5920 Federal Register / Vol. 70, No. 23 / Friday, February 4, 2005 / Rules and Regulations 

(n) Before the MLG outer cylinder is 3 

years old since new or since the last 

overhaul, or within 90 days after May 6, 

2002, whichever is later, perform a detailed 

inspection for cracks and corrosion of the 

cross bolt hole inner chamfer, in accordance 

with ‘‘Part 2—Cross Bolt Hole Inner Chamfer 

Inspection—Bushings Not Removed’’ of the 

Accomplishment Instructions of Boeing Alert 

Service Bulletin 767–32A0192, dated May 

31, 2001; or Revision 1, dated March 13, 

2003. 

(1) If no crack or corrosion is found during 

the inspection required by paragraph (n) of 

this AD, before further flight, and thereafter 

at intervals not to exceed 180 days, perform 

the C.I.C. application on the MLG in 

accordance with ‘‘Part 3—C.I.C. Application’’

of the Accomplishment Instructions of the 

service bulletin, until the next MLG 

overhaul. After the next MLG overhaul has 

been completed, no further action is required 

by this AD. 

(2) If any corrosion is found during the 

detailed inspection required by paragraph (n) 

of this AD, before further flight, remove the 

cross bolt bushings and perform the detailed 

inspection specified in paragraph (k) of this 

AD, and remove the corrosion per Figure 2 

of the service bulletin. 

(i) If all of the corrosion can be removed, 

perform the actions specified in paragraph 

(n)(2)(i)(A) and (n)(2)(i)(B) of this AD, at the 

applicable times indicated. 

(A) Prior to further flight, perform the 

restoration steps shown in Figure 2 of the 

service bulletin; and thereafter at intervals 

not to exceed 180 days, perform the C.I.C. 

application on the MLG in accordance with 

‘‘Part 3—C.I.C. Application’’ of the 

Accomplishment Instructions of the service 

bulletin. 

(B) Within 18 months after the corrosion 

removal required by paragraph (n)(2) of this 

AD, perform the terminating action described 

in paragraph (q) of this AD. 

(ii) If all the corrosion cannot be removed, 

before further flight, perform the terminating 

action required by paragraph (q) of this AD. 

(3) If any crack is found during the detailed 

inspection required by paragraph (n) of this 

AD, before further flight, perform the 

terminating action described in paragraph (q) 

of this AD. 

Parts Installation 

(o) As of May 6, 2002, no person shall 

install on any airplane an MLG outer 

cylinder unless maintenance records 

conclusively show that JC5A has never been 

used on that MLG outer cylinder, or unless 

it complies with paragraph (q) of this AD. 

Use of JC5A Prohibited 

(p) As of May 6, 2002, no person shall use 

the C.I.C. JC5A in the aft trunnion area of the 

MLG outer cylinder on any airplane. 

Terminating Action 

(q) Perform the terminating action 

(including removal of the existing bushings, 

repair of the aft trunnion area of the outer 

cylinder, and machining and installation of 

new bushings) in accordance with ‘‘Part 4—

Terminating Action’’ of the Accomplishment 

Instructions of Boeing Alert Service Bulletin 

767–32A0192, dated May 31, 2001; or 

Revision 1, dated March 13, 2003. 

Completion of the terminating action 

terminates the requirements for the repetitive 

inspections and C.I.C. applications of this 

AD. 

Credit for Terminating Action 

(r) For all airplanes, accomplishment of the 

actions specified in paragraph (q) of this AD 

is considered acceptable for compliance with 

the requirements of paragraph (e) of AD 

2002–01–13, amendment 39–12607. 

New Requirements of This AD 

L/Ns 834 Through 874 Inclusive 

(s) For airplanes with L/Ns 834 through 

874 inclusive: Do the actions specified in 

paragraphs (s)(1), (s)(2), and (s)(3) of this AD. 

(1) Within 90 days after the effective date 

of this AD, and thereafter at intervals not to 

exceed 180 days: Do the actions specified in 

paragraph (m) of this AD until the 

terminating action required by paragraph (q) 

of this AD has been accomplished. 

(2) Before the MLG outer cylinder is 3 

years old since new or since last overhaul, or 

within 90 days after the effective date of this 

AD, whichever is later: Do the actions as 

specified in paragraph (n) of this AD. 

(3) As of the effective date of this AD, the 

actions specified in paragraphs (o) and (p) of 

this AD must be complied with. 

Reporting Requirement 

(t) Although the service bulletins 

referenced in this AD specify to submit 

certain information to the manufacturer, this 

AD does not include such a requirement. 

Alternative Methods of Compliance (AMOCs) 

(u)(1) The Manager, Seattle Aircraft 

Certification Office (ACO), FAA, has the 

authority to approve AMOCs for this AD, if 

requested in accordance with the procedures 

found in 14 CFR 39.19. 

(2) An AMOC that provides an acceptable 

level of safety may be used for any repair 

required by this AD, if it is approved by an 

Authorized Representative for the Boeing 

Delegation Option Authorization 

Organization who has been authorized by the 

Manager, Seattle ACO, to make those 

findings. For a repair method to be approved, 

the repair must meet the certification basis of 

the airplane, and the approval must 

specifically refer to this AD. 

Material Incorporated by Reference 

(v) Unless otherwise specified by this AD, 

the actions shall be done in accordance with 

Boeing Alert Service Bulletin 767–32A0192, 

dated May 31, 2001; or Boeing Alert Service 

Bulletin 767–32A0192, Revision 1, dated 

March 13, 2003. 

(1) The Director of the Federal Register 

approves the incorporation by reference of 

Boeing Alert Service Bulletin 767–32A0192, 

Revision 1, dated March 13, 2003 in 

accordance with 5 U.S.C. 552(a) and 1 CFR 

part 51. 

(2) The Director of the Federal Register 

previously approved the incorporation by 

reference of Boeing Alert Service Bulletin 

767–32A0192, dated May 31, 2001, as of May 

6, 2002 (67 FR 19322, April 19, 2002). 

(3) For copies of the service information, 

contact Boeing Commercial Airplanes, P.O. 

Box 3707, Seattle, Washington 98124–2207. 

For information on the availability of this 

material at the National Archives and 

Records Administration (NARA), call (202) 

741–6030, or go to http://www.archives.gov/

federal_register/code_of_federal_regulations/

ibr_locations.html. You may view the AD 

docket at the Docket Management Facility, 

U.S. Department of Transportation, 400 

Seventh Street SW., room PL–401, Nassif 

Building, Washington, DC.

Issued in Renton, Washington, on January 

21, 2005. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service.

[FR Doc. 05–1805 Filed 2–3–05; 8:45 am] 

BILLING CODE 4910–13–P

DEPARTMENT OF TRANSPORTATION

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2005–20250; Directorate 

Identifier 2003–NM–267–AD; Amendment 

39–13961; AD 2005–03–05] 

RIN 2120–AA64 

Airworthiness Directives; McDonnell 

Douglas Model MD–90–30 Airplanes

AGENCY: Federal Aviation 

Administration (FAA), Department of 

Transportation (DOT).

ACTION: Final rule; request for 

comments. 

SUMMARY: The FAA is revising an 

existing airworthiness directive (AD), 

which applies to certain McDonnell 

Douglas Model MD–90–30 airplanes. 

This AD requires a one-time general 

visual inspection to detect wire chafing 

damage and to determine adequate 

clearance between the disconnect panel 

structure and the wires above the aft left 

lavatory; and corrective actions, if 

necessary. This new AD revises the 

applicability of the existing AD. This 

AD is prompted by the determination 

that certain airplanes unaffected by the 

existing AD are subject to the unsafe 

condition, and certain other airplanes 

should be removed from the 

applicability. We are issuing this AD to 

prevent damage to certain wires due to 

contact between the wires and the 

adjacent structure, which could result in 

electrical arcing and consequent smoke 

and fire in the cabin.

DATES: Effective February 22, 2005. 

The incorporation by reference of a 

certain publication listed in the AD is 

approved by the Director of the Federal 

Register as of February 22, 2005. 

We must receive comments on this 

AD by April 5, 2005.

Federal Register / Vol. 70, No. 23 / Friday, February 4, 2005 / Rules and Regulations 5921

ADDRESSES: Use one of the following 

addresses to submit comments on this 

AD. 

• DOT Docket Web site: Go to

http://dms.dot.gov and follow the 

instructions for sending your comments 

electronically. 

• Government-wide rulemaking Web 

site: Go to http://www.regulations.gov

and follow the instructions for sending 

your comments electronically. 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 

Seventh Street, SW., Nassif Building, 

room PL–401, Washington, DC 20590. 

• Fax: (202) 493–2251. 

• Hand Delivery: Room PL–401 on 

the plaza level of the Nassif Building, 

400 Seventh Street, SW., Washington, 

DC, between 9 a.m. and 5 p.m., Monday 

through Friday, except Federal holidays. 

For service information identified in 

this AD, contact Boeing Commercial 

Airplanes, Long Beach Division, 3855 

Lakewood Boulevard, Long Beach, 

California 90846; Attention: Data and 

Service Management, Dept. C1-L5A 

(D800–0024). You can examine this 

information at the National Archives 

and Records Administration (NARA). 

For information on the availability of 

this material at NARA, call (202) 741–

6030, or go to http://www.archives.gov/

federal_register/

code_of_federal_regulations/

ibr_locations.html.

You can examine the contents of this 

AD docket on the Internet at http://

dms.dot.gov, or in person at the Docket 

Management Facility, U.S. Department 

of Transportation, 400 Seventh Street, 

SW., room PL–401, on the plaza level of 

the Nassif Building, Washington, DC. 

This docket number is FAA–2005–

20250; the directorate identifier for this 

docket is 2003–NM–267–AD. 

Examining the Docket 

You can examine the AD docket on 

the Internet at http://dms.dot.gov, or in 

person at the Docket Management 

Facility office between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. The Docket 

Management Facility office (telephone 

(800) 647–5227) is located on the plaza 

level of the Nassif Building at the DOT 

street address stated in the ADDRESSES

section. Comments will be available in 

the AD docket shortly after the DMS 

receives them.

FOR FURTHER INFORMATION CONTACT:

George Y. Mabuni, Senior Aerospace 

Engineer, Systems and Equipment 

Branch, ANM–130L, FAA, Los Angeles 

Aircraft Certification Office, 3960 

Paramount Boulevard, Lakewood, 

California 90712–4137; telephone (562) 

627–5341; fax (562) 627–5210.

SUPPLEMENTARY INFORMATION: On 

February 14, 2003, we issued AD 2003–

04–10, amendment 39–13058 (68 FR 

9513, February 28, 2003), for certain 

McDonnell Douglas Model MD–90–30 

airplanes. That AD requires a one-time 

general visual inspection to find wire 

chafing damage and to determine 

adequate clearance between the 

disconnect panel structure and the 

wires above the aft left lavatory; and 

corrective actions, if necessary. That AD 

was prompted by a report of 

uncommanded deployment of cabin 

oxygen masks due to chafing of certain 

wires. We issued that AD to prevent 

damage to certain wires due to contact 

between the wires and the adjacent 

structure, which could result in 

electrical arcing and consequent smoke 

and fire in the cabin. 

Actions Since Existing AD Was Issued 

Since we issued AD 2003–04–10, 

Boeing has revised relevant service 

information to change the effectivity, as 

explained in the following section. 

Relevant Service Information 

AD 2003–04–10 requires 

accomplishing the actions specified in 

Boeing Alert Service Bulletin MD90–

24A074, Revision 1, dated August 8, 

2001. The manufacturer has since 

issued Revision 02, dated June 3, 2003. 

Revision 02 revises the effectivity by 

adding certain airplanes and removing 

others. The procedures have not 

changed. Accomplishing the actions 

specified in the service information is 

intended to adequately address the 

unsafe condition. 

FAA’s Determination and Requirements 

of the AD 

We have evaluated all pertinent 

information, identified an unsafe 

condition that is likely to exist or 

develop on other products of this same 

type design, and determined that it is 

necessary to revise AD 2003–04–10. 

This new AD retains the requirements of 

AD 2003–04–10. This new AD revises 

the applicability by removing certain 

airplanes and adding other airplanes. 

This AD requires using the revised 

service information described 

previously to perform these actions, 

except as discussed under ‘‘Differences 

Between the AD and the Service 

Bulletin.’’

Differences Between the AD and the 

Service Bulletin 

The service bulletin specifies a 

compliance time of 120 days after the 

issue date of Revision 1 of the service 

bulletin (August 8, 2001). For those 

airplanes newly added to the 

applicability in this AD, we have 

provided a compliance time of 6 months 

after the effective date of the AD to 

avoid potentially grounding those 

airplanes. 

Costs of Compliance 

There are about 89 airplanes of the 

affected design worldwide. The 

following table provides the estimated 

costs for U.S. operators to comply with 

this AD.

ESTIMATED COSTS

Action Work 

hours 

Average 

labor rate 

per hour 

Parts Cost per 

airplane 

Number of 

U.S.-

registered

airplanes 

Fleet cost 

Inspection ........................................... 1 $65 None required .................................... $65 21 $1,365 

The airplanes that are newly added to 

the applicability of this AD are currently 

operated by non-U.S. operators under 

foreign registry; therefore, those 

airplanes are not directly affected by 

this AD. If a newly affected airplane is 

imported and placed on the U.S. 

Register in the future, the costs provided 

in the above table would apply. 

FAA’s Determination of the Effective 

Date 

For U.S.-registered airplanes, the 

changes in this new AD provide relief 

from the requirements of AD 2003–04–

10, and none of the newly added 

airplanes is on the U.S. Register. 

Therefore, providing notice and 

opportunity for public comment is 

unnecessary before this AD is issued, 

and this AD may be made effective in 

less than 30 days after it is published in 

the Federal Register. 

5922 Federal Register / Vol. 70, No. 23 / Friday, February 4, 2005 / Rules and Regulations 

Comments Invited 

Although this is a final rule that was 

not preceded by notice and an 

opportunity for public comment, we 

invite you to submit any relevant 

written data, views, or arguments 

regarding this AD. Send your comments 

to an address listed under ADDRESSES.

Include ‘‘Docket No. FAA–2005–20250; 

Directorate Identifier 2003–NM–267–

AD’’ at the beginning of your comments. 

We specifically invite comments on the 

overall regulatory, economic, 

environmental, and energy aspects of 

the AD. We will consider all comments 

received by the closing date and may 

amend the AD in light of those 

comments.

We will post all comments we 

receive, without change, to http://

dms.dot.gov, including any personal 

information you provide. We will also 

post a report summarizing each 

substantive verbal contact with FAA 

personnel concerning this AD. Using the 

search function of our docket Web site, 

anyone can find and read the comments 

in any of our dockets, including the 

name of the individual who sent the 

comment (or signed the comment on 

behalf of an association, business, labor 

union, etc.). You can review the DOT’s 

complete Privacy Act Statement in the 

Federal Register published on April 11, 

2000 (65 FR 19477–78), or you can visit 

http://dms.dot.gov.

Authority for This Rulemaking 

Title 49 of the United States Code 

specifies the FAA’s authority to issue 

rules on aviation safety. Subtitle I, 

Section 106, describes the authority of 

the FAA Administrator. Subtitle VII, 

Aviation Programs, describes in more 

detail the scope of the Agency’s 

authority. 

We are issuing this rulemaking under 

the authority described in Subtitle VII, 

Part A, Subpart III, Section 44701, 

‘‘General requirements.’’ Under that 

section, Congress charges the FAA with 

promoting safe flight of civil aircraft in 

air commerce by prescribing regulations 

for practices, methods, and procedures 

the Administrator finds necessary for 

safety in air commerce. This regulation 

is within the scope of that authority 

because it addresses an unsafe condition 

that is likely to exist or develop on 

products identified in this rulemaking 

action. 

Regulatory Findings 

We have determined that this AD will 

not have federalism implications under 

Executive Order 13132. This AD will 

not have a substantial direct effect on 

the States, on the relationship between 

the national Government and the States, 

or on the distribution of power and 

responsibilities among the various 

levels of government. 

For the reasons discussed above, I 

certify that the regulation: 

1. Is not a ‘‘significant regulatory 

action’’ under Executive Order 12866; 

2. Is not a ‘‘significant rule’’ under the 

DOT Regulatory Policies and Procedures 

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

3. Will not have a significant 

economic impact, positive or negative, 

on a substantial number of small entities 

under the criteria of the Regulatory 

Flexibility Act. 

We prepared a regulatory evaluation 

of the estimated costs to comply with 

this AD. See the ADDRESSES section for 

a location to examine the regulatory 

evaluation.

List of Subjects in 14 CFR Part 39 

Air transportation, Aircraft, Aviation 

safety, Incorporation by reference, 

Safety.

Adoption of the Amendment

■ Accordingly, under the authority 

delegated to me by the Administrator, 

the FAA amends 14 CFR part 39 as 

follows:

PART 39—AIRWORTHINESS 

DIRECTIVES

■ 1. The authority citation for part 39 

continues to read as follows:

Authority: 49 U.S.C. 106(g), 40113, 44701.

§ 39.13 [Amended]

■ 2. The FAA amends § 39.13 by adding 

the following new AD:

2005–03–05 McDonnell Douglas:

Amendment 39–13961. Docket No. 

FAA–2005–20250; Directorate Identifier 

2003–NM–267–AD. 

Effective Date 

(a) This airworthiness directive (AD) 

becomes effective February 22, 2005. 

Affected ADs 

(b) This AD revises AD 2003–04–10, 

amendment 39–13058 (68 FR 9513, February 

28, 2003). 

Applicability 

(c) This AD applies to McDonnell Douglas 

Model MD–90–30 airplanes, certificated in 

any category, as listed in Boeing Alert 

Service Bulletin MD90–24A074, Revision 02, 

dated June 3, 2003. 

Unsafe Condition 

(d) This AD was prompted by our 

determination that certain airplanes 

unaffected by AD 2003–04–10, amendment 

39–13058, are subject to the unsafe 

condition, and certain other airplanes should 

be removed from the applicability of that AD. 

We are issuing this AD to prevent damage to 

certain wires due to contact between the 

wires and the adjacent structure, which 

could result in electrical arcing and 

consequent smoke and fire in the cabin. 

Compliance 

(e) You are responsible for having the 

actions required by this AD performed within 

the compliance times specified, unless the 

actions have already been done. 

One-time Inspection/Corrective Actions 

(f) At the applicable time specified in 

paragraph (f)(1) or (f)(2) of this AD: Do a onetime general visual inspection to find wire 

chafing damage and to determine adequate 

clearance between the disconnect panel 

structure and the wires above the aft left 

lavatory, in accordance with the 

Accomplishment Instructions of Boeing Alert 

Service Bulletin MD90–24A074, Revision 02, 

dated June 3, 2003. If no damage is found and 

the clearance is adequate, no further action 

is required by this AD.

Note 1: For the purposes of this AD, a 

general visual inspection is: ‘‘A visual 

examination of an interior or exterior area, 

installation, or assembly to detect obvious 

damage, failure, or irregularity. This level of 

inspection is made from within touching 

distance unless otherwise specified. A mirror 

may be necessary to ensure visual access to 

all surfaces in the inspection area. This level 

of inspection is made under normally 

available lighting conditions such as 

daylight, hangar lighting, flashlight, or 

droplight and may require removal or 

opening of access panels or doors. Stands, 

ladders, or platforms may be required to gain 

proximity to the area being checked.’’

(1) For airplanes listed in Boeing Alert 

Service Bulletin MD90–24A074, Revision 1, 

dated August 8, 2001: Inspect within 12 

months after April 4, 2003 (the effective date 

of AD 2003–04–10). 

(2) For airplanes not identified in 

paragraph (f)(1) of this AD: Inspect within 6 

months after the effective date of this AD. 

(g) Based on the findings of the inspection 

required by paragraph (f) of this AD, do the 

applicable actions specified in paragraph 

(g)(1) or (g)(2) of this AD before further flight 

in accordance with the Accomplishment 

Instructions of Boeing Alert Service Bulletin 

MD90–24A074, Revision 02, dated June 3, 

2003. 

(1) If no damage is found, but the clearance 

is inadequate: Secure the wires using tiewraps to obtain 0.50-inch minimum 

clearance. 

(2) If damage and/or inadequate clearance 

is found: Repair damaged wires, replace 

damaged wires with new wires, and/or 

secure the wires using tie-wraps to obtain 

0.50-inch minimum clearance. 

(h) An inspection and corrective actions 

are also acceptable for compliance with the 

requirements of paragraphs (f) and (g) of this 

AD, if done as specified in paragraph (h)(1) 

or (h)(2) of this AD, as applicable. 

(1) Boeing Alert Service Bulletin MD90–

24A074, dated May 14, 2001, done before 

April 4, 2003. 

(2) Boeing Alert Service Bulletin MD90–

24A074, Revision 01, dated August 8, 2001, 

done before the effective date of this AD. 

Federal Register / Vol. 70, No. 23 / Friday, February 4, 2005 / Rules and Regulations 5923

1 65 FR 77993 at 78013 (December 13, 2000).

2 65 FR 82272 (December 28, 2000).

3 66 FR 45221 at 45226 (August 28, 2001) 

(proposed rules) and 66 FR 53510 at 53513 (October 

23, 2001) (final rules).

4The Commission took a similar approach when 

it amended Rule 1.55 as well as Rule 1.33 

concerning electronic transmission of customer 

account statements. See 66 FR 53517 (Oct. 23, 

2001).

5Commodity Exchange Act § 4b(a)(2)(iv) 

(‘‘unlawful * * * to fill such order by offset against 

the order or orders of any other person, or willfully 

and knowingly and without the prior consent of 

such person to become the buyer in respect to any 

selling order of such person, or become the seller 

in respect to any buying order of such person’’), 7 

U.S.C. 4b(2)(C)(iv) (2003).

6Comment letter of Goldman Sachs & Co., 

December 9, 2004 at p. 2.

Alternative Methods of Compliance 

(AMOCs) 

(i) The Manager, Los Angeles Aircraft 

Certification Office (ACO), FAA, has the 

authority to approve AMOCs for this AD, if 

requested in accordance with the procedures 

found in 14 CFR 39.19. 

Material Incorporated by Reference 

(j) You must use Boeing Alert Service 

Bulletin MD90–24A074, excluding 

Appendix, Revision 02, dated June 3, 2003, 

to perform the actions that are required by 

this AD, unless the AD specifies otherwise. 

The Director of the Federal Register approved 

the incorporation by reference of this 

document in accordance with 5 U.S.C. 552(a) 

and 1 CFR part 51. For copies of the service 

information, contact Boeing Commercial 

Airplanes, Long Beach Division, 3855 

Lakewood Boulevard, Long Beach, California 

90846; Attention: Data and Service 

Management, Dept. C1–L5A (D800–0024). 

You can review copies at the Docket 

Management Facility office, U.S. Department 

of Transportation, 400 Seventh Street SW., 

room PL–401, Nassif Building, Washington, 

DC; or at the National Archives and Records 

Administration (NARA). For information on 

the availability of this material at NARA, call 

(202) 741–6030, or go to http://

www.archives.gov/federal_register/

code_of_federal_regulations/

ibr_locations.html.

Issued in Renton, Washington, on January 

26, 2005. 

Ali Bahrami, 

Manager, Transport Airplane Directorate, 

Aircraft Certification Service.

[FR Doc. 05–1931 Filed 2–3–05; 8:45 am] 

BILLING CODE 4910–13–P

COMMODITY FUTURES TRADING 

COMMISSION 

17 CFR Parts 1 and 155

RIN 3038–AC16

Distribution of ‘‘Risk Disclosure 

Statement’’ by Futures Commission 

Merchants and Introducing Brokers

AGENCY: Commodity Futures Trading 

Commission.

ACTION: Final rule.

SUMMARY: The Commodity Futures 

Trading Commission (‘‘Commission’’ or 

‘‘CFTC’’) is amending Rule 1.55 to 

provide that non-institutional customers 

may indicate with a single signature, in 

addition to the acknowledgment of 

receipt of various disclosures and the 

making of certain elections, the consent 

referenced in Rules 155.3(b)(2) and 

155.4(b)(2) and 155.4(b)(2) concerning 

customer permission for futures 

commission merchants (‘‘FCMs’’) and 

introducing brokers (‘‘IBs’’) to take the 

opposite side of an order. The 

Commission is also amending Rule 

1.55(f) to specify that the 

acknowledgments required by Rules 

155.3(b)(2) and 155.4(b)(2) are not 

required of institutional customers 

when they open an account.

DATES: Effective March 7, 2005.

FOR FURTHER INFORMATION CONTACT:

Lawrence B. Patent, Deputy Director, or 

Susan A. Elliott, Special Counsel, 

Compliance and Registration Section, 

Division of Clearing and Intermediary 

Oversight, Commodity Futures Trading 

Commission. Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. Telephone: (202) 418–5439 or 

(202) 418–5464, or electronic mail: 

lpatent@cftc.gov or selliott@cftc.gov.

SUPPLEMENTARY INFORMATION: 

I. Background 

On November 9, 2004 (69 FR 64873), 

the commission published a proposed 

amendment to Rule 1.55 to provide that 

the single signature by which noninstitutional customers acknowledge 

receipt of basic risk disclosures of 

futures and option trading, and elect 

how hedging positions shall be handled 

in the event of a commodity broker 

bankruptcy, may also reflect the consent 

referenced in Rules 155.3(b)(2) and 

155.4(b)(2) concerning customer 

permission for FCMs and IBs to take the 

opposite side of an order. The 

Commission adopted a similar rule 

amendment in November 2000,1 but 

withdrew it the following month upon 

passage of the Commodity Futures 

Modernization Act of 2000.2 Most of the 

rules adopted and withdrawn in 2000 

were reproposed and re-adopted in 

2001,3 but this one was not. Because 

Commission staff received an inquiry 

about this issue, the Commission 

reproposed the rule amendment and 

sought comments.

II. Rule Amendments 

Three comments were received, from 

the National Futures Association 

(‘‘NFA’’), the Futures Industry 

Association (‘‘FIA’’) and an FCM, 

Goldman Sachs & Co. All comments 

supported adoption of the proposed 

amendment to Rule 1.55(d)(1). In 

addition, the three commenters were 

unanimous in their recommendation 

that the Commission adopt another rule 

amendment that clarifies, in Rule 

1.55(f), that acknowledgment to consent 

for an FCM or IB to take the opposite 

side of an order is not required of 

institutional customers when they open 

an account. 

The commenters requested that Rule 

1.55(f) also be amended to add the 

consent required under Commission 

Rules 115.3(b)(2) and 155.4(b)(2) to the 

prescribed disclosures, consents and 

elections that institutional customers 

are not required to acknowledge in 

opening an account with an FCM. The 

Commission believes that such a further 

amendment is consistent with the 

proposal and with the general structure 

of Rule 1.55 and that it is appropriate to 

clarify Rule 1.55(f) as the commenters 

suggest. The Commission emphasizes 

the point by cross-referencing Rule 1.55 

in Rules 1.55.3 and 155.4.4

As the Commission emphasized in its 

proposal, the single signature 

acknowledgment format was first 

adopted in 1993 based on a rationale of 

customer sophistication. If, with the 

Commission’s proposed rule 

amendment, non-institutional 

customers are now deemed sufficiently 

sophisticated to have their consents 

acknowledged with a single signature, it 

is certainly appropriate to assume that 

more sophisticated institutional 

customers understand that they are 

consenting to the trade practices 

described in Rule 155.3(b)(2) and 

155.4(b)(2) without a separate 

acknowledgment when an account is 

opened. 

Section 4b of the Act 5 nonetheless 

requires intermediaries to have the prior 

consent of the customer before 

knowingly taking, directly or indirectly, 

the opposite side of a customer’s order. 

Thus, as one of the commenters pointed 

out, it is still the responsibility of the 

entity opening the account to ensure 

that prospective customers give ‘‘the 

consent required under this rule,’’ even 

when the customer is an institutional 

customer.6 The amendment of Rule 

1.55(f) permits an entity to choose the 

most appropriate means to accomplish 

that objective. Finally, Rules 155.3(b)(2) 

and 155.4(b)(2) are amended to crossreference Rule 1.55(d)(1).