Source: https://www.federalregister.gov/documents/2004/11/18/04-25613/confidential-information-and-commission-records-and-information
Timestamp: 2017-09-24 11:23:34
Document Index: 486207549

Matched Legal Cases: ['art 40', '§\u200940', '§\u200940', '§\u200940', '§\u200940', '§\u200940', '§\u200940', 'art 40', 'art 40', 'art 145', 'art 145', '§\u200940']

A Rule by the Commodity Futures Trading Commission on 11/18/2004
67503-67508 (6 pages)
A. Public Availability of Applications Submitted by DTEFs, DCOs, and DCMs
B. Appendix D—Submission Cover Sheet and Instructions and Public Availability of Rule Submissions
C. Freedom of Information Act Amendments
Appendix C to Part 40 [Added and Reserved]
Appendix D [Removed]
https://www.federalregister.gov/d/04-25613 https://www.federalregister.gov/d/04-25613
The Commodity Futures Trading Commission is amending its regulations to specify which portions of an application for registration as a derivatives transaction execution facility (DTEF) or derivatives clearing organization (DCO), or for designation as a contract market (DCM), will be public. The amendments also implement a procedure requiring registered entities to submit a cover sheet for all rule submissions. Additionally, the Commission is updating its regulations under the Freedom of Information Act (FOIA) to implement expedited processing and increased time limits; revise the schedule of fees for FOIA requests; and correct certain provisions concerning publicly available records.
Eileen A. Donovan, Assistant Secretary to the Commission for FOIA Matters, (202) 418-5096, electronic mail: edonovan@cftc.gov, or David Steinberg, Attorney Advisor, (202) 418-5102, electronic mail: dsteinberg@cftc.gov, Office of the Secretariat, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581.
On July 28, 2004, the Commission requested comment from the public regarding its proposal to specify that the following portions of DTEF, DCO, and DCM applications are publicly available:[1] transmittal letter, proposed rules, the applicant's regulatory compliance chart, documents establishing the applicant's legal status (e.g., corporate charters), and documents setting forth the applicant's governance structure.[2] The proposed change to § 40.8 addresses the absence in the Commission's regulations of any guidance to applicants or the public about the availability of the applications.
In response to this proposal, the Commission received comment letters from the Chicago Mercantile Exchange (“CME”) and the Chicago Board of Trade (“CBOT”) (collectively, “exchanges”). Both exchanges noted strong support for the rule proposal, but requested that the Commission expand the proposal to make additional information public as a matter of course. The Commission has carefully considered the comments from the exchanges and does not believe the proposal should be expanded at this time. First, the exchanges contend that the Commission should ensure the public has the opportunity to comment meaningfully on the salient operational features of the proposed exchange, as well as any proposed plans that could adversely impact market integrity, such as payment for order flow or internalization plans. The CBOT also believes that applicant plans to allow or encourage trading off the centralized market should be public. The Commission understands the importance of interested parties being able to comment meaningfully on this information. The Commission notes that applicant plans regarding payment for order flow or internalization plans are either submitted in the rules section of the proposed application or may be part of the applicant's future plans filed separately from the application. Applicant plans for trading off the centralized market are also submitted in the rules section of the proposal. Rules are defined in § 40.1 and are already generally considered public information. Consequently, the Commission does not believe it is necessary to separately list this information in § 40.8(a).
Second, both exchanges assert that information concerning outsourcing arrangements upon which the applicant tends to rely should be made public. The CME notes that to the extent that an applicant proposes to outsource any of its operational, self-regulatory, or clearing functions, the public cannot provide the Commission with useful comments regarding the applicant's proposed compliance with the Commodity Exchange Act's core principles or designation criteria unless the key provisions are made public. Again, the Commission recognizes the importance of interested parties being able to comment on a proposed application, but must balance this with the intent of the applicant to protect commercially sensitive information. Outsourcing arrangements often include compliance and surveillance techniques and the public release of this information could cause competitive harm to the applicant. The Commission notes that § 40.8(a) is not intended to limit which applicant information will be released, but to specify the portions of an application that are automatically public and therefore would not be granted confidential treatment under any circumstances. Therefore, even though the Commission does not specify outsourcing information in § 40.8(a), portions of this material in a redacted form could still be made public if requested under the Freedom of Information Act. The Commission also notes that the rule states that any portion of the application not covered by a request for confidential treatment will also be made public. The Commission is committed to providing transparency in the application process and will continue to evaluate whether additional information should be included in § 40.8(a).
The Commission proposed to amend the part 40 and 41 regulations requiring DTEFs, DCOs, and DTEFs to attach a Commission-generated submission cover sheet with all self-certified rules,[3] self-certified products,[4] rules submitted for Commission approval,[5] products submitted for Commission approval,[6] notifications of rule amendments,[7] and Start Printed Page 67504non-material agricultural rule changes.[8] This cover sheet will assist Commission staff in preparing and maintaining the accuracy of the submissions being published on the Commission's website. The Commission also proposed adding appendix D to part 40 to include a copy of the submission cover sheet along with step-by-step instructions for completing and returning the form to the Commission. Although the Commission did not receive any public comments regarding this proposal, the Commission is amending the instructions in appendix D by adding an instruction to ensure that registered entities are fully aware that completing and returning the cover sheet to the Commission does not obviate the responsibility to comply with the other filing requirements for the underlying rule or rule amendment. The Commission has observed, during the past year of requesting the cover sheet, that some rule submissions have not been accompanied by all of the required components of the rule filing.
The Commission did not receive any comments regarding the proposed amendments to 17 CFR part 145. Therefore, all of the proposed amendments are being adopted in the final rules.
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq. (2000), requires that agencies, in proposing regulations, consider the impact of those regulations on small entities. The regulations discussed herein would affect contract markets and other registered entities. The Commission has previously established certain definitions of “small entities” to be used by the Commission in evaluating the impact of its regulations in accordance with the RFA.[9] In its previous determinations, the Commission has concluded that DCMs, DTEFs, and DCOs are not small entities for purposes of the RFA.[10]
The Commission has previously determined, pursuant to 5 U.S.C. 605(b), that part 145 regulations do not have a significant economic impact on a substantial number of small entities. Because they do not impose regulatory obligations on commodity professionals and small commodity firms and because the changes will improve public access to Commission records and information, the Commission does not expect the regulations to have a significant economic impact on a substantial number of small entities.
In the proposed rules, the Commission solicited comment on whether the rules as proposed would have a significant impact on a substantial number of small entities. The Commission received no comments in response to this request. The Commission hereby determines that the rules, as adopted herein, will not have a significant impact on a substantial number of small entities. Therefore, the Chairman, on behalf of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that the amendments will not have a significant impact on a substantial number of small entities.
As required by the Paperwork Reduction Act of 1995,[11] the Commission submitted a copy of the proposed rule amendments to the Office of Management and Budget for its review. The Commission did not receive any public comments relative to its analysis of paperwork burdens associated with this rulemaking.
The Commission published an analysis of costs and benefits when it proposed the rule amendments that have now been adopted.[12] It did not receive any public comments pertaining to the analysis.
For the reasons stated in the preamble, the Commodity Futures Trading Commission amends
To list a new product for trading, to list a product for trading that has become dormant, or to accept for clearing a product (not traded on a designated contract market or a registered derivatives transaction execution facility), a registered entity must file with the Secretary of the Commission at its Washington, DC, headquarters no later than the close of business of the business day preceding the product's listing or acceptance for clearing, either in electronic or hard copy form, a copy of the submission cover sheet in accordance with the instructions in appendix D to this part, a copy of the product's rules, including its terms and conditions, or the rules establishing the terms and conditions of products that make them acceptable for clearing, and a certification by the registered entity that the trading product or other instrument, or the clearing of the trading product or other instrument, including any rules establishing the Start Printed Page 67505terms and conditions of products that make them acceptable for clearing, complies with the Act and regulations thereunder.
(4) The submission identifies with particularity information in the submission (except for the product's terms and conditions which are made publicly available at the time of submission) that will be subject to a request for confidential treatment and supports that request for confidential treatment with reasonable justification;
(vi) Identify any Commission regulation that the Commission may need to amend, or sections of the Act or Commission regulations that the Commission may need to interpret in order to approve the proposed rule. To the extent that such an amendment or interpretation is necessary to accommodate a proposed rule, the submission should include a reasoned analysis supporting the amendment to the Commission regulation or the interpretation;
(a) The following sections of all applications to become a registered entity will be public: transmittal letter, proposed rules, the applicant's regulatory compliance chart, documents establishing the applicant's legal status, documents setting forth the applicant's governance structure, and any other part of the application not covered by a request for confidential treatment.
7. Appendix D is added to read as follows:
A properly completed submission cover sheet must accompany all rule submissions submitted by a designated contract market, registered derivatives clearing organization, or registered derivatives transaction execution facility and forwarded either in hard copy form or electronically to the Secretary of the Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581 or electronically to submissions@cftc.gov in a format specified by the Secretary of the Commission. Each submission should include the following:
8. Other Requirements—Comply with all filing requirements for the underlying proposed rule or rule amendment. The filing of the submission cover sheet does not obviate the responsibility to comply with any applicable filing requirement (e.g., rules submitted for Commission approval under § 40.5 must be accompanied by an explanation of the purpose and effect of the proposed rule along with a description of any substantive opposing views).
Start Part Start Printed Page 67507
(j) Expedited processing. A request may be given expedited processing if the requester demonstrates a compelling need for the requested records. For purposes of this provision, the term “compelling need” means: That a failure to obtain requested records on an expedited basis could reasonably be expected to pose an imminent threat to the life or physical safety of an individual; or with respect to a request made by a person primarily engaged in disseminating information, urgency to inform the public concerning actual or alleged federal government activity. A requester who seeks expedited processing must demonstrate a compelling need by submitting a statement that is certified by the requester to be true and correct to the best of that person's knowledge and belief. The Assistant Secretary, or his or her designee, will determine whether to provide expedited processing, and notice of the determination will be provided to the requester, within ten days after the date of the request. If the request for expedited processing is denied, the requester may file an appeal with the Office of General Counsel within ten days of the date of the denial by the Assistant Secretary. The Office of General Counsel will respond to the appeal within ten days after the date of the appeal.
14. Appendix A is amended by revising paragraph (a)(2), the heading of paragraph (b), paragraphs (b)(2) and (b)(3), and adding paragraph (b)(13) to read as follows:
(2) Weekly Advisory (solely available on the Commission's Web site at http://www.cftc.gov/​cftc/​cftcpressoffice.htm).
15. Appendix B is amended by revising paragraphs (a)(1), (a)(2), (a)(3), (a)(5), (a)(6) and (b) to read as follows:
(i) Will reimburse the Commission for the actual cost of transporting the records; and Start Printed Page 67508
16. Appendix D is removed.
Issued in Washington, DC, on November 12, 2004, by the Commission.
1. 69 FR 44981.
2. The rule proposal indicated that the identical sections of applications seeking designation or registration as a DCM or DTEF under section 6(a) of the CEA would be publicly available.
3. Commission Regulations 40.6(a) and 41.24.
4. Commission Regulations 40.2 and 41.23.
5. Commission Regulations 40.4(a) and 40.5.
6. Commission Regulation 40.3.
7. Commission Regulation 40.6(c).
8. Commission Regulation 40.4(b).
9. 47 FR 18618-18621 (Apr. 30, 1982).
10. 47 FR 18618, 18619 (April 30, 1982) (discussing contract markets); 66 FR 42256, 42268 (August 10, 2001) (discussing DTEFs); 66 FR 45605, 45609 (August 29, 2001) (discussing DCOs).
11. Pub. L. 104-13 (May 13, 1995).
12. 69 FR 44981 at 44984 (July 28, 2004).
[FR Doc. 04-25613 Filed 11-17-04; 8:45 am]