: 

(1) Which authorizes an independent 

account controller independently to 

control all trading decisions with 

respect to the eligible entity’s client 

positions and accounts that the 

independent account controller holds 

directly or indirectly, or on the eligible 

entity’s behalf, but without the eligible 

entity’s day-to-day direction; and 

(2) Which maintains: 

(i) Only such minimum control over 

the independent account controller as is 

consistent with its fiduciary 

responsibilities to the managed 

positions and accounts, and necessary 


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to fulfill its duty to supervise diligently 

the trading done on its behalf; or 

(ii) If a limited partner, limited 

member or shareholder of a commodity 

pool the operator of which is exempt 

from registration under § 4.13 of this 

chapter, only such limited control as is 

consistent with its status. 

(e) * * * 

(2) Over whose trading the eligible 

entity maintains only such minimum 

control as is consistent with its 

fiduciary responsibilities to the 

managed positions and accounts to 

fulfill its duty to supervise diligently the 

trading done on its behalf or as 

consistent with such other legal rights 

or obligations which may be incumbent 

upon the eligible entity to fulfill; 

* * * * * 

(5) Who is: 

(i) Registered as a futures commission 

merchant, an introducing broker, a 

commodity trading advisor, or an 

associated person of any such registrant, 

or 

(ii) A general partner, managing 

member or manager of a commodity 

pool the operator of which is excluded 

from registration under § 4.5(a)(4) of this 

chapter or § 4.13 of this chapter, 

provided that such general partner, 

managing member or manager complies 

with the requirements of § 150.4(c). 

* * * * * 

§ 150.3 [Amended] 

■ 3. Amend § 150.3 as follows: 

■ a. Remove the semicolon and the 

word ‘‘or’’ at the end of paragraph (a)(3); 

■ b. Add a period at the end of 

paragraph (a)(3); and 

■ c. Remove paragraph (a)(4). 

■ 4. Revise § 150.4 to read as follows: 

§ 150.4 Aggregation of positions. 

(a) Positions to be aggregated—(1) 

Trading control or 10 percent or greater 

ownership or equity interest. For the 

purpose of applying the position limits 

set forth in § 150.2, unless an exemption 

set forth in paragraph (b) of this section 

applies, all positions in accounts for 

which any person, by power of attorney 

or otherwise, directly or indirectly 

controls trading or holds a 10 percent or 

greater ownership or equity interest 

must be aggregated with the positions 

held and trading done by such person. 

For the purpose of determining the 

positions in accounts for which any 

person controls trading or holds a 10 

percent or greater ownership or equity 

interest, positions or ownership or 

equity interests held by, and trading 

done or controlled by, two or more 

persons acting pursuant to an expressed 

or implied agreement or understanding 

shall be treated the same as if the 

positions or ownership or equity 

interests were held by, or the trading 

were done or controlled by, a single 

person. 

(2) Substantially identical trading. 

Notwithstanding the provisions of 

paragraph (b) of this section, for the 

purpose of applying the position limits 

set forth in § 150.2, any person that, by 

power of attorney or otherwise, holds or 

controls the trading of positions in more 

than one account or pool with 

substantially identical trading strategies, 

must aggregate all such positions. 

(b) Exemptions from aggregation. For 

the purpose of applying the position 

limits set forth in § 150.2, and 

notwithstanding the provisions of 

paragraph (a)(1) of this section, but 

subject to the provisions of paragraph 

(a)(2) of this section, the aggregation 

requirements of this section shall not 

apply in the circumstances set forth in 

this paragraph. 

(1) Exemption for ownership by 

limited partners, shareholders or other 

pool participants. Any person that is a 

limited partner, limited member, 

shareholder or other similar type of pool 

participant holding positions in which 

the person by power of attorney or 

otherwise directly or indirectly has a 10 

percent or greater ownership or equity 

interest in a pooled account or positions 

need not aggregate the accounts or 

positions of the pool with any other 

accounts or positions such person is 

required to aggregate, except that such 

person must aggregate the pooled 

account or positions with all other 

accounts or positions owned or 

controlled by such person if such 

person: 

(i) Is the commodity pool operator of 

the pooled account; 

(ii) Is a principal or affiliate of the 

operator of the pooled account, unless: 

(A) The pool operator has, and 

enforces, written procedures to preclude 

the person from having knowledge of, 

gaining access to, or receiving data 

about the trading or positions of the 

pool; 

(B) The person does not have direct, 

day-to-day supervisory authority or 

control over the pool’s trading 

decisions; 

(C) The person, if a principal of the 

operator of the pooled account, 

maintains only such minimum control 

over the commodity pool operator as is 

consistent with its responsibilities as a 

principal and necessary to fulfill its 

duty to supervise the trading activities 

of the commodity pool; and 

(D) The pool operator has complied 

with the requirements of paragraph (c) 

of this section on behalf of the person 

or class of persons; or 

(iii) Has, by power of attorney or 

otherwise directly or indirectly, a 25 

percent or greater ownership or equity 

interest in a commodity pool, the 

operator of which is exempt from 

registration under § 4.13 of this chapter. 

(2) Exemption for certain ownership 

of greater than 10 percent in an owned 

entity. Any person with an ownership or 

equity interest in an owned entity of 10 

percent or greater (other than an interest 

in a pooled account subject to paragraph 

(b)(1) of this section), need not aggregate 

the accounts or positions of the owned 

entity with any other accounts or 

positions such person is required to 

aggregate, provided that: 

(i) Such person, including any entity 

that such person must aggregate, and the 

owned entity: 

(A) Do not have knowledge of the 

trading decisions of the other; 

(B) Trade pursuant to separately 

developed and independent trading 

systems; 

(C) Have and enforce written 

procedures to preclude each from 

having knowledge of, gaining access to, 

or receiving data about, trades of the 

other. Such procedures must include 

document routing and other procedures 

or security arrangements, including 

separate physical locations, which 

would maintain the independence of 

their activities; 

(D) Do not share employees that 

control the trading decisions of either; 

and 

(E) Do not have risk management 

systems that permit the sharing of trades 

or trading strategy; and 

(ii) Such person complies with the 

requirements of paragraph (c) of this 

section. 

(3) [Reserved] 

(4) Exemption for accounts held by 

futures commission merchants. A 

futures commission merchant or any 

affiliate of a futures commission 

merchant need not aggregate positions it 

holds in a discretionary account, or in 

an account which is part of, or 

participates in, or receives trading 

advice from a customer trading program 

of a futures commission merchant or 

any of the officers, partners, or 

employees of such futures commission 

merchant or of its affiliates, if: 

(i) A person other than the futures 

commission merchant or the affiliate 

directs trading in such an account; 

(ii) The futures commission merchant 

or the affiliate maintains only such 

minimum control over the trading in 

such an account as is necessary to fulfill 

its duty to supervise diligently trading 

in the account; 

(iii) Each trading decision of the 

discretionary account or the customer 


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trading program is determined 

independently of all trading decisions 

in other accounts which the futures 

commission merchant or the affiliate 

holds, has a financial interest of 10 

percent or more in, or controls; and 

(iv) The futures commission merchant 

or the affiliate has complied with the 

requirements of paragraph (c) of this 

section. 

(5) Exemption for accounts carried by 

an independent account controller. An 

eligible entity need not aggregate its 

positions with the eligible entity’s client 

positions or accounts carried by an 

authorized independent account 

controller, as defined in § 150.1(e), 

except for the spot month in physicaldelivery commodity contracts, provided 

that the eligible entity has complied 

with the requirements of paragraph (c) 

of this section, and that the overall 

positions held or controlled by such 

independent account controller may not 

exceed the limits specified in § 150.2. 

(i) Additional requirements for 

exemption of affiliated entities. If the 

independent account controller is 

affiliated with the eligible entity or 

another independent account controller, 

each of the affiliated entities must: 

(A) Have, and enforce, written 

procedures to preclude the affiliated 

entities from having knowledge of, 

gaining access to, or receiving data 

about, trades of the other. Such 

procedures must include document 

routing and other procedures or security 

arrangements, including separate 

physical locations, which would 

maintain the independence of their 

activities; provided, however, that such 

procedures may provide for the 

disclosure of information which is 

reasonably necessary for an eligible 

entity to maintain the level of control 

consistent with its fiduciary 

responsibilities to the managed 

positions and accounts and necessary to 

fulfill its duty to supervise diligently the 

trading done on its behalf; 

(B) Trade such accounts pursuant to 

separately developed and independent 

trading systems; 

(C) Market such trading systems 

separately; and 

(D) Solicit funds for such trading by 

separate disclosure documents that meet 

the standards of § 4.24 or § 4.34 of this 

chapter, as applicable, where such 

disclosure documents are required 

under part 4 of this chapter. 

(ii) [Reserved] 

(6) Exemption for underwriting. A 

person need not aggregate the positions 

or accounts of an owned entity if the 

ownership or equity interest is based on 

the ownership of securities constituting 

the whole or a part of an unsold 

allotment to or subscription by such 

person as a participant in the 

distribution of such securities by the 

issuer or by or through an underwriter. 

(7) Exemption for broker-dealer 

activity. A broker-dealer registered with 

the Securities and Exchange 

Commission, or similarly registered 

with a foreign regulatory authority, need 

not aggregate the positions or accounts 

of an owned entity if the ownership or 

equity interest is based on the 

ownership of securities acquired in the 

normal course of business as a dealer, 

provided that such person does not have 

actual knowledge of the trading 

decisions of the owned entity. 

(8) Exemption for information sharing 

restriction. A person need not aggregate 

the positions or accounts of an owned 

entity if the sharing of information 

associated with such aggregation (such 

as, only by way of example, information 

reflecting the transactions and positions 

of a such person and the owned entity) 

creates a reasonable risk that either 

person could violate state or federal law 

or the law of a foreign jurisdiction, or 

regulations adopted thereunder, 

provided that such person does not have 

actual knowledge of information 

associated with such aggregation, and 

provided further that such person has 

filed a prior notice pursuant to 

paragraph (c) of this section and 

included with such notice a written 

memorandum of law explaining in 

detail the basis for the conclusion that 

the sharing of information creates a 

reasonable risk that either person could 

violate state or federal law or the law of 

a foreign jurisdiction, or regulations 

adopted thereunder. However, the 

exemption in this paragraph shall not 

apply where the law or regulation serves 

as a means to evade the aggregation of 

accounts or positions. All documents 

submitted pursuant to this paragraph 

shall be in English, or if not, 

accompanied by an official English 

translation. 

(9) Exemption for higher-tier entities. 

If an owned entity has filed a notice 

under paragraph (c) of this section, any 

person with an ownership or equity 

interest of 10 percent or greater in the 

owned entity need not file a separate 

notice identifying the same positions 

and accounts previously identified in 

the notice filing of the owned entity, 

provided that: 

(i) Such person complies with the 

conditions applicable to the exemption 

specified in the owned entity’s notice 

filing, other than the filing 

requirements; and 

(ii) Such person does not otherwise 

control trading of the accounts or 

positions identified in the owned 

entity’s notice. 

(iii) Upon call by the Commission, 

any person relying on the exemption 

paragraph (b)(9) of this section shall 

provide to the Commission such 

information concerning the person’s 

claim for exemption. Upon notice and 

opportunity for the affected person to 

respond, the Commission may amend, 

suspend, terminate, or otherwise modify 

a person’s aggregation exemption for 

failure to comply with the provisions of 

this section. 

(c) Notice filing for exemption. (1) 

Persons seeking an aggregation 

exemption under paragraph (b)(1)(ii), 

(b)(2), (b)(4), (b)(5), or (b)(8) of this 

section shall file a notice with the 

Commission, which shall be effective 

upon submission of the notice, and shall 

include: 

(i) A description of the relevant 

circumstances that warrant 

disaggregation; and 

(ii) A statement of a senior officer of 

the entity certifying that the conditions 

set forth in the applicable aggregation 

exemption provision have been met. 

(2) [Reserved] 

(3) Upon call by the Commission, any 

person claiming an aggregation 

exemption under this section shall 

provide such information demonstrating 

that the person meets the requirements 

of the exemption, as is requested by the 

Commission. Upon notice and 

opportunity for the affected person to 

respond, the Commission may amend, 

suspend, terminate, or otherwise modify 

a person’s aggregation exemption for 

failure to comply with the provisions of 

this section. 

(4) In the event of a material change 

to the information provided in any 

notice filed under paragraph (c) of this 

section, an updated or amended notice 

shall promptly be filed detailing the 

material change. 

(5) Any notice filed under paragraph 

(c) of this section shall be submitted in 

the form and manner provided for in 

paragraph (d) of this section. 

(d) Form and manner of reporting and 

submitting information or filings. Unless 

otherwise instructed by the Commission 

or its designees, any person submitting 

reports under this section shall submit 

the corresponding required filings and 

any other information required under 

this part to the Commission using the 

format, coding structure, and electronic 

data transmission procedures approved 

in writing by the Commission. Unless 

otherwise provided in this section, the 

notice shall be effective upon filing. 

When the reporting entity discovers 

errors or omissions to past reports, the 

entity shall so notify the Commission 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
Federal Register / Vol. 80, No. 188 / Tuesday, September 29, 2015 / Proposed Rules 58381 

1See Ira Iosebashvili and Tatyana Shumsky, 

Investors Flee Commodities, The Wall Street 

Journal, Jul. 20, 2015, available at http://

www.wsj.com/articles/investors-flee-commodities1437434367; See also Veronica Brown and Pratima 

Desai, Speculators Show Global Commodities Rout 

Still Has Legs, Reuters, Jul. 27, 2015, available at 

http://www.reuters.com/article/2015/07/27/usmarkets-commodities-routidUSKCN0Q11TJ20150727. 

2See Keynote Address by Commissioner J. 

Christopher Giancarlo, 7th Annual Capital Link 

Global Commodities, Energy & Shipping Forum, 

Sept. 16, 2015, available at http://www.cftc.gov/

PressRoom/SpeechesTestimony/opagiancarlo-8. 

3Letter from Walt Lukken, President and Chief 

Executive Officer, Futures Industry Association, to 

Melissa Jurgens, Secretary, CFTC (Feb. 6, 2014), at 

8–9, available at https://secure.fia.org/downloads/

Aggregation_Comment_Letter_020614.pdf. 

and file corrected information in a form 

and manner and at a time as may be 

instructed by the Commission or its 

designee. 

(e) Delegation of authority to the 

Director of the Division of Market 

Oversight. (1) The Commission hereby 

delegates, until it orders otherwise, to 

the Director of the Division of Market 

Oversight or such other employee or 

employees as the Director may designate 

from time to time, the authority: 

(i) [Reserved] 

(ii) In paragraph (b)(9)(iii) of this 

section to call for additional information 

from a person claiming the exemption 

in paragraph (b)(9)(i) of this section. 

(iii) In paragraph (d) of this section for 

providing instructions or determining 

the format, coding structure, and 

electronic data transmission procedures 

for submitting data records and any 

other information required under this 

part. 

(2) The Director of the Division of 

Market Oversight may submit to the 

Commission for its consideration any 

matter which has been delegated in this 

section. 

(3) Nothing in this section prohibits 

the Commission, at its election, from 

exercising the authority delegated in 

this section. 

Issued in Washington, DC, on September 

23, 2015, by the Commission. 

Christopher J. Kirkpatrick, 

Secretary of the Commission. 

Note: The following appendices will not 

appear in the Code of Federal Regulations. 

Appendices to Aggregation of Positions 

Supplemental Notice of Proposed 

Rulemaking—Commission Voting 

Summary, Chairman’s Statement, and 

Commissioner’s Statement 

Appendix 1—Commission Voting 

Summary 

On this matter, Chairman Massad and 

Commissioners Bowen and Giancarlo voted 

in the affirmative. No Commissioner voted in 

the negative. 

Appendix 2—Statement of Chairman 

Timothy G. Massad 

As part of the Dodd-Frank Wall Street 

Reform and Consumer Protection Act, 

Congress mandated that the CFTC adopt 

limits to address the risk of excessive 

speculation in physical commodity 

derivative contracts. In 2013, the 

Commission proposed these rules on 

‘‘position limits.’’ These proposed rules 

included guidelines to determine which 

accounts and positions a person with an 

ownership interest must aggregate to 

determine compliance. In addition, the 

Commission separately proposed an 

exemption process from this ‘‘aggregation’’ 

requirement. 

Today, we are proposing a simplification of 

that exemption process. Instead of requiring 

a participant that has a 50 percent or more 

interest in an entity to apply for and obtain 

prior approval from the Commission, our 

proposal would rely on a notice filing. If that 

participant files a notice attesting to the 

Commission that it has no control over the 

trading of that entity, and that firewalls are 

in place to prevent access to information, 

then it need not wait for the CFTC’s review 

and approval. This notice filing process is 

similar to what the Commission uses in many 

other areas. 

This should create a more practical, 

efficient rule. It is important to note that the 

proposed change does not alter the standard 

of when aggregation is required. Moreover, 

the Commission retains its authority to call 

for additional information and modify or 

terminate an exemption for failure to comply 

with the standard. 

Today’s proposed modification is part of 

our ongoing consideration of the substantial 

public input the Commission received on its 

2013 position limits proposal. As we 

continue to consider that input and work on 

a final rule, I want to underscore that the 

Commission appreciates the importance and 

complexity of these issues, and we intend to 

take the time necessary to get it right. We 

hope to have more to say about issues related 

to position limits in the coming months. 

Appendix 3—Statement of 

Commissioner J. Christopher Giancarlo 

I support these proposed changes to the 

aggregation rules because I believe they make 

the position limits regime more workable. 

However, this is just the first of many steps 

needed to make the CFTC’s approach to 

position limits less harmful to the risk 

management activities of American farmers, 

energy producers, manufacturers, riskhedgers and trading institutions that do 

business around the globe. We must avoid at 

all costs adopting flawed government 

regulations that prevent our markets from 

operating effectively at a time of plunging 

commodity prices.1 That means not 

displacing the everyday commercial 

judgement of farmers and businesses with a 

small set of allowable hedging options preselected by a Washington Commission with 

limited experience in commercial risk 

management. 

As I recently stated,2 the CFTC must 

change the proposed requirement that a 

market participant aggregate trading 

positions across subsidiaries over which it 

has no control or in which it may only be 

invested on a short-term basis. The proposal 

from 2013 essentially requires a market 

participant to apply for permission from the 

CFTC before it can disaggregate a position if 

the participant owns more than fifty percent 

of an entity, even if it has zero control or 

influence over that entity. This approach 

does not reflect the realities of modern 

commerce in which global trading firms may 

often have many unconnected subsidiaries 

that neither communicate nor share trading 

strategies or market position information. 

I commend the CFTC staff for taking into 

account public comments and putting 

forward a revised rule proposal that better 

recognizes the varied corporate structures of 

contemporary market participants. I am 

hopeful that today’s proposal will serve as 

the basis for a workable solution to the 

flawed approach to aggregation in the 

previous proposal. 

In addition, today’s proposal would relieve 

the Commission of the obligation to conduct 

a detailed, individualized inquiry into the 

relationships of the owned entities of a 

majority-owner applicant that seeks to 

disaggregate its trading positions across a 

global corporate enterprise. I agree with 

commenters that characterized the 2013 

process as unworkable and a burden on 

already-limited Commission resources. 

Furthermore, this proposed reform appears 

considerably more attentive to liquidity 

concerns than the 2013 proposal. By 

permitting majority owners that lack trading 

control to file a disaggregation notice with 

immediate effect rather than navigating a 

case-by-case Commission approval process, 

the 2015 framework significantly reduces 

barriers to disaggregation, thereby possibly 

increasing market participation. 

One area discussed at length in the current 

proposal is the issue of control of a corporate 

entity. Specifically, I invite public comment 

on whether there should be a removal of the 

presumption of control of an entity for all 

minority ownership interests. This would 

allow the exclusion now available to 

minority owners with a stake below ten 

percent, while retaining the presumption for 

interests exceeding fifty percent. 

In addition, I am concerned that, by 

requiring an owner to aggregate an owned 

entity’s positions when its affiliates have 

risk-management systems that permit the 

sharing of trades or trading strategy, the 

proposed rule may stymie critical riskmitigation efforts. Owners and their affiliates 

may need to share information regarding 

trades or trading strategy to verify 

compliance with applicable credit limits as 

well as restrictions and collateral 

requirements for inter-affiliate transactions, 

among other risk-management and 

compliance-related objectives.3

Accordingly, I invite public comment on 

whether the Commission should consider 

modifying the current proposal to clarify that 

owners and their affiliates may share such 

trading information as is necessary for 

effective risk safeguards without forfeiting 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS
58382 Federal Register / Vol. 80, No. 188 / Tuesday, September 29, 2015 / Proposed Rules 

1 16 U.S.C. 824v, 825(b), 825f(a), 825(h). 

2 Federal Energy Regulatory Commission Strategic 

Plan FY 2014–2018, Objective 1.2 (Mar. 2014), 

available at http://www.ferc.gov/about/strat-docs/

FY-2014-FY-2018-strat-plan.pdf. 3 Id. 

eligibility for disaggregation. If the 

Commission remains concerned that this 

accommodation will facilitate coordinated 

trading, it might require affiliates sharing 

trading data to restrict dissemination of the 

information to those responsible for 

compliance and risk-management efforts, 

maintaining internal firewalls to conceal the 

information from employees who develop or 

execute trading strategies. 

I also welcome public comment on 

whether the Commission should consider 

modifying the proposed rule to clarify that an 

owner filing a notice of trading independence 

in order to claim an exemption from 

aggregation under this rule need only make 

subsequent filings in the event of a material 

change in the owner’s degree of control over 

its subsidiary’s positions. The text of the 

proposed rule does not appear to require 

periodic filings following the initial notice of 

trading independence, but the Commission’s 

calculation of the proposal’s costs seems to 

assume that such filings will be made on an 

annual basis. 

I encourage the public to comment on my 

above concerns and propose potential 

solutions if appropriate. 

[FR Doc. 2015–24596 Filed 9–28–15; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 35 

[Docket No. RM15–23–000] 

Collection of Connected Entity Data 

From Regional Transmission 

Organizations and Independent 

System Operators 

AGENCY: Federal Energy Regulatory 

Commission. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) 

proposes to amend its regulations to 

require each regional transmission 

organization (RTO) and independent 

system operator (ISO) to electronically 

deliver to the Commission, on an 

ongoing basis, data required from its 

market participants that would; first 

identify the market participants by 

means of a common alpha-numeric 

identifier; and secondly list their 

‘‘Connected Entities,’’ which includes 

entities that have certain ownership, 

employment, debt, or contractual 

relationships to the market participants, 

as specified in this NOPR; and finally 

describe in brief the nature of the 

relationship of each Connected Entity. 

Such information will assist screening 

and investigative efforts to detect market 

manipulation, an enforcement priority 

of the Commission. The initiative would 

also assist market monitors for the RTOs 

and ISOs in their individual and joint 

investigations of potential cross-market 

manipulation. Unless the RTOs and 

ISOs request continuation of existing 

affiliate disclosure requirements based 

on a particularized need, the 

Commission expects that this new 

disclosure obligation will supplant all 

existing affiliate disclosures 

requirements contained in the RTOs and 

ISOs tariffs. The proposed definitional 

uniformity of the term ‘‘Connected 

Entity’’ across all of the RTOs and ISOs 

may help ease compliance burdens on 

market participants that are active in 

more than one RTO or ISO, and that are 

now required to submit affiliate 

information that may be unique to each 

of the organized markets in which they 

participate. 

DATES: Comments on the proposed rule 

are due November 30, 2015. 

ADDRESSES: Comments, identified by 

docket number, may be filed in the 

following ways: 

• Electronic Filing through http://

www.ferc.gov. Documents created 

electronically using word processing 

software should be filed in native 

applications or print-to-PDF format and 

not in a scanned format. 

• Mail/Hand Delivery: Those unable 

to file electronically may mail or handdeliver comments to: Federal Energy 

Regulatory Commission, Secretary of the 

Commission, 888 First Street NE., 

Washington, DC 20426. 

Instructions: For detailed instructions 

on submitting comments and additional 

information on the rulemaking process, 

see the Comment Procedures Section of 

this document. 

FOR FURTHER INFORMATION CONTACT: 

David Pierce (Technical Information), 

Office of Enforcement, Federal Energy 

Regulatory Commission, 888 First 

Street NE, Washington, DC 20426, 

(202) 502–6454, david.pierce@

ferc.gov. 

Kathryn Kuhlen (Legal Information), 

Office of Enforcement, Federal Energy 

Regulatory Commission, 888 First 

Street NE, Washington, DC 20426, 

(202) 502–6855, kathryn.kuhlen@

ferc.gov 

SUPPLEMENTARY INFORMATION: 

1. In this Notice of Proposed 

Rulemaking (NOPR), the Federal Energy 

Regulatory Commission (Commission) 

proposes, pursuant to sections 222, 

301(b), 307(a) and 309 of the Federal 

Power Act (FPA),1 to amend its 

regulations to require each regional 

transmission organization (RTO) and 

independent system operator (ISO) to 

electronically deliver to the 

Commission, on an ongoing basis, data 

required from its market participants 

that would: (i) Identify the market 

participants by means of a common 

alpha-numeric identifier; (ii) list their 

‘‘Connected Entities,’’ which includes 

entities that have certain ownership, 

employment, debt, or contractual 

relationships to the market participants, 

as specified in this NOPR; and (iii) 

describe in brief the nature of the 

relationship of each Connected Entity. 

The uniform identification of market 

participants, together with the listing of 

entities that comprise a network of 

common interests, would enhance the 

Commission’s efforts to detect and deter 

market manipulation, a central objective 

of the Commission as identified in its 

FY 2014–2018 Strategic Plan.2 Unless 

the RTOs and ISOs request continuation 

of existing affiliate disclosure 

requirements based on a particularized 

need, the Commission expects that this 

new disclosure obligation will supplant 

all existing affiliate disclosures 

requirements contained in the RTOs and 

ISOs tariffs. 

2. In the Strategic Plan, the 

Commission cited monitoring and 

surveillance activities as a key function 

in meeting the objective of detecting and 

deterring market manipulation.3 In 

recent years the Commission has greatly 

enhanced its capabilities in this regard, 

having developed automated screens of 

market activities and set up analytical 

procedures to detect potential market 

manipulation. Understanding the 

ownership, employment, debt, and 

contractual relationships of market 

participants would provide context for 

such data, and help determine whether 

there appears to be a legitimate business 

rationale for seemingly anomalous 

trading patterns, or whether there may 

be market manipulation, fraud, or abuse. 

This in turn will further the 

Commission’s goal of detecting and 

deterring possible market manipulation. 

As we explain below, the existing 

affiliate disclosure requirements do not 

appropriately enable the Commission to 

identify and monitor these business 

relationships. 

I. Background 

3. Beginning in the late 1960s, the 

electric industry gradually transformed 

itself from one populated by mostly selfsufficient vertically integrated utilities 

compensated by cost-based rates, to 


asabaliauskas on DSK5VPTVN1PROD with PROPOSALS