1658 Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations 

1Commission regulations cited to herein are 

found at 17 CFR Ch. I (2006). 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 71 

[Docket No. FAA–2006–25905; Airspace 

Docket No. 06–AAL–30] 

RIN 2120–AA66 

Revocation of Low Altitude Reporting 

Point; AK 

AGENCY: Federal Aviation 

Administration (FAA), DOT. 

ACTION: Final rule. 

SUMMARY: This action revokes the 

HERRY as an Alaskan low altitude 

reporting point. The FAA has 

determined that this reporting point 

should be removed from the National 

Airspace System (NAS), since the 

HERRY is no longer used as a low 

altitude reporting point. 

DATES: Effective Date: 0901 UTC, March 

15, 2007. The Director of Federal 

Register approves this incorporation by 

reference action under 1 CFR part 51, 

subject to the annual revision of FAA 

Order 7400.9 and publication of 

conforming amendments. 

FOR FURTHER INFORMATION CONTACT: Ken 

McElroy, Airspace and Rules, Office of 

System Operations Airspace and 

Aeronautical Information Management, 

Federal Aviation Administration, 800 

Independence Avenue, SW., 

Washington, DC 20591; telephone: (202) 

267–8783. 

SUPPLEMENTARY INFORMATION: 

Background 

In October 2006, it was determined 

that the HERRY low altitude reporting 

point was no longer required to support 

the NAS and is no longer used by the 

FAA. 

The Rule 

This action amends Title 14 Code of 

Federal Regulations (14 CFR) part 71 by 

revoking the HERRY low altitude 

reporting point. Accordingly, since this 

action only involves a change in the 

legal description, notice and public 

procedure under 5 U.S.C. 533(b) are 

unnecessary. 

Alaskan low altitude reporting points 

are published in paragraph 7004 of FAA 

Order 7400.9P dated September 1, 2006, 

and effective September 15, 2006, which 

is incorporated by reference in 14 CFR 

71.1. The low altitude reporting points 

listed in this document will be removed 

subsequently in the Order. 

The FAA has determined that this 

regulation only involves an established 

body of technical regulations for which 

frequent and routine amendments are 

necessary to keep them operationally 

current. Therefore, this regulation: (1) Is 

not a ‘‘significant regulatory action’’

under Executive Order 12866; (2) is not 

a ‘‘significant rule’’ under Department of 

Transportation (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 that this rule, when 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities under the 

criteria of the Regulatory Flexibility Act. 

Environmental Review 

The FAA has determined that this 

action qualifies for categorical exclusion 

under the National Environmental 

Policy Act in accordance with FAA 

Order 1050.1E, paragraph 311(a), 

‘‘Environmental Impacts: Policies and 

Procedures.’’ This airspace action is not 

expected to cause any potentially 

significant environmental impacts, and 

no extraordinary circumstances exist 

that warrant preparation of an 

environmental assessment. 

List of Subjects in 14 CFR Part 71 

Airspace, Incorporation by reference, 

Navigation (air). 

Adoption of the Amendment 

■ In consideration of the foregoing, the 

Federal Aviation Administration 

amends 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 part 71 

continues to read as follows: 

Authority: 49 U.S.C. 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 7400.9P, 

Airspace Designations and Reporting 

Points, dated September 1, 2006, and 

effective September 15, 2006, is 

amended as follows: 

Paragraph 7004 Alaskan Low Altitude 

Reporting Points. 

* * * * * 

Herry, AK [Revoked] 

* * * * * 

Issued in Washington, DC on January 4, 

2007. 

Edith V. Parish, 

Manager, Airspace and Rules. 

[FR Doc. E7–317 Filed 1–12–07; 8:45 am] 

BILLING CODE 4910–13–P 

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Part 4 

RIN 3038–AC33 

Electronic Filing of Notices of 

Exemption and Exclusion Under Part 4 

of the Commission’s Regulations 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Final rulemaking. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is amending Commission 

regulations to require that notices of 

exemption or exclusion under Part 4 of 

the Commission’s regulations submitted 

to National Futures Association 

(‘‘NFA’’) be filed electronically. Under 

the regulations the Commission is 

amending, the submission of a notice 

through NFA’s electronic exemption 

filing system by a person duly 

authorized to bind the submitter will be 

permitted in lieu of the manual 

signature currently required by each of 

these regulations. 

In addition, the Commission also is 

adopting technical amendments that 

remove the procedure for making filings 

with the Commission required by Part 4, 

and revising other sections of Part 4 to 

refer to filings made with NFA rather 

than the Commission. 

DATES: Effective Date: February 15, 

2007. 

FOR FURTHER INFORMATION CONTACT: 

Eileen R. Chotiner, Futures Trading 

Specialist, at (202) 418–5467, or Kevin 

P. Walek, Assistant Director, at (202) 

418–5463, Division of Clearing and 

Intermediary Oversight, Commodity 

Futures Trading Commission, Three 

Lafayette Centre, 1155 21st Street, NW., 

Washington, DC 20581. Electronic mail: 

echotiner@cftc.gov or kwalek@cftc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Background 

A. Exemptions and Exclusions Under 

Part 4 of the Commission’s Regulations 

On October 13, 2006, the Commission 

published for public comment proposed 

amendments to Part 4 of its regulations.1


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Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations 1659 

2Regulation 4.10(d)(1) defines a pool as ‘‘any 

investment trust, syndicate or similar form of 

enterprise operated for the purpose of trading 

commodity interests.’’

3The Commodity Exchange Act (‘‘Act’’) defines a 

CTA as any person who ‘‘for compensation or 

profit, engages in the business of advising others 

* * * as to the value of or the advisability of 

trading in’’ commodity interests. 7 U.S.C. 1a(6) 

(2000). 

4NFA is a registered futures association under the 

Act. 7 U.S.C. 21 (2000). As discussed below, the 

Commission has delegated to NFA the 

responsibility for administrating the Commission’s 

registration program. 

5 17 CFR 230.501(a) (2006). 

6A statutory exemption from CTA registration 

exists in Section 4m(1) of the Act for a person who 

has not had more than 15 clients during a 12-month 

period and is not otherwise holding itself out as a 

CTA. 7 U.S.C. 6m (2000). A person who qualifies 

for this exemption is not required to file a notice 

claiming the exemption. 

7 62 FR 52088 (October 6, 1997). 

8At the time NFA was authorized to process these 

notices, Commission regulations required that 

copies of the notices also be filed with the 

Commission. In December 2002, the Commission 

revised its regulations to require that such notices 

be filed solely with NFA. 67 FR 77409 (December 

18, 2002). 

9The Commission previously has adopted 

amendments to its regulations to enable NFA to 

utilize an online system for registration functions 

(67 FR 38,869 (June 6, 2002)). The Commission also 

Continued 

Part 4 of the Commission’s regulations 

applies to the operation of commodity 

pool operators (‘‘CPOs’’) and commodity 

trading advisors (‘‘CTAs’’). Generally, a 

person who operates a commodity pool 

must register with the Commission as a 

CPO,2 and a person who manages 

clients’ trading must register with the 

Commission as a CTA.3 Under 

Commission Regulation 4.5, certain 

‘‘otherwise regulated persons’’ are 

excluded from the CPO definition. 

These persons include registered 

investment companies, banks and trust 

companies, insurance companies, and 

fiduciaries of ERISA pension plans. A 

person who qualifies for the exclusion 

must file a notice of eligibility with 

NFA.4

Commission regulations also make 

certain exemptions from CPO and CTA 

registration available to persons who 

meet specified criteria. Regulation 4.13 

permits exemption from registration for 

CPOs that limit their activities to small 

or family pools; or whose participants 

are highly sophisticated; or whose pools 

limit participants to SEC ‘‘accredited 

investors’’ 5 as that term is defined in 

the regulations promulgated by the 

Securities and Exchange Commission 

(‘‘SEC’’) and limit trading of commodity 

interests to a minimum amount 

specified in the regulation. A notice 

claiming exemption from registration as 

a CPO must be filed with NFA. 

A CTA is exempt from registration if 

it meets criteria specified in Regulation 

4.14, including: it furnishes trading 

advice solely to commodity pools for 

which it is the registered CPO or for 

which it is exempt from CPO 

registration; it provides advice solely 

incidental to the conduct of one of 

certain businesses or professions listed 

in the Act or the Commission’s 

regulations; it is registered with the 

Commission in another capacity and its 

advice is solely in connection with 

acting in that other capacity; it does not 

manage client accounts or provide 

commodity trading advice based on, or 

tailored to, the financial positions of 

particular clients; or it is an SECregistered investment adviser whose 

futures advice is incidental to providing 

securities trading advice to the 

‘‘otherwise regulated’’ trading vehicles 

specified in Regulation 4.5, or to CPOs 

of pools operated pursuant to the 

exemptions in Regulations 4.13(a)(3) 

and (4). A notice must be filed to claim 

the exemption available to SECregistered investment advisers who 

meet the criteria set forth in Regulation 

4.14(a)(8); the other exemptions from 

CTA registration do not require the 

filing of an exemption notice to be 

effective.6

Registered CPOs are required to 

provide a disclosure document to 

prospective participants that includes 

disclosure of risks and information such 

as the business backgrounds of persons 

involved with the pool, investment 

objectives, fees, conflicts, material 

litigation, and past performance. The 

CPO must provide unaudited periodic 

reports and certified annual reports on 

the pool’s financial operations to the 

pool’s participants. Disclosure 

documents and annual reports also must 

be filed with NFA. Further, the CPO is 

required to make and keep specified 

books and records for a period of five 

years, and make them available for 

inspection by the CFTC, NFA, and the 

United States Department of Justice. 

Registered CTAs must provide to 

prospective participants, and file with 

NFA, disclosure documents containing 

information about their trading 

programs, and also must comply with 

specified recordkeeping requirements. 

The Commission has established a 

simplified regulatory framework for 

registered CPOs and CTAs who operate 

or advise pools and accounts whose 

participants meet the criteria specified 

in Regulation 4.7. Relief from full 

compliance with the disclosure, 

reporting, and recordkeeping 

requirements is available where, for 

example, pool participants are CFTC or 

SEC registrants, ‘‘inside employees’’ of 

the CPO or CTA, or persons who earn 

$200,000 annually and who have assets 

worth at least $2 million. A CPO 

offering a pool whose futures trading is 

incidental to its securities trading and is 

limited to 10 percent of the pool’s net 

assets may claim exemption from some 

disclosure, reporting and recordkeeping 

requirements pursuant to Regulation 

4.12(b). A person claiming exemption 

under Regulations 4.7 or 4.12(b) must 

file a notice with NFA. 

In a Notice and Order issued in 1997,7

the Commission authorized NFA to 

process: (1) Notices of eligibility for 

exclusion from the definition of CPO for 

certain otherwise regulated persons, 

pursuant to Commission Regulation 4.5; 

(2) notices of claim for exemption from 

certain Part 4 requirements with respect 

to commodity pools and CTAs whose 

participants or clients are qualified 

eligible persons, pursuant to 

Commission Regulation 4.7; (3) claims 

of exemption from certain Part 4 

requirements for CPOs with respect to 

pools that principally trade securities, 

pursuant to Commission Regulation 

4.12(b); (4) statements of exemption 

from registration as a CPO, pursuant to 

Commission Regulation 4.13; and (5) 

notices of exemption from registration 

as a CTA for certain persons registered 

with the SEC as an investment adviser, 

pursuant to Regulation 4.14(a)(8). The 

Commission also made NFA the 

custodian of those records.8

B. Electronic Filing of Part 4 Notices 

NFA petitioned the Commission to 

amend its regulations to require that the 

notices required under Regulations 4.5, 

4.7, 4.12(b), 4.13, and 4.14(a)(8) be filed 

electronically with NFA, and that 

submission of a notice by a 

representative duly authorized to bind 

the person be permitted in lieu of the 

manual signature currently specified 

under each regulation that requires a 

notice filing. After considering the 

comments received, the Commission 

has determined to amend Regulations 

4.5, 4.7, 4.12(b), 4.13, and 4.14(a)(8) as 

set forth herein to effectuate this 

purpose. 

Firms that are registered with the 

Commission in any capacity and nonregistrants will both access NFA’s 

electronic filing system through the use 

of a designated user ID and password. 

Registered firms will establish access for 

appropriate staff using the security 

manager process in place for their 

existing Online Registration System 

(‘‘ORS’’) accounts, the process that is 

currently used for registration and other 

electronic filings with NFA.9 In order to 


cprice-sewell on PROD1PC66 with RULES
1660 Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations 

adopted amendments to its regulations to require 

electronic filing of financial statements of 

commodity pools (71 FR 8939 (February 22, 2006)) 

and introducing brokers (71 FR 67462 (November 

22, 2006)). 

10 50 FR 15879 (April 23, 1985). 

11See note 2. 

12 In 1997, the Commission also authorized NFA 

to process notices of exemption pursuant to 

Advisory 18–96. See note 1. Since 1997, NFA has 

received approximately 500 notices of exemption 

pursuant to Advisory 18–96. 

13 ‘‘Non-United States person’’ is defined in 

Regulation 4.7(a)(1)(iv). 

enable non-registrants, who are not 

required to have ORS accounts, to file 

exemption notices, NFA has established 

a new process that contains similar 

safeguards regarding the identity of the 

filers and provides the non-registrant 

with the ability to establish one or more 

system users. For both registrants and 

non-registrants, the person who submits 

a notice must be a representative duly 

authorized to bind the submitter. The 

person or firm that is making the filing, 

or on whose behalf the filing is made, 

is responsible for ensuring that only 

persons who are duly authorized to bind 

the filer are granted the ability to submit 

notices. 

The electronic filing system will 

allow filers to select the applicable 

exemption type and complete a form 

that will provide the information 

required for the exemption filing. Each 

form contains a statement by the 

representative submitting the form that 

the information contained therein is 

accurate and complete, to the best of his 

or her knowledge, and that the 

submitter is duly authorized to bind the 

person making the claim. Submission of 

the electronic form will record the data 

regarding the filing in NFA’s database 

system. The system also will allow the 

filer to create a printer-friendly version 

of exemption notices for the filer’s 

records. 

The amendments will no longer 

require persons filing the notices with 

NFA to do so in paper form. Therefore, 

the Commission has concluded that 

electronic transmission of a written 

notification to participants, such as by 

electronic mail or facsimile, is 

consistent with the requirement to 

provide the information in writing and 

is amending each of the regulations with 

a participant notification requirement, 

with the exception of Regulation 4.5, to 

make explicit that notice may be 

delivered through electronic 

transmission. In adopting such 

amendment, the Commission has 

reasoned that the provision of written 

notice necessarily requires that the 

exemption filer establish with the 

participant a method to deliver the 

written communication. Should a 

participant have provided an email 

address or facsimile number to the 

exemption filer for the purpose of 

receiving communications from that 

person, the participant can reasonably 

be expected to receive such written 

communications from the party, 

including the written notification 

required under Commission regulations, 

through such method of electronic 

transmission. 

As discussed in the proposal, the 

Commission is not revising Regulation 

4.5 with respect to disclosure to 

participants. Regulation 4.5 requires 

that the qualifying entity disclose in 

writing to participants that it is 

operating pursuant to the terms of 

Regulation 4.5. When it adopted 

Regulation 4.5, the Commission noted 

that the qualifying entity may satisfy 

this requirement by including the 

information in any document that its 

other federal or state regulator requires 

to be furnished routinely to participants. 

If no such document is furnished 

routinely, the information may be 

disclosed in any instrument establishing 

the entity’s investment policies and 

objectives that the other regulator 

requires to be made available to the 

entity’s participants.10 Therefore, the 

Commission is amending Regulation 4.5 

to contain clarification regarding the 

provision of disclosure according to the 

requirements of other regulators. 

C. Technical Amendments 

As proposed, the Commission is 

removing and reserving Regulation 4.2, 

which specifies technical requirements, 

such as address, for material filed with 

the Commission under Part 4 of its 

regulations. Amendments to 

Commission regulations adopted in 

2002 11 no longer require that any filings 

required under Part 4 be submitted to 

the Commission and thus the continued 

existence of Regulation 4.2 is no longer 

necessary. Further, two provisions 

within Part 4 inadvertently were not 

amended in 2002 and continue to 

include references to filing with the 

Commission. Accordingly, the 

Commission is adopting technical 

amendments to Regulations 4.8 and 

4.12(b) to conform these sections to the 

current filing requirements in the other 

regulations to which they refer. 

II. Comments 

The Commission received two 

comment letters on the proposed 

amendments, from NFA and the 

Committee on Futures Regulation of the 

New York City Bar Association (‘‘Bar 

Association’’). NFA supported the 

proposed amendments and stated that 

electronic filing of Part 4 notices would 

increase efficiency, reduce staff time 

currently devoted to processing notices, 

and eliminate data entry errors because 

the person claiming the notice will enter 

the information directly into the system. 

Both NFA and the Bar Association 

commented regarding Advisory 18–96, 

which is discussed in detail in Section 

III, below. 

III. Advisory 18–96 

NFA also petitioned the Commission 

to amend Advisory 18–96, which was 

issued by the Commission’s former 

Division of Trading and Markets, now 

the Division of Clearing and 

Intermediary Oversight.12 Advisory 18–

96 makes available exemptions from 

disclosure and reporting requirements 

under Regulations 4.21 and 4.22, and 

specified recordkeeping requirements 

under Regulation 4.23, to registered 

CPOs of commodity pools organized 

and operated outside the United States 

and offered solely to non-United States 

persons.13 In considering NFA’s 

petition, the Commission reexamined 

Advisory 18–96 and concluded that 

additional exemptions from CPO 

registration adopted in 2003 have 

essentially superseded the provisions of 

Advisory 18–96. Specifically, 

Regulation 4.13(a)(4) permits a CPO to 

claim exemption from CPO registration 

where the pool is offered pursuant to an 

exemption from registration under the 

Securities Act of 1933 and its 

participants are limited to natural 

persons who are qualified eligible 

persons (‘‘QEPs’’) under Regulation 

4.7(a)(2), and non-natural persons that 

are either QEPs under Regulation 4.7 or 

accredited investors under 17 CFR 

230.501(a)(1)–(3), (a)(7) and (a)(8). Since 

non-United States persons are included 

in the definition of QEP in Regulation 

4.7(a)(2), CPOs meeting the criteria of 

Advisory 18–96 may instead claim the 

exemption available under Regulation 

4.13(a)(4), which offers more extensive 

relief than that available under Advisory 

18–96. 

Based on the overlap between the 

terms of Advisory 18–96 and Regulation 

4.13(a)(4), the Commission suggested in 

the proposing release that it may be 

appropriate to supersede Advisory 18–

96 prospectively, and requested 

comments on this approach. The 

Commission asked in particular for 

comment on whether there are any 

conflicts between the criteria and relief 

in Advisory 18–96 and Regulation 

4.13(a)(4), and whether the 

unavailability of Advisory 18–96 on a 

prospective basis would result in any 

adverse consequences for CPOs. The 


cprice-sewell on PROD1PC66 with RULES
Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations 1661 

14 47 FR 18618 (April 30, 1982). 

15 71 FR 60454 at 60456 (October 1, 2006). 

16 Id. 

17 71 FR at 54791–2. 

Commission proposed that CPOs that 

have previously claimed relief under 

Advisory 18–96 would be permitted to 

continue to rely on the terms of 

Advisory 18–96, or could choose to 

claim exemption pursuant to Regulation 

4.13(a)(4). 

The Bar Association’s sole comment 

related to Advisory 18–96. The letter 

noted that, while most the provisions of 

Advisory 18–96 have been superseded, 

there is still a benefit to retaining 

Advisory 18–96. Specifically, unlike 

Regulation 4.13(a)(4), the Advisory does 

not contain a requirement that a CPO 

inform participants in writing regarding 

the CPO’s unregistered status and 

exemption from certain requirements. 

The Bar Association asserted that 

practitioners who advise offshore hedge 

funds believe that it is unnecessary and 

potentially confusing to the non-U.S. 

domiciled investors to explain why the 

sponsor is not registered with a U.S. 

futures regulator, and recommended 

that Advisory 18–96 be retained as an 

option for CPOs. 

NFA agreed in its comment letter that 

section (a) of Advisory 18–96 could be 

retired without consequence due to the 

existence of Regulation 4.13(a)(4), but 

suggested that the Commission consider 

the consequences of superseding section 

(b) of the Advisory. Section (b) of 

Advisory 18–96 provides relief from the 

requirement that a CPO maintain a 

pool’s books and records at the CPO’s 

main business office inside the U.S. 

where the main business office of the 

pool is located outside the U.S., as long 

as the CPO maintains the pool’s original 

books and records at the pool’s main 

office located outside the U.S., keeps 

duplicate books and records of the 

commodity pool at a designated office 

in the U.S., and makes the original 

records available within 72 hours upon 

the request of the Commission, the 

United States Department of Justice or 

NFA. NFA noted that pools that qualify 

for relief under Section (b) of Advisory 

18–96 do not necessarily qualify for 

relief under Regulation 4.13(a)(4); 

therefore, superseding the Advisory 

would preclude new offshore pools 

from taking advantage of this relief. 

Based on the comments received, the 

Commission has determined that it 

should retain provisions of Advisory 

18–96 that continue to be applicable to 

the activities of U.S. CPOs operating 

offshore pools. Accordingly, Advisory 

18–96 will remain in effect, and relief 

may continue to be claimed by CPOs by 

filing a paper notice with NFA. The 

Commission will further consider 

whether it would be appropriate to 

propose future amendments to Part 4 to 

codify the relief provided by Advisory 

18–96. 

IV. Amendments 

Regulations 4.5, 4.7, 4.12(b), 4.13, and 

4.14(a)(8) require that the notice 

claiming the exclusion or exemption 

available pursuant to each such 

regulation must be filed in paper form. 

The Commission is amending 

Regulations 4.5, 4.7, 4.12(b), 4.13, and 

4.14(a)(8) Regulation to provide that the 

notice claiming exclusion or exemption 

must be filed electronically with NFA 

through compliance with NFA’s 

electronic filing procedures. 

V. Related Matters 

A. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

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

that agencies, in proposing rules, 

consider the impact of those rules on 

small businesses. The Commission 

previously has established certain 

definitions of ‘‘small entities’’ to be used 

by the Commission in evaluating the 

impact of its rules on such entities in 

accordance with the RFA.14 The 

proposed rule amendments will not 

place any burdens, whether new or 

additional, on CPOs and CTAs who 

would be affected hereunder, as the 

proposed amendments simply alter the 

mechanism for filing notices of 

exemption and do not affect the 

substance of those filings or the nature 

of the qualifying criteria. The 

Commission’s proposal solicited public 

comment on this analysis.15 No 

comments were received. Accordingly, 

the Chairman, on behalf of the 

Commission, hereby certifies, pursuant 

to 5 U.S.C. 605(b), that the action it is 

taking herein will not have a significant 

economic impact on a substantial 

number of small entities. 

B. Paperwork Reduction Act 

This rulemaking alters the method of 

collection of information required under 

Commission regulations, but does not 

alter the substance of the filings. 

Therefore, the Commission certified in 

its proposal that the proposed rule 

amendments, if promulgated in final 

form, would not impact the total annual 

reporting or recordkeeping burden 

associated with the applicable 

collection of information. As required 

by the Paperwork Reduction Act of 1995 

(44 U.S.C. 3507(d)), the Commission 

submitted a copy of this section to the 

Office of Management and Budget 

(‘‘OMB’’) for its review. No comments 

were received in response to the 

Commission’s invitation in the notice of 

proposed rulemaking 16 to comment on 

any change in the potential paperwork 

burden associated with these rule 

amendments. 

C. Cost-Benefit Analysis 

Section 15(a) 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 under the Act. By its 

terms, Section 15(a) does not require the 

Commission to quantify the costs and 

benefits of a new regulation or to 

determine whether the benefits of the 

regulation 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 Act 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 

regulation was 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 Commission’s proposal contained 

an analysis of its consideration of these 

costs and benefits and solicited public 

comment thereon.17 No comments were 

received with respect to the analysis of 

the Commission’s consideration. 

Therefore, pursuant to such 

consideration, the Commission has 

decided to adopt these amendments as 

discussed above. 

List of Subjects in 17 CFR Part 4 

Advertising, Brokers, Commodity 

futures, Commodity pool operators, 

Commodity trading advisors, Consumer 

Protection, Reporting and recordkeeping 

requirements. 

■ Accordingly, 17 CFR Chapter I is 

amended as follows: 

PART 4—COMMODITY POOL 

OPERATORS AND COMMODITY 

TRADING ADVISORS 

■ 1. The authority citation for part 4 

continues to read as follows: 


cprice-sewell on PROD1PC66 with RULES
1662 Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations 

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

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

■ 2. Remove and reserve § 4.2. 

■ 3. Revise paragraphs (c) introductory 

text, (c)(2)(i), (d)(1) and (2), and (f) of 

§ 4.5 to read as follows: 

§ 4.5 Exclusion for certain otherwise 

regulated persons from the definition of the 

term ‘‘commodity pool operator.’’

* * * * * 

(c) Any person who desires to claim 

the exclusion provided by this section 

shall file electronically a notice of 

eligibility with the National Futures 

Association through its electronic 

exemption filing system; Provided, 

however, That a plan fiduciary who is 

not a named fiduciary as described in 

paragraph (a)(4) of this section may 

claim the exclusion through the notice 

filed by the named fiduciary. 

* * * * * 

(2) * * * 

(i) Will disclose in writing to each 

participant, whether existing or 

prospective, that the qualifying entity is 

operated by a person who has claimed 

an exclusion from the definition of the 

term ‘‘commodity pool operator’’ under 

the Act and, therefore, who is not 

subject to registration or regulation as a 

pool operator under the Act; Provided, 

that such disclosure is made in 

accordance with the requirements of 

any other federal or state regulatory 

authority to which the qualifying entity 

is subject. The qualifying entity may 

make such disclosure by including the 

information in any document that its 

other federal or state regulator requires 

to be furnished routinely to participants 

or, if no such document is furnished 

routinely, the information may be 

disclosed in any instrument establishing 

the entity’s investment policies and 

objectives that the other regulator 

requires to be made available to the 

entity’s participants; and 

* * * * * 

(d)(1) Each person who has claimed 

an exclusion hereunder must, in the 

event that any of the information 

contained or representations made in 

the notice of eligibility becomes 

inaccurate or incomplete, amend the 

notice electronically through National 

Futures Association’s electronic 

exemption filing system as may be 

necessary to render the notice of 

eligibility accurate and complete. 

(2) This amendment required by 

paragraph (d)(1) of this section shall be 

filed within fifteen business days after 

the occurrence of such event. 

* * * * * 

(f) Any notice required to be filed 

hereunder must be filed by a 

representative duly authorized to bind 

the person specified in paragraph (a) of 

this section. 

* * * * * 

■ 4. In § 4.7, revise paragraph (d)(1) to 

read as follows: 

§ 4.7 Exemption from certain part 4 

requirements for commodity pool operators 

with respect to offerings to qualified eligible 

persons and for commodity trading 

advisors with respect to advising qualified 

eligible persons. 

* * * * * 

(d) Notice of claim for exemption. (1) 

A notice of a claim for exemption under 

this section must: 

(i) Provide the name, main business 

address, main business telephone 

number and the National Futures 

Association commodity pool operator or 

commodity trading advisor 

identification number of the person 

claiming the exemption; 

(ii)(A) Where the claimant is a 

commodity pool operator, provide the 

name(s) of the pool(s) for which the 

request is made; Provided, That a single 

notice representing that the pool 

operator anticipates operating singleinvestor pools may be filed to claim 

exemption for single-investor pools and 

such notice need not name each such 

pool; 

(B) Where the claimant is a 

commodity trading advisor, contain a 

representation that the trading advisor 

anticipates providing commodity 

interest trading advice to qualified 

eligible persons; 

(iii) Contain representations that: 

(A) Neither the commodity pool 

operator or commodity trading advisor 

nor any of its principals is subject to any 

statutory disqualification under section 

8a(2) or 8a(3) of the Act unless such 

disqualification arises from a matter 

which was previously disclosed in 

connection with a previous application 

for registration if such registration was 

granted or which was disclosed more 

than thirty days prior to the filing of the 

notice under this paragraph (d); 

(B) The commodity pool operator or 

commodity trading advisor will comply 

with the applicable requirements of 

§ 4.7; and 

(C) Where the claimant is a 

commodity pool operator, that the 

exempt pool will be offered and 

operated in compliance with the 

applicable requirements of § 4.7; 

(iv) Specify the relief claimed under 

§ 4.7; 

(v) Where the claimant is a 

commodity pool operator, state the 

closing date of the offering or that the 

offering will be continuous; 

(vi) Be filed by a representative duly 

authorized to bind the commodity pool 

operator or commodity trading advisor; 

(vii) Be filed electronically with the 

National Futures Association through its 

electronic exemption filing system; and 

(viii)(A)(1) Where the claimant is a 

commodity pool operator, except as 

provided in paragraph (d)(1)(ii)(A) of 

this section with respect to singleinvestor pools and in paragraph 

(d)(1)(viii)(A)(2) of this section, be 

received by the National Futures 

Association: 

(i) Before the date the pool first enters 

into a commodity interest transaction, if 

the relief claimed is limited to that 

provided under paragraphs (b)(2), (3) 

and (4) of this section; or 

(ii) Prior to any offer or sale of any 

participation in the exempt pool if the 

claimed relief includes that provided 

under paragraph (b)(1) of this section. 

(2) Where participations in a pool 

have been offered or sold in full 

compliance with Part 4, the notice of a 

claim for exemption may be filed with 

the National Futures Association at any 

time; Provided, That the claim for 

exemption is otherwise consistent with 

the duties of the commodity pool 

operator and the rights of pool 

participants and that the commodity 

pool operator notifies the pool 

participants of his intention, absent 

objection by the holders of a majority of 

the units of participation in the pool 

who are unaffiliated with the 

commodity pool operator within 

twenty-one days after the date of the 

notification, to file a notice of claim for 

exemption under § 4.7 and such holders 

have not objected within such period. A 

commodity pool operator filing a notice 

under this paragraph (d)(1)(viii)(A)(2) 

shall either provide disclosure and 

reporting in accordance with the 

requirements of Part 4 to those 

participants objecting to the filing of 

such notice or allow such participants 

to redeem their units of participation in 

the pool within three months of the 

filing of such notice. 

(B) Where the claimant is a 

commodity trading advisor, be received 

by the Commission before the date the 

trading advisor first enters into an 

agreement to direct or guide the 

commodity interest account of a 

qualified eligible person pursuant to 

§ 4.7. 

* * * * * 

■ 5. In § 4.8, revise paragraphs (a) and 

(b) to read as follows: 


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Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations 1663 

§ 4.8 Exemption from certain requirements 

of rule 4.26 with respect to pools offered or 

sold in certain offerings exempt from 

registration under the Securities Act. 

(a) Notwithstanding paragraph (d) of 

§ 4.26 and subject to the conditions 

specified herein, the registered 

commodity pool operator of a pool 

offered or sold solely to ‘‘accredited 

investors’’ as defined in 17 CFR 230.501 

in an offering exempt from the 

registration requirements of the 

Securities Act of 1933 pursuant to Rule 

505 or 506 of Regulation D, 17 CFR 

230.505 or 230.506, may solicit, accept 

and receive funds, securities and other 

property from prospective participants 

in that pool upon filing with the 

National Futures Association and 

providing to such participants the 

Disclosure Document for the pool. 

(b) Notwithstanding paragraph (d) of 

§ 4.26 and subject to the conditions 

specified herein, the registered 

commodity pool operator of a pool 

offered or sold in an offering exempt 

from the registration requirements of the 

Securities Act of 1933 pursuant to Rule 

505 or 506 of Regulation D, 17 CFR 

230.505 or 230.506, that is operated in 

compliance with, and has filed the 

notice required by § 4.12(b) may solicit, 

accept and receive funds, securities and 

other property from prospective 

participants in that pool upon filing 

with the National Futures Association 

and providing to such participants the 

Disclosure Document for the pool. 

* * * * * 

■ 6. In § 4.12, revise paragraphs 

(b)(1)(ii), (b)(3) and (b)(5)(i) to read as 

follows: 

§ 4.12 Exemption from provisions of part 

4. 

* * * * * 

(b) * * * 

(1) * * * 

(ii) Each existing participant and 

prospective participant in the pool for 

which it makes such request is informed 

in writing of the restrictions set forth in 

paragraph (b)(1)(i) (C) and (D) of this 

section prior to the date the pool 

commences trading commodity 

interests. The pool operator may furnish 

this information by way of the pool’s 

Disclosure Document, Account 

Statement, a separate notice or other 

similar means, including written 

communication delivered through 

electronic transmission. 

* * * * * 

(3) Any registered commodity pool 

operator who desires to claim the relief 

available under this § 4.12(b) must file 

electronically a claim of exemption with 

National Futures Association through its 

electronic exemption filing system. 

Such claim must: 

(i) Provide the name, main business 

address and main business telephone 

number of the registered commodity 

pool operator, or applicant for such 

registration, making the request; 

(ii) Provide the name of the 

commodity pool for which the request 

is being made; 

(iii) Contain representations that the 

pool will be operated in compliance 

with § 4.12(b)(1)(i) and the pool operator 

will comply with the requirements of 

§ 4.12(b)(1)(ii); 

(iv) Specify the relief sought under 

§ 4.12(b)(2); and 

(v) Be filed by a representative duly 

authorized to bind the pool operator. 

* * * * * 

(5) * * * 

(i) If a claim of exemption has been 

made under § 4.12(b)(2)(i), the 

commodity pool operator must make a 

statement to that effect on the cover 

page of each offering memorandum, or 

amendment thereto, that it is required to 

file with the National Futures 

Association pursuant to § 4.26. 

* * * * * 

■ 7. In § 4.13, revise paragraphs (a)(5), 

(b)(1) introductory text, (b)(1)(iii), (b)(2) 

and (b)(4), and revise paragraph (e)(2), 

to read as follows: 

§ 4.13 Exemption from registration as a 

commodity pool operator. 

* * * * * 

(a) * * * 

(5)(i) Eligibility for exemption under 

this section is subject to the person 

furnishing in written communication 

physically delivered or delivered 

through electronic transmission to each 

prospective participant in the pool: 

(A) A statement that the person is 

exempt from registration with the 

Commission as a commodity pool 

operator and that therefore, unlike a 

registered commodity pool operator, it 

is not required to deliver a Disclosure 

Document and a certified annual report 

to participants in the pool; and 

(B) A description of the criteria 

pursuant to which it qualifies for such 

exemption from registration. 

(ii) The person must make these 

disclosures by no later than the time it 

delivers a subscription agreement for 

the pool to a prospective participant in 

the pool. 

(b)(1) Any person who desires to 

claim the relief from registration 

provided by this section, must file 

electronically a notice of exemption 

from commodity pool operator 

registration with the National Futures 

Association through its electronic 

exemption filing system. The notice 

must: 

* * * * * 

(iii) Be filed by a representative duly 

authorized to bind the person. 

(2) The person must file the notice by 

no later than the time it delivers a 

subscription agreement for the pool to a 

prospective participant in the pool; 

Provided, That where a person 

registered with the Commission as a 

commodity pool operator intends to 

withdraw from registration in order to 

claim exemption hereunder, the person 

must notify its pool’s participants in 

written communication physically 

delivered or delivered through 

electronic transmission that it intends to 

withdraw from registration and claim 

the exemption, and it must provide each 

such participant with a right to redeem 

its interest in the pool prior to the 

person filing a notice of exemption from 

registration. 

* * * * * 

(4) Each person who has filed a notice 

of exemption from registration under 

this section must, in the event that any 

of the information contained or 

representations made in the notice 

becomes inaccurate or incomplete, 

amend the notice through National 

Futures Association’s electronic 

exemption filing system as may be 

necessary to render the notice accurate 

and complete. This amendment must be 

filed electronically within 15 business 

days after the pool operator becomes 

aware of the occurrence of such event. 

* * * * * 

(e)(2) If a person operates one or more 

commodity pools described in 

paragraph (a)(3) or (a)(4) of this section, 

and one or more commodity pools for 

which it must be, and is, registered as 

a commodity pool operator, the person 

is exempt from the requirements 

applicable to a registered commodity 

pool operator with respect to the pool or 

pools described in paragraph (a)(3) or 

(a)(4) of this section; Provided, That the 

person: 

(i) Furnishes in written 

communication physically delivered or 

delivered through electronic 

transmission to each prospective 

participant in a pool described in 

paragraph (a)(3) or (a)(4) of this section 

that it operates: 

(A) A statement that it will operate 

the pool as if the person was exempt 

from registration as a commodity pool 

operator; 

(B) A description of the criteria 

pursuant to which it will so operate the 

pool; 

(ii) Complies with paragraph (c) of 

this section; and 


cprice-sewell on PROD1PC66 with RULES
1664 Federal Register / Vol. 72, No. 9 / Tuesday, January 16, 2007 / Rules and Regulations 

(iii) Provides to each existing 

participant in a pool that the person 

elects to operate as described in 

paragraph (a)(3) or (a)(4) of this section 

a right to redeem the participant’s 

interest in the pool, and informs each 

such participant of that right no later 

than the time the person commences to 

operate the pool as described in 

paragraph (a)(3) or (a)(4) of this section. 

* * * * * 

■ 8. In § 4.14, introductory text of 

paragraph (a) and introductory text of 

paragraph (a)(8) is republished and 

paragraph (a)(8)(iii)(A) introductory text 

and paragraphs (a)(8)(iii)(A)(3), 

(a)(8)(iii)(B) and (a)(8)(iii)(D) are revised 

to read as follows: 

§ 4.14 Exemption from registration as a 

commodity trading advisor. 

* * * * * 

(a) A person is not required to register 

under the Act as a commodity trading 

advisor if: 

* * * * * 

(8) It is a registered as an investment 

adviser under the Investment Advisers 

Act of 1940 or with the applicable 

securities regulatory agency of any 

State, or it is exempt from such 

registration, or it is excluded from the 

definition of the term ‘‘investment 

adviser’’ pursuant to the provisions of 

section 202(a)(2) and 202(a)(11) of the 

Investment Advisers Act of 1940, 

Provided, That: 

* * * * * 

(iii)(A) A person who desires to claim 

the relief from registration provided by 

this § 4.14(a)(8) must file electronically 

a notice of exemption from commodity 

trading advisor registration with the 

National Futures Association through its 

electronic exemption filing system. The 

notice must: 

* * * * * 

(3) Be filed by a representative duly 

authorized to bind the person. 

(B) The person must file the notice by 

no later than the time it delivers an 

advisory agreement for the trading 

program pursuant to which it will offer 

commodity interest advice to a client; 

Provided, That where the advisor is 

registered with the Commission as a 

commodity trading advisor, it must 

notify its clients in written 

communication physically delivered or 

delivered through electronic 

transmission that it intends to withdraw 

from registration and claim the 

exemption and must provide each such 

client with a right to terminate its 

advisory agreement prior to the person 

filing a notice of exemption from 

registration. 

* * * * * 

(D) Each person who has filed a notice 

of exemption from registration under 

this section must, in the event that any 

of the information contained or 

representations made in the notice 

becomes inaccurate or incomplete, 

amend the notice electronically through 

National Futures Association’s 

electronic exemption filing system as 

may be necessary to render the notice 

accurate and complete. This amendment 

must be filed within 15 business days 

after the trading advisor becomes aware 

of the occurrence of such event. 

* * * * * 

Issued in Washington, DC, on January 5, 

2007 by the Commission. 

Eileen A. Donovan, 

Acting Secretary of the Commission. 

[FR Doc. E7–174 Filed 1–12–07; 8:45 am] 

BILLING CODE 6351–01–P 

DEPARTMENT OF COMMERCE 

United States Patent and Trademark 

Office 

37 CFR Part 1 

[Docket No.: PTO–P–2005–0015] 

RIN 0651–AB75 

Changes to Implement Priority 

Document Exchange Between 

Intellectual Property Offices 

AGENCY: United States Patent and 

Trademark Office, Commerce. 

ACTION: Final rule. 

SUMMARY: The United States Patent and 

Trademark Office (Office) has 

established a 21st Century Strategic Plan 

to transform the Office into a more 

quality-focused, highly productive, 

responsive organization supporting a 

market-driven intellectual property 

system. One goal of the 21st Century 

Strategic Plan is the electronic exchange 

of information and documents between 

intellectual property offices. Consistent 

with this goal, the Office is revising the 

rules of practice to provide for the 

electronic transfer of certified copies of 

applications for which priority is 

claimed under the Paris Convention 

(priority applications) from other 

intellectual property offices with which 

the Office has negotiated priority 

document exchange agreements. The 

Office is also revising the rules of 

practice to permit applicants to request 

that the Office permit other 

participating intellectual property 

offices to electronically retrieve certified 

copies of United States patent 

applications without payment of a fee. 

This electronic exchange of copies of 

priority documents will benefit 

applicants by reducing the cost of 

ordering paper certified copies of 

priority applications for filing in other 

participating intellectual property 

offices, and will benefit participating 

intellectual property offices by reducing 

the administrative costs associated with 

handling paper copies of priority 

documents and scanning them into their 

electronic image record management 

systems. 

DATES: Effective Date: January 16, 2007. 

FOR FURTHER INFORMATION CONTACT: 

Diana Oleksa, ((571) 272–3291), Legal 

Advisor for IT Policy, Office of Patent 

Cooperation Treaty Legal 

Administration, Office of the Deputy 

Commissioner for Patent Examination 

Policy, or Robert A. Clarke ((571) 272–

7735), Deputy Director, Office of Patent 

Legal Administration, Office of the 

Deputy Commissioner for Patent 

Examination Policy, at 

PatentEFW.comments@uspto.gov or 

directly by phone, or by facsimile to 

(571) 273–7735, marked to the attention 

of Ms. Oleksa, or by mail addressed to: 

Mail Stop Comments-Patents, 

Commissioner for Patents, P.O. Box 

1450, Alexandria, VA 22313–1450. 

SUPPLEMENTARY INFORMATION: The Office 

has established a 21st Century Strategic 

Plan to transform the Office into a more 

quality-focused, highly productive, 

responsive organization supporting a 

market-driven intellectual property 

system. One goal of the 21st Century 

Strategic Plan is the electronic exchange 

of information and documents between 

intellectual property offices. The Office 

plans to leverage its image file wrapper 

(IFW) technology by negotiating 

agreements with other patent offices to 

permit the Office to obtain and provide 

electronic copies of priority documents. 

See 35 U.S.C. 2(b)(6) (authorizes the 

Office, subject to certain conditions, to 

use the services, records, facilities, or 

personnel of any instrumentality or 

foreign patent and trademark office or 

international organization to perform 

functions on its behalf) and 11 

(authorizes the Office to exchange 

copies of specifications and drawings of 

United States patents and published 

applications for patents for those of 

other NAFTA or WTO member 

countries). Agreements to obtain and 

provide such copies have been 

established with the European Patent 

Office (EPO) and its member states, and 

are being considered with the Japan 

Patent Office (JPO), both of which 

offices will have the technical ability to 

provide and retrieve certified electronic 

copies of priority documents via 


cprice-sewell on PROD1PC66 with RULES