63472 Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules

1The Commission previously made clear that

subject to certain conditions applicable to

transactions involving stock indexes and foreign

government debt, a rule 30.3 order would not be

necessary for transactions effected by U.S. futures

commission merchants (FCM) on behalf of foreign

customers. See 57 FR 36369 (August 13, 1992).

2Consistent with section 2(a)(1)(B) of the CEA,

this proposed rulemaking would not be applicable

to commodity options based on or involving a

foreign futures contract based on a foreign stock

index unless the foreign stock index futures

contract has been approved for offer or sale in the

United States through the issuance of a no-action

letter by the Commission’s Office of the General

Counsel. Further, this proposed rulemaking would

not be applicable to commodity options based on

a foreign government debt which has not been

designated as an exempted security under SEC rule

3a12–8.

assessment of the effect of the changed

configuration on the unsafe condition

addressed by this AD. In no case does the

presence of any modification, alteration, or

repair remove any airplane from the

applicability of this AD.

Compliance: Required as indicated, unless

accomplished previously.

To prevent the reduction of fuel supply to

the engines during cross-feed operation,

which could lead to engine fuel starvation,

accomplish the following:

(a) After the effective date of this AD,

whenever the fuel balance transfer system

(FBTS) is used during maintenance, prior to

further flight, perform an inspection to verify

that the position indicator of the fuel balance

transfer valve (FBTV) is in the closed

position, in accordance with Fokker Service

Bulletin SBF100–28–030, Revision 1, dated

December 5, 1994. The inspection

requirements of this paragraph must be

accomplished until the deactivation required

by paragraph (b) of this AD is accomplished.

(1) If the position indicator is in the closed

position, no further action is required by this

paragraph.

(2) If the position indicator is in the open

position, close the FBTV in accordance with

the service bulletin.

(b) Within 90 days after the effective date

of this AD, deactivate the FBTS in

accordance with either Part 2 or Part 3 of the

Accomplishment Instructions of Fokker

Service Bulletin SBF100–28–030, Revision 1,

dated December 5, 1994, as applicable.

Accomplishment of the deactivation

constitutes terminating action for the

repetitive inspection requirements of

paragraph (a) of this AD.

(c) An alternative method of compliance or

adjustment of the compliance time that

provides an acceptable level of safety may be

used if approved by the Manager,

Standardization Branch, ANM–113, FAA,

Transport Airplane Directorate. Operators

shall submit their requests through an

appropriate FAA Principal Maintenance

Inspector, who may add comments and then

send it to the Manager, Standardization

Branch, ANM–113.

Note 2: Information concerning the

existence of approved alternative methods of

compliance with this AD, if any, may be

obtained from the Standardization Branch,

ANM–113.

(d) Special flight permits may be issued in

accordance with sections 21.197 and 21.199

of the Federal Aviation Regulations (14 CFR

21.197 and 21.199) to operate the airplane to

a location where the requirements of this AD

can be accomplished.

Issued in Renton, Washington, on

December 5, 1995.

Darrell M. Pederson,

Acting Manager, Transport Airplane

Directorate, Aircraft Certification Service.

[FR Doc. 95–30076 Filed 12–8–95; 8:45 am]

BILLING CODE 4910–13–U

COMMODITY FUTURES TRADING

COMMISSION

17 CFR Part 30

Foreign Commodity Options

AGENCY: Commodity Futures Trading

Commission.

ACTION: Proposed rule.

SUMMARY: The Commodity Futures

Trading Commission (Commission or

CFTC) is proposing to amend rule 30.3

to eliminate the requirement that the

CFTC authorize the offer and sale of a

particular foreign commodity option

before it can be offered or sold in the

United States. This proposal reflects the

Commission’s assessment that the

continued treatment of foreign

commodity options differently from

foreign futures (which do not require a

specific authorization order) should be

reevaluated.

DATES: Comments must be submitted on

or before January 10, 1996.

ADDRESSES: Comments should be sent to

the Secretariat, Commodity Futures

Trading Commission, Three Lafayette

Centre, 1155 21st Street, N.W.,

Washington, D.C. 20581. Reference

should be made to ‘‘Rule 30.3—Foreign

commodity options.’’

FOR FURTHER INFORMATION CONTACT: Jane

C. Kang, Esq., or Robert H. Rosenfeld,

Esq., Division of Trading and Markets,

Commodity Futures Trading

Commission, Three Lafayette Centre,

1155 21st Street, N.W., Washington,

D.C. 20581; telephone (202) 418–5435.

SUPPLEMENTARY INFORMATION:

Background

Commission rule 30.3(a) of the

Commission’s Part 30 rules governing

the offer and sale of foreign futures and

option transactions makes it unlawful

for any person to engage in the domestic

offer or sale of any foreign commodity

option contract until the Commission,

by order, authorizes the foreign option

to be offered or sold in the United

States.1 A Commission order is not

required with respect to foreign futures.

However, an option on a foreign stockindex futures contract will not be

approved unless, among other things,

the Commission’s Office of the General

Counsel has issued a no-action letter

authorizing the offer and sale in the

United States of the underlying foreign

stock-index futures contract. In

addition, debt obligations of a foreign

country must be designated as an

exempted security by the SEC under its

rule 3a12–8, 17 CFR 240.3a12–8, before

a futures contract based on such debt

obligation (or an option on such a

futures contract) may be offered or sold

to a U.S. person.2

The Commission is proposing to

eliminate the specific authorization

requirement of rule 30.3 thereby

permitting, subject to existing

prohibitions with respect to stock index

futures and options and foreign

government debt futures and options

products, the offer and sale of foreign

commodity options in the same manner

as currently applies to the offer and sale

of foreign futures. The Commission

would, however, continue to monitor

the situation and take appropriate action

should it determine that U.S. investors,

or the Commission, are not able to

obtain appropriate information related

to the option transactions of a specific

exchange or are otherwise being

adversely affected by the rule change.

Moreover, the proposal would not affect

the existing regulatory requirements

applicable to the manner in which

appropriate products may be offered or

sold to U.S. persons, e.g., registration of

intermediaries, requirements related to

sales practices (including appropriate

disclosures), availability to the

Commission of books and records and

prohibitions on fraudulent activities.

The Commission’s determination to

propose modifications to the current

procedure of regulation 30.3(a) for

approval of foreign option products for

sale to U.S. persons is based on its

experiences with the regulations

governing options generally, and, in

particular, with the initial regulations

imposed on foreign options trading.

This proposal reflects the Commission’s

assessment that the continued treatment

of foreign commodity options

differently from foreign futures (which

do not require a specific authorization

order) should be reevaluated.

History of Options Regulation

The regulatory approach to

commodity options in the United States
Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules 63473

3The Commission notes that the abuses which

characterized the offer and sale of commodity

options in the past generally involved sales

practices, 46 FR 54500, 54503 (November 3, 1981),

including sales activity with respect to alleged

‘‘London options’’ (which appeared to have been

perpetrated exclusively by sales persons or

organizations in the United States, and did not

involve any improper activities on the part of

foreign exchanges), see 42 FR 18246, 18249 (April

5, 1977).

4See section 4c(c) of the CEA, as amended by the

1978 Act. See 46 FR 33293, 33294 (June 29, 1981).

5See 46 FR 33293, 33294 (June 29, 1981).

6See 46 FR 54500, 54502 (November 3, 1981).

7 47 FR 56996 (December 22, 1982).

8 Id. at 56997.

9See, e.g., 49 FR 33641 (August 24, 1984)

(permitting each exchange to trade five contracts);

50 FR 45811 (November 4, 1985) (increasing from

five to eight the number of contracts permitted per

exchange).

10 49 FR 2752 (January 23, 1984). The pilot

program was established after the statutory bar to

trading options on domestic agricultural

commodities was repealed by section 206 of the

Futures Trading Act of 1982, Pub. L. 97–444, 96

Stat. 2294, 2301 (1983). The Commission limited

the pilot program to options on futures contracts on

agricultural products. The Commission noted that

industry commenters generally favored such a

restriction and the Commission’s cautious

approach. See 49 FR at 2754.

11See 51 FR 17464 (May 13, 1986) (termination

of pilot status for non-agricultural options); 53 FR

777 (January 9, 1987) (termination of pilot status for

options on non-agricultural physical commodities

and on agricultural futures contracts).

12See H. Rep. 99–624, 99th Cong., 2d Sess. 15

(1986).

13 58 FR 30701 (May 27, 1993). The Commission

based this rule change on its belief that compliance

with the supervisory requirements of rule 166.3, the

requirements of rule 166.2 concerning authorization

to trade, other Commission rules of general

applicability, and SRO rules such as NFA

compliance rule 2–8, should be adequate to address

the regulatory concerns applicable to both option

and futures customer discretionary accounts. See 58

FR 30701, 30702.

14See 57 FR 58976, 58977 (December 14, 1992)

(such records must however be maintained by the

FCM for review as part of the routine audit process);

see generally 56 FR 43694 (September 4, 1991).

15 56 FR 43694 (September 4, 1991). The

Commission also revised rule 33.4(d) which had

required exchanges to justify expiration dates of

less than 10 days before first notice day or last

trading day of the future, whichever comes first.

16See 46 FR 33293, 33294 (June 29, 1981).

17 52 FR 28980 (August 5, 1987).

has been particularly cautious due to

the history of abuses which had been

associated with such transactions.3

Unsatisfactory experiences with what

essentially were unregulated sales of

options on commodities in the early

1970’s, and further abuses under interim

regulations adopted in 1976 ultimately

resulted in the Commission’s

suspension of the offer and sale of all

commodity options as of June 1, 1978

and the codification of that suspension

by Congress in the Commodity

Exchange Act of 1978. See 46 FR 54500,

54502 (November 3, 1981). The

suspension codified by Congress

permitted the Commission to introduce

option trading, but only if the

Commission could document to its

Congressional oversight committee its

ability to regulate successfully such

transactions.4

Mindful of this history, in proposing

a pilot program for the offer and sale of

options in 1981, the Commission

expressly stated that it was: 5

Cognizant of the need to exercise a strong

degree of control over all aspects of

commodity option trading.

Thus, the final domestic exchangetraded commodity option rules adopted

in 1981 authorized the introduction of

options under a limited pilot program

which permitted only one option

contract per exchange, did not permit

either foreign options or options on

physical commodities to be offered, and

placed significantly greater selfregulatory responsibilities on boards of

trade than was then required for futures

trading, particularly with respect to the

protection of the public from sales

practice abuses.6

Evolution of Domestic Option

Regulations

Although starting narrowly and

cautiously, the Commission’s options

regulations have evolved consistently

with the acquisition of an operational

history under those regulations. Thus,

in December 1982 the Commission

expanded the pilot program to permit

each exchange to trade one option on a

futures contract and one option contract

on a non-agricultural physical

commodity.7 The Commission

continued to expand the pilot program

in a controlled and orderly manner so

that both the Commission and the

exchanges would obtain greater

experience with the trading of options,8

subsequently expanding the pilot

program to permit more option contracts

per exchange,9 to include option

contracts on futures contracts on

agricultural commodities,10 and

ultimately, to eliminate the pilot status

of the option regulations.11

The Commission’s incremental

expansion of the domestic exchangetraded options program was validated

by Congress in 1986 when Congress

amended section 4c of the CEA to make

permanent the program of exchangetraded commodity options. As stated in

the House Report on the 1986

legislation: 12

The Committee’s amendment coincides

with a recent decision by the Commission to

terminate the pilot status of the program for

trading options on futures contracts other

than those on domestic agricultural

commodities and make the trading of such

options permanent. * * *

The Committee believes the Commission

has practiced good judgment in its regulation

and oversight of both agricultural and the

nonagricultural options programs.

Furthermore, the Committee is satisfied that

the overall experience with both of these

pilot programs indicates that few regulatory

problems have arisen, and that the exchanges

have discharged their responsibilities

adequately. Additionally, the Commission

has detected no adverse effects on the

underlying futures markets resulting from

such option trading.

Moreover, based on its administration

of the option pilot program for more

than ten years, the Commission has

previously determined to eliminate

certain provisions that were originally

part of its options designation

requirements for which there were not

comparable futures regulation, such as:

—Rule 33.4(b)(9) which required a board of

trade applying for designation as a contract

market with respect to commodity option

transactions to adopt special rules governing

the handling by its member FCMs of

discretionary accounts in option

transactions; 13

—rules which require boards of trade

designated as contract markets for options to

adopt rules requiring FCMs that engage in the

offer or sale of commodity options regulated

under Part 33 to send copies of customer

complaints and their resolutions and copies

of all promotional materials to the members’

designated self-regulatory organization

(DSRO); 14 and

—rules which required a specified volume

of trading in the underlying futures contract

prior to designation; established a delisting

criterion for the trading of low-volume

contracts; and required exchanges to provide

a comprehensive list of occupational

categories of commercial users of the

commodity underlying the option.15

History of Foreign Options Rules.

As noted above, the Commission’s

initial pilot programs did not include

foreign options.16 Thus the ban

contained in section 4c of the CEA

remained in effect with respect to

foreign options. A program to authorize

the offer and sale of foreign exchangetraded commodity options was not

implemented until 1987 with the

general adoption of the part 30 rules

governing foreign futures and option

transactions generally.17 The Part 30

rules, among other things, provided a

mechanism for lifting the ban with

respect to foreign exchange-traded

options. Under rule 30.3(a), foreign

exchange-traded commodity options are

prohibited from being offered or sold in

the United States unless the

Commission issues a product-specific

order. The part 30 rules did not

similarly require a product-specific

order for foreign futures transactions.
63474 Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules

18See, e.g., 53 FR 28840 (July 29, 1988).

19See 52 FR 28980, 28988 (August 5, 1987).

20 Id.

21 In reviewing the foreign regulatory program for

purposes of rule 30.10, the Commission’s staff

considers the sales practice compliance review

program in effect in the foreign jurisdiction.

22Part 33 requires exchanges as a condition of

designation as a contract market to have specific

options sales practice compliance responsibilities.

NFA and the futures exchanges participate in a

Joint Audit Plan (Plan) to reduce the duplication of

audit and financial surveillance work which

otherwise could occur with respect to FCMs which

are members of more than one exchange. The plan

assigns primary audit and financial surveillance

responsibility for each FCM, which is a member of

more than one of the SROs, to one of the Plan

participants. The SRO which has the primary

responsibility is known as that FCM’s DSRO. NFA

is the DSRO for all FCMs which are not members

of any commodity exchange and therefore, do not

have an exchange SRO and, in some cases, NFA by

agreement is the DSRO for certain exchange

member firms. NFA also is the DSRO responsible

for surveillance over the financial reporting and

recordkeeping by all member CPOs, and

independent introducing brokers (IBs), as well as

guaranteed IBs whose guaranteeing FCMs have NFA

as the DSRO. NFA also is charged with auditing for

sales practice compliance all member IBs, CTAs

and CPOs, and branch offices of FCMs for which

NFA is DSRO, as well as all futures sales practices

compliance not contracted to another SRO.

To date, NFA has undertaken, in conjunction

with specific Commission orders under rule 30.3(a),

to conduct sales practice compliance auditing of

registrants marketing particular foreign commodity

options under relevant arrangements with such

firms’ DSRO. Therefore, any revisions to

Commission rule 30.3 would be premised on the

existence of an audit program to assure general

sales practice compliance for all foreign commodity

option transactions. See also n. 21. 23See Commission rule 33.4(c); see also n. 22.

As with the Commission’s pilot

program for domestic exchange-traded

options, the program for foreign

exchange-traded commodity options

also has proceeded cautiously. Thus, in

issuing the order for any foreign market,

the Commission has considered: (1) The

availability of certain information

relevant to preventing abuses including,

but not limited to trade confirmation

data; (2) the arrangements in place for

assuring that sales practice abuses do

not occur; (3) the arrangements for U.S.

customers to redress grievances; and (4)

the regulatory environment in which

such options are traded.18

In particular, the Commission placed

great stress initially on its ability to

obtain information from the foreign

exchange with respect to transactions

entered into on that exchange on behalf

of U.S. customers.19 As stated in the

final rules: 20

In order to ensure that foreign commodity

exchanges are both willing and able to share

appropriate information with the

Commission * * * the Commission has

determined to make the issuance of a

Commission order a prerequisite to the

lawful offer and sale of such products.

Reevaluation of foreign options rules.

Since 1987 foreign option sales to

U.S. customers have been permitted

under the Commission’s part 30 rules.

Such sales have occurred without the

type of sales abuses that historically had

been associated with commodity option

activities. Contributing to this success

has been the requirement that foreign

options be sold to U.S. customers by

futures commission merchants (which

ensures among other things the

adequacy of firm capital, fitness of

personnel and proper supervision of

sales practices); the Commission’s Part

30 rules, which seek to ensure that

foreign firms directly soliciting U.S.

customers for foreign products are

otherwise regulated as to their sales

practices; 21 and the undertaking by the

National Futures Association (NFA) to

audit the foreign options sales practices

of domestic firms marketing foreign

options to domestic customers.22 In

particular, under the current regulatory

scheme, firms engaged in the offer or

sale of foreign commodity options (and

futures) to U.S. customers must either

be a Commission registrant or a foreign

firm which has qualified to sell foreign

products in the United States under the

Commission’s Part 30 rules based on

substituted compliance with a foreign

jurisdiction’s licensing and fitness

requirements and subject to certain

other conditions to assure the

availability of the firms’ records and its

submission to Commission jurisdiction

under the CEA and U.S. law otherwise.

In the case of NFA, NFA audits

generally include the review and

analysis of a member firm’s trading

records, sales materials and practices

(sales practices compliance audits), and

for FCMs and independent IBs,

accounting procedures, financial

statements and records (financial

audits). NFA’s audit programs are

designed so that the auditors must

perform a certain amount of work at the

member firm’s office, testing records

and resolving any discrepancies. While

all NFA members are subject to audit,

decisions concerning whether to audit a

particular firm are based on a number of

factors, including NFA’s review of

financial statements, monitoring of

media advertising, receipt of customer

complaints, knowledge of the past

history of the firm and its principals, the

time elapsed since the previous NFA

audit, potential effects of market

movements and referrals outside of

NFA.

NFA compliance audits have two

major objectives: to determine whether

the firm is maintaining records in

accordance with NFA rules and

applicable Commission regulations, and

to ascertain that the firm is being

operated in a professional manner and

that customers are protected against

unscrupulous activities, including

fraudulent or high-pressure sales

practices. The compliance program

specifically examines the firm’s

practices in soliciting accounts and

audits could review, among other

things: records of customers’ orders;

customer confirmations and other

account statements; records regarding

handling of discretionary accounts;

disclosure documents, advertising and

other promotional material; records of

customer complaints; and records

relative to the internal supervision of

account executives, order handling or

sales personnel.23

The Commission believes that its

experience since 1987 with foreign

options justifies a reexamination of the

necessity of requiring a specific option

authorization order for each options

contract offered and sold in the United

States, that is, the continuing need for

differential treatment of the offer or sale

of foreign futures and foreign options in

the United States. Just as the

Commission’s domestic exchangetraded option program has evolved on

the basis of accumulated operational

experience, the Commission believes

that a similar measured evolution, based

on experience, is warranted with respect

to foreign commodity options.

However, as noted above, the

Commission believes that its existing

regulatory scheme governing domestic

registered firms which deal directly

with the public in conjunction with the

sales practice program of the NFA—all

subject to Commission oversight—

should provide adequate sales practice

protections for customers who would

engage in foreign options transactions

through registered FCMs. In this

connection, prior to adopting any final

rules in this regard, the Commission

would need to be assured that

arrangements exist through NFA or

otherwise to ensure that sales practice

compliance audits of registrants offering

foreign commodity options will be

undertaken, thereby ensuring complete

sales practice compliance audit

coverage of firms (which heretofore has

been mandated on a product-specific

basis under rule 30.3 orders).

Similarly, the Commission’s rule

30.10 orders permitting foreign firms to

directly solicit U.S. persons for foreign

products address options and futures

sales practice concerns. In addition, the

Commission notes that existing 30.10

orders have been accompanied by

information-sharing arrangements
Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules 63475

24Significantly, to date, the Commission has not

had occasion to request any information under any

information sharing arrangement in connection

with the approval of a particular exchange foreign

option product.

25 In explaining its decision to suspend the offer

and sale of foreign commodity options in the

United States, the Commission noted in 1977,

among other things, that:

The Commission’s investigators and auditors

have also encountered great difficulty in their

attempts to verify the details of option transactions

purportedly effected for Americans on foreign

exchanges.

See 43 FR 16153, 16155 (April 17, 1977).

26For example, such regulatory and enforcement

MOUs and cooperative arrangements have been

entered into with authorities in Australia,

Argentina, Brazil, Canada, France, Hong Kong, Italy,

Japan, Mexico, the Netherlands, Singapore, Spain,

Taiwan, and the United Kingdom.

which assure Commission access to

relevant information of the type which

previously may not have been

available.24 The Commission further

recognizes that its ability to obtain

information to confirm the existence of

transactions executed on foreign

exchanges 25 has been materially

enhanced by the numerous informationsharing memoranda of understanding

and cooperative arrangements that have

been entered with foreign

jurisdictions.26

Nor would elimination of the

authorization requirement negatively

affect the access of U.S. customers to

existing customer complaint

procedures, either under existing rule

30.10 orders for customers directly

solicited by foreign firms or under

NFA’s arbitration rules governing

disputes with a foreign party.

Customers solicited by foreign firms

operating under a rule 30.10 order will,

pursuant to the express terms of such

orders, have access to arbitration

procedures both abroad and through

NFA. Customers transacting through a

domestic firm will have the option of

electing NFA arbitration procedures.

NFA rules governing arbitration of

disputes involving foreign parties

provide that disputes involving a

foreign party may, in the discretion of

NFA, be arbitrated if the parties agree to

such arbitration (see NFA foreign

arbitration rule sec. 2(a)(1)). Demands

for arbitration will be rejected, however,

if the claim arises primarily out of

delivery, clearance, settlement or floor

practices of a foreign exchange unless

the foreign jurisdiction has no program

for the resolution of disputes, in which

case NFA will hear such claims. The

rule 30.10 order permits the 30.10 firm

to require a customer to consent to use

a foreign regulator’s non-binding

mediation or conciliation service prior

to initiating an NFA arbitration case.

(See NFA Arbitration Policy Statement

(March 1, 1989)).

Thus, whether solicited by

Commission registrants or foreign firms

operating under rule 30.10, the

Commission believes that the systems in

place to address sales practice abuses

and information sharing warrant

reexamination of existing procedures.

Finally, the Commission notes that

FCMs which are not members of foreign

exchanges should assure themselves

that there are no statutory or regulatory

impediments on their ability to obtain

information from foreign exchangemembers firms necessary to enable such

FCMs to comply with the CEA and

regulations thereunder relative to

confirming the execution of foreign

option transactions.

In conclusion, the Commission

believes that the differential treatment

of foreign options no longer is justified.

Indeed, to the extent that such

differential treatment continues under

circumstances when such treatment is

not warranted based on existing

economic and/or regulatory concerns, it

risks conveying to traders the incorrect

impression that the Commission can

provide a greater level of protection

with respect to foreign options than

with respect to foreign futures.

Moreover, as domestic exchanges

increasingly seek to link their exchanges

electronically with other exchanges

worldwide, the presence of an

authorization process for commodity

options raises, under the current

circumstances, an unnecessary obstacle

that could competitively disadvantage

domestic exchanges.

Proposal

The Commission is therefore

proposing to eliminate rule 30.3’s

requirement that no foreign option may

be offered or sold in the United States

until the Commission, by order,

authorizes such foreign commodity

option to be offered or sold in the

United States.

The Commission notes that the

proposed elimination of the specific

authorization requirement in rule

30.3(a) will not affect the existing

product restrictions applicable to

options on futures contracts based on

stock index products (i.e., the

underlying stock index futures must be

the subject of a no-action letter issued

by the CFTC’s Office of the General

Counsel) and foreign government debt

(i.e., the debt product must be

designated by the SEC as an exempted

security under SEC rule 13a–8)

contained in section 2(a)(1)(B)(v) of the

CEA.

Accordingly, the Commission invites

comment from interested parties on its

proposal. Moreover, the Commission

specifically invites the contract markets

to indicate any other areas in which the

designation requirements for options

and futures generally could be further

harmonized.

Other Matters

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 has

previously determined that FCMs

should be excluded from the definition

of ‘‘small entity’’ based upon the

fiduciary nature of the FCM/customer

relationships as well as the fact that

FCMs must meet minimum financial

requirements. 47 FR 18618, 18619

(April 30, 1982). The Commission

similarly determined that CPOs are not

small entities for purposes of the RFA.

47 FR 18618, 18620 (April 30, 1982).

With respect to CTAs and IBs, the

Commission has stated that it would

evaluate within the context of a

particular rule proposal whether all or

some affected CTAs would be

considered to be small entities and, if

so, the economic impact on them of any

rule. 47 FR 18618, 18620 (April 30,

1982) (CTAs); 48 FR 35248, 35276

(August 3, 1983) (IBs).

The proposed amendment of rule 30.3

is intended to facilitate the ability of

Commission registrants or exempted

firms to provide customers with access

to desired products by eliminating a

current product-by-product

authorization requirement, thus

providing easier access to a greater

number of persons.

Accordingly, the Chairman, on behalf

of the Commission, hereby certifies,

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

proposed rule will not have a significant

economic impact on a substantial

number of small entities.

Paperwork Reduction Act

The Paperwork Reduction Act of 1980

(Act), 44 U.S.C. 3501 et seq., imposes

certain requirements on federal agencies

(including the Commission) in

connection with their conducting or

sponsoring any collection of

information as defined by the Act. The

Commission has determined that the

proposed amendment does not have any

paperwork burden.

Persons wishing to comment on the

Commission’s determination on the

paperwork burden concerning this

proposed rule should contact Jeff Hill,
63476 Federal Register / Vol. 60, No. 237 / Monday, December 11, 1995 / Proposed Rules

1See, Natural Gas Production for the Lower 48

States 1982 through 1993, Energy Information

Agency, March 1993.

2 71 FERC ¶ 61,351 (1995).

Office of Management and Budget, room

3228, NEOB, Washington, D.C. 20503,

(202) 395–7340. Copies of the

information collection submission to

OMB are available from Joe Mink, CFTC

Clearance Officer, Three Lafayette

Centre, 1155 21st Street, N.W.,

Washington, D.C. 20581; telephone

(202) 418–5170.

List of Subjects in 17 CFR Part 30

Commodity futures.

In consideration of the foregoing, and

pursuant to the authority contained in

the Commodity Exchange Act and, in

particular, sections 2(a)(1)(A), 4, 4c and

8a of the Commodity Exchange Act, 7

U.S.C. 2, 6, 6c and 12a, the Commission

hereby proposes to amend part 30 of

chapter I of title 17 of the Code of

Federal Regulations as follows:

PART 30—FOREIGN FUTURES AND

FOREIGN OPTIONS TRANSACTIONS

1. The authority citation for part 30

continues to read as follows:

Authority: Secs. 2(a)(1)(A), 4, 4c and 8a of

the Commodity Exchange Act, 7 U.S.C. 2, 6,

6c and 12a.

2. Section 30.3 is proposed to be

amended by revising paragraph (a) to

read as follows:

§ 30.3 Prohibited transactions.

(a) It shall be unlawful for any person

to engage in the offer and sale of any

foreign futures contract or foreign

options transaction for or on behalf of a

foreign futures or foreign options

customer, except in accordance with the

provisions of this part: Provided, that,

with the exception of the disclosure and

antifraud provisions set forth in §§ 30.6

and 30.9 of this part, the provisions of

this part shall not apply to transactions

executed on a foreign board of trade,

and carried for or on behalf of a

customer at a designated contract

market, subject to an agreement with

and rules of a contract market which

permit positions in a commodity

interest which have been established on

one market to be liquidated on another

market.

* * * * *

Issued in Washington, D.C. on December 5,

1995 by the Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 95–30046 Filed 12–8–95; 8:45 am]

BILLING CODE 6351–01–P

DEPARTMENT OF ENERGY

Federal Energy Regulatory

Commission

18 CFR Chapter I

[Docket No. RM96–5–000]

Gas Pipeline Facilities and Services on

the Outer Continental Shelf—Issues

Related to the Commission’s

Jurisdiction Under the Natural Gas Act

and the Outer Continental Shelf Lands

Act

November 29, 1995.

AGENCY: Federal Energy Regulatory

Commission, DOE.

ACTION: Proposed rule; notice of inquiry.

SUMMARY: The Federal Energy

Regulatory Commission is initiating an

inquiry into the Commission’s policy

respecting the application of its

jurisdiction under the Natural Gas Act

and the Outer Continental Shelf Lands

Act over natural gas facilities and

services on the Outer Continental Shelf

(OCS). The notice of inquiry is intended

to receive information respecting the

structure and operation of natural gas

gathering and transportation on the OCS

and the effects of the Commission’s

current policy. The notice of inquiry

solicits comments on the legal and

policy issues to be considered, in either

maintaining or departing from the

Commission’s present policy, the

operational considerations pertaining to

OCS exploration and development

activities, and pipeline systems that the

Commission should take into account in

its review of its current policy. The

notice of inquiry invites all interested

persons to participate in the inquiry and

to submit answers to several specific

questions.

DATES: Written comments must be

received on or before January 12, 1996;

an original and 14 copies should be

filed.

ADDRESSES: All comments should refer

to Docket No. RM96–5–000 and should

be addressed to: Office of the Secretary,

Federal Energy Regulatory Commission,

888 First Street, N.E., Washington, DC

20426.

FOR FURTHER INFORMATION CONTACT:

Robert Wolfe, Office of the General

Counsel, 888 First Street, NE.,

Washington, DC 20426, (202) 208–2098.

SUPPLEMENTARY INFORMATION:

I. Introduction

The Federal Energy Regulatory

Commission is initiating an inquiry into

the Commission’s policy respecting the

application of its jurisdiction under the

Natural Gas Act (NGA) and the Outer

Continental Shelf Lands Act (OCSLA)

over natural gas facilities and services

on the Outer Continental Shelf (OCS).

The Commission is initiating this

Notice of Inquiry (NOI) to examine the

structure and operation of natural gas

gathering and transportation on the OCS

and the effects of the Commission’s

current policy. The NOI will also seek

information on the legal and policy

issues to be considered, in either

maintaining or departing from the

Commission’s present policy, the

operational considerations pertaining to

OCS exploration and development

activities, and pipeline systems that the

Commission should take into account in

its review of its current policy.

II. Background

The Commission’s current policy

respecting the jurisdictional status of

gas pipelines and services on the OCS

presents a number of issues concerning

the status, scope, and effects of the

Commission’s regulation of gathering

and transportation on the OCS. The

Commission has determined that it

should undertake a review of these

issues.

Increases in successful offshore

exploration and development activities,

particularly in the Gulf of Mexico, have

heightened the significance of these

jurisdictional issues. Recently, several

companies have either filed requests for,

or have indicated their intent to request,

exempt gathering status for offshore

pipeline systems that each is eager to

construct to bring gas onshore from

significant newly developed deep water

reserves in the Gulf. There are also

pending requests for declaratory orders

concerning existing certificated offshore

systems.

There are 18 existing interstate

pipelines on the Outer Continental Shelf

(OCS) in the Gulf of Mexico that are

presently subject to the Commission’s

regulation under the NGA. There are

also numerous facilities that are not

under NGA jurisdiction. These are

principally producer-owned facilities. It

is noteworthy that an estimated 27% of

the lower 48 State’s total dry gas

production comes from the Gulf of

Mexico OCS.1

The various OCS pipeline system

proposals and Sea Robin Pipeline

Company’s request for rehearing of the

Commission’s June 16, 1995 order in

Docket No. CP95–168–000 2 have

prompted reexamination of the