58608 Federal Register / Vol. 74, No. 218 / Friday, November 13, 2009 / Notices 

1A copy of the petition is available on the 

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

2The Petitioners also requested that the 

Commission issue an order under Section 4d of the 

CEA that would permit KCBTCC and futures 

commission merchants (FCMs) to commingle 

customer funds used to margin, secure, or guarantee 

the cleared-only contracts with other funds held in 

segregated accounts. Although the CEA does not 

require the Commission to provide public ‘‘notice 

and opportunity for hearing’’ in connection with 

the issuance of a 4d order (as is required for an 

order requested under Section 4(c)), public 

comments regarding the Petitioners’ request for a 4d 

order are being accepted on the Commission’s Web 

site. 

3See 74 FR 12316 (Mar. 24, 2009) (order 

permitting clearing of corn, wheat, and soybean 

swaps by the Chicago Mercantile Exchange); 73 FR 

77015 (Dec. 18, 2008) (order permitting clearing of 

coffee, sugar, and cocoa swaps by ICE Clear U.S.). 

4 17 CFR Part 35 (Commission regulations are 

hereinafter cited as ‘‘Reg. ___’’). 

5 Jurisdiction is retained for, among other things, 

provisions of the CEA proscribing fraud and 

manipulation. See Reg. 35.2. 

6Reg. 35.1(b)(1)(i). ‘‘Commodity’’ is defined in 

Section 1a(4) of the CEA to include a variety of 

specified agricultural products, ‘‘and all other goods 

and articles, except onions * * * and all services, 

rights, and interests in which contracts for future 

delivery are presently or in the future dealt in.’’ 

7See 58 FR 5587 (Jan. 22, 1993). 

8Public Law 106–554, 114 Stat. 2763 (2000). 

9See, e.g., Sections 2(d), (g), and (h) of the CEA, 

7 U.S.C. 2(d), (g), and (h). 

10Reg. 35.2(b). 

11Reg. 35.2(c). 

12The contracts that the KCBT proposes to list for 

clearing-only would, however, meet the 

requirements of paragraphs (a) and (d) of Reg. 35.2 

in that they would be entered into solely between 

eligible swap participants and executed OTC. 

COMMODITY FUTURES TRADING 

COMMISSION 

Request for Comment on a Petition To 

Exempt Certain Over-the-Counter 

Agricultural Swaps From Certain of the 

Requirements Imposed by 

Commission Regulation 35.2, Pursuant 

to Section 4(c) of the Commodity 

Exchange Act 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of request for comment. 

SUMMARY: The Commodity Futures 

Trading Commission (Commission) is 

requesting comment on whether to 

exempt certain over-the-counter (OTC) 

swaps from certain of the requirements 

otherwise imposed by Commission 

Regulation 35.2. Specifically, the Kansas 

City Board of Trade (KCBT), a 

designated contract market, and the 

Kansas City Board of Trade Clearing 

Corporation (KCBTCC), a registered 

derivatives clearing organization (DCO), 

have petitioned for an exemption 

permitting them to list for clearing and 

to clear, respectively, wheat calendar 

swaps. Authority for granting such an 

exemption is found in Section 4(c) of 

the Commodity Exchange Act (CEA). 

DATES: Comments must be received on 

or before December 14, 2009. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov/http:// 

frwebgate.access.gpo/cgi-bin/leaving. 

Follow the instructions for submitting 

comments. 

• E-mail: secretary@cftc.gov. Include 

‘‘KCBT/KCBTCC Section 4(c) Petition’’ 

in the subject line of the message. 

• Fax: 202–418–5521. 

• Mail: Send to David A. Stawick, 

Secretary, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

• Courier: Same as mail above. 

All comments received will be posted 

without change to http:// 

www.CFTC.gov/. 

FOR FURTHER INFORMATION CONTACT: 

Phyllis P. Dietz, Associate Director, 

202–418–5449, pdietz@cftc.gov, or 

Eileen A. Donovan, Special Counsel, 

202–418–5096, edonovan@cftc.gov, 

Division of Clearing and Intermediary 

Oversight, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. The KCBT/KCBTCC Petition 

KCBT and KCBTCC (Petitioners) 

jointly submitted a request to the 

Commission for an exemptive order 

under Section 4(c) of the CEA.1 The 

order would permit KCBT to list certain 

wheat calendar swaps for ‘‘clearing 

only’’ and permit KCBTCC to clear those 

wheat calendar swaps (cleared-only 

contracts).2 The contract size (5,000 

bushels), position limits (5,000 contracts 

for any single month and 6,500 

contracts for all months combined), and 

minimum price fluctuations ($.0025) of 

the cleared-only contracts would be the 

same as those of the KCBT wheat 

futures contract. However, the clearedonly contracts would be cash-settled, in 

contrast to KCBT’s wheat futures 

contract, which is physically-settled, 

and would be listed for any of the 12 

calendar months, as compared to the 

wheat futures contract which is listed 

only for March, May, July, September, 

and December. 

The OTC wheat calendar swaps 

would be negotiated between eligible 

swap participants in the OTC market 

and then cleared by clearing members 

acting on behalf of their own customers 

or the customers of non-clearing 

member FCMs or non-member FCMs. 

Previous requests to clear OTC 

agricultural swaps were limited to 

clearing member FCMs acting on behalf 

of their own customers.3

In support of their request, Petitioners 

represent that daily large trader 

reporting information allows KCBT to 

monitor for position concentration 

among non-clearing member and nonmember FCMs, and the risk 

management and financial surveillance 

procedures of the non-clearing member 

and non-member FCMs’ designated selfregulatory organizations (DSROs) are 

similar or identical to those employed 

by KCBT. The Commission requests 

comment on the impact of permitting 

the OTC wheat calendar swaps to be 

cleared by clearing FCMs on behalf of 

the customers of non-clearing member 

FCMs or non-member FCMs, and 

whether there are any conditions that 

should be placed upon DSROs or FCMs 

to facilitate risk management in 

connection with such transactions in 

the cleared-only contracts. 

Part 35 of the Commission’s 

regulations 4 exempts swap agreements 

and eligible persons entering into such 

agreements from most provisions of the 

CEA.5 The term ‘‘swap agreement’’ is 

defined to include, among other types of 

agreements, a ‘‘commodity swap.’’ 6 Part 

35 was promulgated pursuant to 

authority conferred upon the 

Commission in Section 4(c) of the CEA 

to exempt certain transactions in order 

to promote innovation and 

competition.7 Various exemptions and 

exclusions were subsequently added to 

the CEA by the Commodity Futures 

Modernization Act of 2000 (CFMA),8

but none apply to agricultural 

contracts.9

Part 35 requires, among other things, 

that a swap agreement not be part of a 

fungible class of agreements that are 

standardized as to their material 

economic terms 10 and that the 

creditworthiness of any party having an 

interest under the agreement be a 

material consideration in entering into 

or negotiating the terms of the 

agreement.11 Under the arrangement 

proposed by Petitioners, a cleared-only 

contract could be offset by another 

cleared-only contract. Thus, clearing of 

the OTC wheat calendar swaps would 

result in contracts that are fungible with 

other cleared-only contracts with 

equivalent terms. In addition, the 

creditworthiness of the counterparty 

would not be a consideration. 

Accordingly, the OTC swaps KCBTCC 

would clear would not satisfy all of the 

conditions of Part 35.12


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Federal Register / Vol. 74, No. 218 / Friday, November 13, 2009 / Notices 58609 

13Reg. 35.2(d). 

14Section 4(c)(1) of the CEA, 7 U.S.C. 6(c)(1), 

provides in full that: 

In order to promote responsible economic or 

financial innovation and fair competition, the 

Commission by rule, regulation, or order, after 

notice and opportunity for hearing, may (on its own 

initiative or on application of any person, including 

any board of trade designated or registered as a 

contract market or derivatives transaction execution 

facility for transactions for future delivery in any 

commodity under section 7 of this title) exempt any 

agreement, contract, or transaction (or class thereof) 

that is otherwise subject to subsection (a) of this 

section (including any person or class of persons 

offering, entering into, rendering advice or 

rendering other services with respect to, the 

agreement, contract, or transaction), either 

unconditionally or on stated terms or conditions or 

for stated periods and either retroactively or 

prospectively, or both, from any of the requirements 

of subsection (a) of this section, or from any other 

provision of this chapter (except subparagraphs 

(c)(ii) and (D) of section 2(a)(1) of this title, except 

that the Commission and the Securities and 

Exchange Commission may by rule, regulation, or 

order jointly exclude any agreement, contract, or 

transaction from section 2(a)(1)(D) of this title), if 

the Commission determines that the exemption 

would be consistent with the public interest. 

15House Conf. Report No. 102–978, 1992 

U.S.C.C.A.N. 3179, 3213. 

16Section 4(c)(2) of the CEA, 7 U.S.C. 6(c)(2), 

provides in full that: 

The Commission shall not grant any exemption 

under paragraph (1) from any of the requirements 

of subsection (a) of this section unless the 

Commission determines that— 

(A) the requirement should not be applied to the 

agreement, contract, or transaction for which the 

exemption is sought and that the exemption would 

be consistent with the public interest and the 

purposes of this Act; and 

(B) the agreement, contract, or transaction— 

(i) will be entered into solely between appropriate 

persons; and 

(ii) will not have a material adverse effect on the 

ability of the Commission or any contract market or 

derivatives transaction execution facility to 

discharge its regulatory or self-regulatory duties 

under this Act. 

17Section 3(b) of the CEA, 7 U.S.C. 5(b). See also 

Section 4(c)(1) of the CEA, 7 U.S.C. 6(c)(1) (purpose 

of exemptions is ‘‘to promote responsible economic 

or financial innovation and fair competition’’). 

18 44 U.S.C. 3501 et seq. 

19 7 U.S.C. 19(a). 

However, Part 35 further permits ‘‘any 

person [to] apply to the Commission for 

exemption from any of the provisions of 

the Act * * * for other arrangements or 

facilities.’’ 13 Petitioners have requested 

that the Commission grant an order 

under Section 4(c) of the CEA that 

would exempt cleared-only contracts to 

the same extent as contracts that are 

exempt pursuant to Part 35 of the 

Commission’s regulations. 

II. Section 4(c) of the Commodity 

Exchange Act 

Section 4(c)(1) of the CEA empowers 

the Commission to ‘‘promote 

responsible economic or financial 

innovation and fair competition’’ by 

exempting any transaction or class of 

transactions from any of the provisions 

of the CEA (subject to exceptions not 

relevant here) where the Commission 

determines that the exemption would be 

consistent with the public interest.14

The Commission may grant such an 

exemption by rule, regulation, or order, 

after notice and opportunity for hearing, 

and may do so on application of any 

person or on its own initiative. 

In enacting Section 4(c), Congress 

noted that the goal of the provision ‘‘is 

to give the Commission a means of 

providing certainty and stability to 

existing and emerging markets so that 

financial innovation and market 

development can proceed in an effective 

and competitive manner.’’ 15 The 

Petitioners represent that permitting the 

clearing of the OTC wheat calendar 

swaps by KCBTCC may benefit the 

marketplace by providing market 

participants the ability to combine 

flexible negotiation with central 

counterparty guarantees and capital 

efficiencies. In addition, Petitioners 

represent that they expect the clearedonly contracts to provide a risk 

management tool with unique attributes, 

i.e., contract months and settlement 

features, to address price risk and to 

complement KCBT’s wheat futures and 

options contracts. 

Section 4(c)(2) provides that the 

Commission may grant an exemption 

only when it determines that the 

requirements for which the exemption 

is being provided should not be applied 

to the agreements, contracts, or 

transactions at issue, and the exemption 

is consistent with the public interest 

and the purposes of the CEA; that the 

agreements, contracts, or transactions 

will be entered into solely between 

appropriate persons; and that the 

exemption will not have a material 

adverse effect on the ability of the 

Commission or any contract market or 

derivatives transaction execution 

facility to discharge its regulatory or 

self-regulatory responsibilities under the 

CEA.16 Thus, the Commission is 

requesting comment on whether it 

should exempt the OTC wheat calendar 

swaps that are proposed to be cleared by 

KCBTCC and listed by KCBT, as 

described above, to the same extent as 

other contracts that are exempt pursuant 

to Part 35 of the Commission’s 

regulations. 

The purposes of the CEA include 

‘‘promot[ing] responsible innovation 

and fair competition among boards of 

trade, other markets, and market 

participants.’’ 17 It may be consistent 

with these and the other purposes of the 

CEA, and with the public interest, for 

the cleared-only contracts described 

herein to be exempt as are other 

contracts under Part 35 of the 

Commission’s regulations. However, the 

exception of agricultural commodities 

from the exemptions and exclusions 

provided under the CFMA for OTC 

transactions may be relevant to the 

analysis. Accordingly, the Commission 

is requesting comment as to whether an 

exemption from the requirements of the 

CEA should be granted in the context of 

these transactions. 

In light of the above, the Commission 

also is requesting comment as to 

whether this exemption would affect its 

ability to discharge its regulatory 

responsibilities under the CEA, or with 

the self-regulatory duties of any 

designated contract market. 

III. Request for Comment 

The Commission requests comment 

on all aspects of the issues presented by 

Petitioners’ exemption request. 

IV. Related Matters 

A. Paperwork Reduction Act 

The Paperwork Reduction Act 

(PRA) 18 imposes certain requirements 

on federal agencies (including the 

Commission) in connection with their 

conducting or sponsoring any collection 

of information as defined by the PRA. 

An exemptive order issued by the 

Commission would not be associated 

with a collection of information. 

Accordingly, the PRA does not apply. 

B. Cost-Benefit Analysis 

Section 15(a) of the CEA 19 requires 

the Commission to consider the costs 

and benefits of its action before issuing 

an order under the CEA. By its terms, 

Section 15(a) does not require the 

Commission to quantify the costs and 

benefits of an order or to determine 

whether the benefits of the order 

outweigh its costs. Rather, Section 15(a) 

simply requires the Commission to 

‘‘consider the costs and benefits’’ of its 

action. 

Section 15(a) of the CEA further 

specifies that costs and benefits shall be 

evaluated in light of five broad areas of 

market and public concern: Protection 

of market participants and the public; 

efficiency, competitiveness, and 

financial integrity of futures markets; 

price discovery; sound risk management 

practices; and other public interest 

considerations. Accordingly, the 

Commission could in its discretion give 

greater weight to any one of the five 

enumerated areas and could in its 

discretion determine that, 

notwithstanding its costs, a particular 

order was necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or to 


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58610 Federal Register / Vol. 74, No. 218 / Friday, November 13, 2009 / Notices 

accomplish any of the purposes of the 

CEA. 

The Commission is considering the 

costs and benefits of an exemptive order 

in light of the specific provisions of 

Section 15(a) of the CEA, as follows: 

1. Protection of market participants 

and the public. The contracts that are 

the subject of the exemption request 

will only be entered into by persons 

who are ‘‘appropriate persons’’ as set 

forth in Section 4(c) of the CEA. 

2. Efficiency, competition, and 

financial integrity. Extending the 

exemption granted under Part 35 to the 

OTC wheat calendar swaps to allow 

them to be cleared may promote 

liquidity and transparency in the 

markets for OTC wheat derivatives as 

well as wheat futures. Extending the 

exemption also may promote financial 

integrity by providing the benefits of 

clearing to the OTC wheat market. 

3. Price discovery. Price discovery 

may be enhanced through market 

competition. 

4. Sound risk management practices. 

Clearing of OTC transactions may foster 

risk management by the participant 

counterparties. KCBTCC’s risk 

management practices in clearing these 

transactions would be subject to the 

Commission’s supervision and 

oversight. 

5. Other public interest 

considerations. The requested 

exemption may encourage market 

competition in an agricultural 

derivatives product without 

unnecessary regulatory burden. 

After considering these factors, the 

Commission has determined to seek 

comment on the exemption request as 

discussed above. The Commission also 

invites public comment on its 

application of the cost-benefit 

provisions of Section 15. 

Issued in Washington, DC, on November 6, 

2009 by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. E9–27287 Filed 11–12–09; 8:45 am] 

BILLING CODE P 

CONSUMER PRODUCT SAFETY 

COMMISSION 

[Docket No. CPSC–2009–0093] 

Proposed Extension of Approval of 

Information Collection; Comment 

Request—Consumer Opinion Forum 

AGENCY: Consumer Product Safety 

Commission. 

ACTION: Notice. 

SUMMARY: As required by the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

Chapter 35), the Consumer Product 

Safety Commission (CPSC or 

Commission) requests comments on a 

proposed extension of approval of a 

collection of information from persons 

who may voluntarily register and 

participate in a Consumer Opinion 

Forum posted on the CPSC Web site, 

http://www.cpsc.gov. The Commission 

will consider all comments received in 

response to this notice before requesting 

an extension of this collection of 

information from the Office of 

Management and Budget. 

DATES: Written comments must be 

received by the Office of the Secretary 

not later than January 12, 2010. 

ADDRESSES: You may submit comments, 

identified by Docket No. CPSC–2009– 

0093, by any of the following methods: 

Submit electronic comments in the 

following way: 

Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

To ensure timely processing of 

comments, the Commission is no longer 

accepting comments submitted by 

electronic mail (e-mail) except through 

http://www.regulations.gov. 

Submit written submissions in the 

following way: 

Mail/Hand delivery/Courier (for 

paper, disk, or CD–ROM submissions), 

preferably in five copies, to: Office of the 

Secretary, Consumer Product Safety 

Commission, Room 502, 4330 East-West 

Highway, Bethesda, MD 20814; 

telephone (301) 504–7923. 

Instructions: All submissions received 

must include the agency name and 

docket number for this notice. All 

comments received may be posted 

without change, including any personal 

identifiers, contact information, or other 

personal information provided, to 

http://www.regulations.gov. Do not 

submit confidential business 

information, trade secret information, or 

other sensitive or protected information 

electronically. Such information should 

be submitted in writing. 

Docket: For access to the docket to 

read background documents or 

comments received, go to http:// 

www.regulations.gov. 

FOR FURTHER INFORMATION CONTACT: For 

information about the proposed 

collection of information call or write 

Linda L. Glatz, Division of Policy and 

Planning, Office of Information 

Technology and Technology Services, 

Consumer Product Safety Commission, 

4330 East-West Highway, Bethesda, MD 

20814; telephone: (301) 504–7671 or by 

e-mail to lglatz@cpsc.gov. 

SUPPLEMENTARY INFORMATION: 

A. Background 

The Commission is authorized under 

section 5(a) of the Consumer Product 

Safety Act (CPSA), 15 U.S.C. 2054(a), to 

conduct studies and investigations 

relating to the causes and prevention of 

deaths, accidents, injuries, illnesses, 

other health impairments, and economic 

losses associated with consumer 

products. Section 5(b) of the CPSA, 15 

U.S.C. 2054(b), further provides that the 

Commission may conduct research, 

studies and investigations on the safety 

of consumer products or test consumer 

products and develop product safety 

test methods and testing devices. 

In order to better identify and 

evaluate the risks of product-related 

incidents, the Commission staff seeks to 

solicit consumer opinions and 

perceptions related to consumer product 

use, on a voluntary basis, through 

questions posted on the CPSC’s 

Consumer Opinion Forum. Through the 

forum, consumers will be able to answer 

questions and provide information 

regarding their experiences, opinions 

and/or perceptions on the use or pattern 

of use of a specific product or type of 

product. The Consumer Opinion Forum 

is intended for consumers, 18 years and 

older, who have access to the Internet 

and e-mail, who voluntarily register to 

participate through a participant 

registration process, and respond to the 

questions posted in the Consumer 

Opinion Forum. A link to the Consumer 

Opinion Forum login page is available 

on the CPSC Web site, http:// 

www.cpsc.gov. Consumers may link 

directly to the login page for the 

Consumer Opinion Forum at https:// 

www.cpsc.gov/cgibin/cof/login.aspx. 

When new questions are posted on the 

CPSC Web site, registered participants 

will be invited via e-mail to respond to 

various questions, but not more 

frequently than once every four weeks. 

The information collected from the 

Consumer Opinion Forum will help 

inform the Commission’s evaluation of 

consumer products and product use by 

providing insight and information into 

consumer perceptions and usage 

patterns. Such information may also 

assist the Commission in its efforts to 

support voluntary standards activities, 

and help the staff identify areas 

regarding consumer safety issues that 

need additional research. In addition, 

based on the information obtained, the 

staff may be able to provide safety 

information to the public that is easier 

to read and is more easily understood by 

a wider range of consumers. For 

example, the staff may be able to 

propose new language or revisions to 

existing language in warning labels or 


srobinson on DSKHWCL6B1PROD with NOTICES