Federal Register / Vol. 72, No. 120 / Friday, June 22, 2007 / Proposed Rules 34417 

1Commodity Exchange Act § 3(b), 7 U.S.C. § 5(b). 

2The Commission has recently proposed 

amendments to its definition of the term, ‘‘foreign 

broker.’’ The amended definition would also be 

relocated, from its current location at § 15.00(g) to 

§ 1.3(xx). See 72 FR 15637 (April 2, 2007). If such 

amendments were to be adopted, there would be no 

change in a foreign broker’s obligations to comply 

with the Commission’s large trader or special call 

regulations set forth in 17 CFR parts 15–21. 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 21 

Special Calls 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Proposed rules. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’) is 

proposing to amend Part 21 of its 

regulations relating to special calls for 

information. The proposed amendments 

would: add to the types of information 

specified in § 21.02, which must be 

furnished upon special call, information 

regarding exchanges of futures for 

physical commodities or for derivatives 

positions, and information regarding 

delivery notices issued and stopped; 

and delegate to the Director of the 

Division of Market Oversight and the 

Director’s delegatees, the ability to issue 

special calls pursuant to sections 21.01 

and 21.02. 

DATES: Comments must be received by 

July 23, 2007. 

ADDRESSES: Comments should be sent to 

the Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581, attention: Office of the 

Secretariat. Comments may be sent by 

facsimile transmission to 202–418–

5521, or by e-mail to secretary@cftc.gov. 

Reference should be made to ‘‘Proposed 

Rules for Special Calls.’’

FOR FURTHER INFORMATION CONTACT: Don 

Heitman, Senior Special Counsel 

(telephone 202–418–5041, e-mail 

dheitman@cftc.gov), Division of Market 

Oversight, Commodity Futures Trading 

Commission, Three Lafayette Center, 

1155 21st Street, NW., Washington, DC 

20581. 

SUPPLEMENTARY INFORMATION: 

I. Background 

The Commodity Exchange Act 

(‘‘Act’’), as amended by the Commodity 

Futures Modernization Act of 2000 

(‘‘CFMA’’), Pub. L. No. 106–554, is 

intended, among other things, to ‘‘deter 

and prevent price manipulation or any 

other disruptions to market integrity.’’ 1

To that end, the Commission, through 

its Division of Market Oversight 

(‘‘Division’’), conducts a comprehensive 

program of market surveillance. A 

centerpiece of this program is its largetrader reporting system, under which all 

large futures and option positions are 

reported to the Commission. Each day, 

for every active futures or option 

market, Division surveillance staff 

monitors the activities of large traders, 

key price relationships, and all relevant 

supply and demand factors in a 

continuous review for potential market 

problems. An essential element of the 

Commission’s market surveillance 

program is the ability to make special 

calls for information from Commission 

registrants and other market 

participants. 

II. Information To Be Furnished Upon 

Special Call 

Part 17 of the Commission’s 

regulations sets forth the routine reports 

that futures commission merchants, 

members of contract markets and 

foreign brokers (collectively, ‘‘reporting 

firms’’) are required to submit to the 

Commission.2 These reports provide the 

information for the Commission’s large 

trader reporting system that it uses in its 

market surveillance program to detect 

and prevent market manipulation or 

other disruptions to market integrity in 

markets subject to Commission 

oversight. 

By contrast, the purpose of the 

Commission’s special call authority in 

Part 21 of the Commission’s regulations 

is to provide the Commission with 

relevant information that is not 

routinely supplied to the Commission, 

pursuant to other parts of the 

Commission’s regulations such as Part 

17. For example, the Commission may 

need to know about futures positions 

that are below the routine reporting 

levels specified in Part 15 of the 

Commission’s regulations. Among 

possible reasons for such special needs 

for information may be a particular 

market situation that warrants 

unusually close Commission market 

surveillance, or when Commission staff 

is conducting an audit of reporting firms 

to ensure complete and accurate 

reporting. 

The proposed amendments to Part 21 

would require reporting firms to retain 

and make available to the Commission, 

upon a special call, information similar 

to that which they are required to report 

to the Commission pursuant to Part 17 

of the Commission’s regulations. 

Specifically, the proposed amendments 

would add two additional categories of 

information to the types of information 

specified in § 21.02, which must be 

furnished upon special call. The first 

additional category of information that 

would be subject to special call under 

this proposal includes information 

regarding futures contracts exchanged 

for physical commodities (‘‘EFPs’’), as 

well as futures contracts exchanged for 

other derivatives contracts, including 

exchanges of futures for options 

(‘‘EFOs’’) and exchanges of futures for 

swaps (‘‘EFSs’’). The second additional 

category of information includes the 

amount of futures contracts where 

actual delivery of the underlying 

commodity has been initiated (i.e., 

delivery notices have been issued or 

received). 

Section 21.02 applies to futures 

commission merchants (‘‘FCMs’’), 

introducing brokers (‘‘IBs’’), members of 

contract markets and foreign brokers. 

However, the first three of the foregoing 

categories are already subject to 

substantial reporting and recordkeeping 

requirements under § 1.35 of the 

Commission’s regulations, which, 

among other things, requires FCMs, IBs 

and contract market members to 

maintain, and produce on request, the 

records that are also the subject of these 

proposed rules. Therefore, as a practical 

matter, the proposed rules will impose 

new requirements only on foreign 

brokers (who are not subject to § 1.35). 

Foreign brokers and other persons 

receiving a special call pursuant to 

§ 21.02 are required by that regulation to 

furnish the information requested. Since 

such persons cannot comply with the 

legal requirement to furnish information 

pursuant to a special call without 

maintaining records from which to 

generate the information requested, it 

follows that persons subject to special 

calls under § 21.02 are required, by the 

Commission’s regulations, to maintain 

such records. Therefore, such records—

including both those already listed in 

§ 21.02, and those that would be added 

by this proposed rule amendment—are 

subject to the five-year record retention 

requirements of § 1.31(a)(1) of the 

regulations, which provides in relevant 

part that: 

All books and records required to be kept 

by the Act or by these regulations shall be 

kept for a period of five years from the date 

thereof and shall be readily accessible during 

the first two years of the five-year period. 

III. Delegation of Authority 

For reasons of administrative 

efficiency, the Commission is also 

proposing to delegate to the Director of 

the Division of Market Oversight, and 

the Director’s delegatees, the power to 

issue special calls pursuant to sections 

21.01 and 21.02. Consistent with other 

delegations of authority to Commission 


rfrederick on PROD1PC67 with PROPOSALS
34418 Federal Register / Vol. 72, No. 120 / Friday, June 22, 2007 / Proposed Rules 

3 5 U.S.C. 553(a)(2). 

4 72 FR 15673 (April 2, 2007). 

5 47 FR 18618 at 18621 (April 30, 1982). 

6 Id. at 18619. 

7Pub. L. 104–13 (May 13, 1995). 

senior staff, the proposed delegation of 

the Part 21 special call authority allows 

the Director to submit to the 

Commission for its consideration any 

matter that has been delegated pursuant 

to the new section. The proposed 

amendment also preserves the 

Commission’s ultimate authority over 

the special calls by providing that, 

‘‘nothing in this section shall be deemed 

to prohibit the Commission, at its 

election, from exercising the authority 

delegated * * * to the Director.’’

Ordinarily, the delegation of authority 

to make special calls would not be 

published for comment because the 

Administrative Procedure Act provides 

that ‘‘a matter relating to agency 

management’’ 3 is not required to be 

published for comment. However, 

because the proposed delegation is 

being published as part of a larger notice 

that includes other proposed 

amendments on which the Commission 

is seeking comment, the Commission 

will also accept public comments 

regarding the proposed delegation of 

authority to issue special calls from the 

Commission to the Director of the 

Division of Market Oversight. 

IV. Cost Benefit Analysis 

Section 15 of the Act, as amended by 

section 119 of the CFMA, requires the 

Commission to consider the costs and 

benefits of its action before issuing a 

new regulation or order under the Act. 

By its terms, § 15(a) does not require the 

Commission to quantify the costs and 

benefits of its action or to determine 

whether the benefits of the action 

outweigh its costs. Rather, § 15(a) 

simply requires the Commission to 

‘‘consider the costs and benefits’’ of the 

subject rule or order. 

Section 15(a) further specifies that the 

costs and benefits of the proposed rule 

or order shall be evaluated in light of 

five broad areas of market and public 

concern: (1) Protection of market 

participants and the public; (2) 

efficiency, competitiveness, and 

financial integrity of futures markets; (3) 

price discovery; (4) sound risk 

management practices; and (5) other 

public interest considerations. The 

Commission may, in its discretion, give 

greater weight to any one of the five 

enumerated areas of concern and may, 

in its discretion, determine that, 

notwithstanding its costs, a particular 

rule or order is necessary or appropriate 

to protect the public interest or to 

effectuate any of the provisions or to 

accomplish any of the purposes of the 

Act. 

The proposed amendments are 

intended to supplement the 

Commission’s rules regarding its market 

surveillance program. That program 

supports one of the Commission’s most 

critical statutory responsibilities, 

deterring and preventing price 

manipulation or any other disruptions 

to market integrity. Effective 

surveillance activities are crucial not 

only to protecting market participants 

and the public from price manipulation, 

but also to: promoting market efficiency, 

competitiveness and financial integrity; 

protecting the futures markets’ price 

discovery function; and promoting 

sound risk management practices. 

In addition, the records that would be 

subject to special call under these 

proposed amendments are the type of 

basic transaction records that any 

foreign broker would create as a matter 

of sound business practices. Because 

these records would be created in any 

event, independently of any regulatory 

requirements, the proposed rules would 

impose no additional costs on foreign 

brokers in that area. There would be 

minimal costs associated with providing 

the records in answer to a special call, 

but such costs would be far outweighed 

by the benefits of protecting the markets 

and the public. Finally, with respect to 

the five-year record retention 

requirement that would apply to these 

records, the cost of retaining the records 

would be minimal because Commission 

rules allow such records to be 

maintained electronically. Those 

minimal costs would, again, be far 

outweighed by the benefits of protecting 

the marketplace and the public. 

The Commission has considered the 

costs and benefits of the proposed 

amendments to Part 21 regarding special 

calls in light of the above-noted specific 

areas of concern identified in section 15. 

The Commission believes that the 

amended rules would impose the 

minimum requirements necessary to 

enable it to perform its oversight 

functions and to carry out its mandate 

to protect the public interest in markets 

that are free of fraud, abuse and 

manipulation. 

After considering these factors, the 

Commission has determined to propose 

the rule amendments set forth below. 

The Commission specifically invites 

public comment on its application of 

the criteria contained in the Act for 

consideration. Commenters are also 

invited to submit any quantifiable data 

that they may have concerning the costs 

and benefits of the proposed rules with 

their comment letter. 

V. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’), 5 U.S.C. 601 et seq., requires 

federal agencies, in promulgating rules, 

to consider the impact of those rules on 

small entities. The proposed 

amendment to § 21.02 would apply to 

FCMs, IBs, members of contract markets 

and foreign brokers. However, as noted 

above, the first three of these categories 

are already subject to substantial 

reporting and recordkeeping 

requirements under § 1.35 of the 

Commission’s regulations. Among other 

things, that section requires FCMs, IBs 

and contract market members to 

maintain, and produce on request, the 

records that are also the subject of these 

proposed rules. Therefore, as a practical 

matter, the proposed rules will impose 

new requirements only on foreign 

brokers (who are not subject to § 1.35). 

With respect to such foreign brokers, 

the Commission recently published 

proposed rules to exempt from 

registration certain foreign persons 

(including foreign brokers).4 In 

reviewing the applicability of the RFA 

to such foreign persons, the Commission 

noted that it has previously established 

certain definitions of ‘‘small entities’’ to 

be used in evaluating the impact of its 

regulations on such entities in 

accordance with the RFA.5 The 

Commission has previously determined 

that FCMs are not small entities for 

purposes of the RFA because each FCM 

has an underlying fiduciary relationship 

with its customers, regardless of the size 

of the FCM.6 The Commission notes that 

the foreign brokers affected by these 

proposed changes to the Commission’s 

regulations would be required to be 

registered as FCMs if not for certain 

exemptions provided in Commission 

regulations. As such, they would 

maintain a fiduciary relationship with 

customers similar to the relationship 

maintained by each registered FCM. 

Therefore, in this context foreign 

brokers, like FCMs, are not 

appropriately categorized as small 

entities. Accordingly, the Chairman, on 

behalf of the Commission, hereby 

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

the proposed rules will not have a 

significant economic impact on a 

substantial number of small entities. 

B. Paperwork Reduction Act 

When publishing proposed rules, the 

Paperwork Reduction Act (PRA) 7


rfrederick on PROD1PC67 with PROPOSALS
Federal Register / Vol. 72, No. 120 / Friday, June 22, 2007 / Proposed Rules 34419 

imposes certain requirements on federal 

agencies, including the Commission, in 

connection with conducting or 

sponsoring any collection of 

information as defined by the PRA. In 

compliance with the PRA, the 

Commission through these proposed 

rules solicits comments to: (1) Evaluate 

whether the proposed collection of 

information is necessary for the proper 

performance of the functions of the 

agency, including the validity of the 

methodology and assumptions used; (2) 

evaluate the accuracy of the agency’s 

estimate of the burden of the proposed 

collection of information, including the 

validity of the methodology and 

assumptions used; (3) enhance the 

quality, utility, and clarity of the 

information to be collected; and (4) 

minimize the burden of the collection 

on those who are to respond, including 

through the use of appropriate 

automated, electronic, mechanical, or 

other technological collection 

techniques or other forms of information 

technology. The Commission has 

submitted the proposed rules and their 

associated information collection 

requirements to the Office of 

Management and Budget (OMB). The 

proposed rules are part of an approved 

collection of information (OMB Control 

No. 3038–0009). The estimated burden 

associated with information to be 

provided pursuant to special calls is as 

follows: 

Average burden of response: One 

hour. 

Number of respondents: 10 per year. 

Frequency of response: One response 

per respondent per year. 

Annual reporting burden: 10 hours. 

Persons wishing to comment on the 

information that would be required by 

these proposed rules should contact the 

Desk Officer, CFTC, Office of 

Management and Budget, Room 10202, 

NEOB, Washington, DC 20503, (202) 

395–7340. Copies of the information 

collection submission to OMB are 

available from the CFTC Clearance 

Officer, 1155 21st Street, NW., 

Washington, DC 20581, (202) 418–5160. 

Copies of the OMB-approved 

information collection package 

associated with the rulemaking may be 

obtained from the Desk Officer, 

Commodity Futures Trading 

Commission, Office of Management and 

Budget, Room 10202, NEOB, 

Washington, DC 20503, (202) 395–7340. 

List of Subjects in 17 CFR Part 21 

Commodity futures, Commodity 

Futures Trading Commission. 

In consideration of the foregoing, and 

pursuant to the authority in the 

Commodity Exchange Act, the 

Commission hereby proposes to amend 

Part 21 of Title 17 of the Code of Federal 

Regulations as follows: 

PART 21—SPECIAL CALLS 

1. The authority citation for part 21 

continues to read as follows: 

Authority: 7 U.S.C. 1a, 2, 2a, 4, 6a, 6c, 6f, 

6g, 6i, 6k, 6m, 6n, 7, 7a, 12a, 19 and 21; 5 

U.S.C. 552 and 552(b). 

2. Section 21.02 is proposed to be 

amended by: 

a. Removing the word ‘‘and’’ at the 

end of paragraph (f); 

b. Redesignating paragraph (g) as 

paragraph (i); and 

c. Adding new paragraphs (g) and (h). 

The additions read as follows: 

§ 21.02 Special calls for information on 

open contracts in accounts carried or 

introduced by futures commission 

merchants, members of contract markets, 

introducing brokers, and foreign brokers. 

* * * * * 

(g) The total number of futures 

contracts exchanged for commodities or 

for derivatives positions; 

(h) The total number of futures 

contracts against which delivery notices 

have been issued or received; and 

* * * * * 

3. Section 21.04 is added to read as 

follows: 

§ 21.04 Delegation of authority to the 

Director of the Division of Market Oversight. 

The Commission hereby delegates, 

until the Commission orders otherwise, 

to the Director of the Division of Market 

Oversight, or to the Director’s delegates, 

the authority set forth in section 21.01 

of this Part to make special calls for 

information on controlled accounts from 

futures commission merchants and from 

introducing brokers and the authority 

set forth in section 21.02 of this Part to 

make special calls for information on 

open contracts in accounts carried or 

introduced by futures commission 

merchants, members of contract 

markets, introducing brokers, and 

foreign brokers. The Director may 

submit to the Commission for its 

consideration any matter that has been 

delegated pursuant to this section. 

Nothing in this section shall be deemed 

to prohibit the Commission, at its 

election, from exercising the authority 

delegated in this section to the Director. 

Issued in Washington, DC, on June 15, 

2007 by the Commission. 

Eileen Donovan, 

Acting Secretary of the Commission. 

[FR Doc. E7–11984 Filed 6–21–07; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF STATE 

22 CFR Part 62 

[Public Notice: 5837] 

RIN 1400–AC38 

Exchange Visitor Program—Fees and 

Charges for Exchange Visitor Program 

Services 

AGENCY: Department of State. 

ACTION: Proposed rule with request for 

comment. 

SUMMARY: The Department is proposing 

to revise its regulations regarding Fees 

and Charges for Exchange Visitor 

Program services. A new section will 

contain all of the fees and charges for 

Exchange Visitor Program services. The 

long-range goal of these changes is to 

recoup the full cost for providing such 

services. 

DATES: The Department will accept 

comments from the public by August 

21, 2007. 

ADDRESSES: You may submit comments, 

identified by any of the following 

methods: 

• Persons with access to the Internet 

may view this notice and provide 

comments by going to the 

regulations.gov Web site at: http:// 

www.regulations.gov/index.cfm. 

• Mail (paper, disk, or CD–ROM 

submissions): U.S. Department of State, 

Office of Exchange Coordination and 

Designation, SA–44, 301 4th Street, 

SW., Room 734, Washington, DC 20547. 

• E-mail: jexchanges@state.gov. You 

must include the RIN (1400–AC38) in 

the subject line of your message. 

FOR FURTHER INFORMATION CONTACT: 

Stanley S. Colvin, Director, Office of 

Exchange Coordination and 

Designation, U.S. Department of State, 

SA–44, 301 4th Street, SW., Room 734, 

Washington, DC 20547; 202–203–5096 

or e-mail at jexchanges@state.gov. 

SUPPLEMENTARY INFORMATION: The 

Department of State designates U.S. 

government, academic, and private 

sector entities to conduct educational 

and cultural exchange programs 

pursuant to a broad grant of authority 

provided by the Mutual Educational and 

Cultural Exchange Act of 1961, as 

amended (Fulbright-Hays Act), 22 

U.S.C. 2451 et seq.; the Immigration and 

Nationality Act, 8 U.S.C. 1101(a)(15)(J); 

the Foreign Affairs Reform and 

Restructuring Act of 1998, Public Law 

105–277; as well as other statutory 

enactments, Reorganization Plans and 

Executive Orders. Under those 

authorities, designated program 

sponsors facilitate the entry of more 


rfrederick on PROD1PC67 with PROPOSALS