80 FR 59575 - Repeal of the Exempt Commercial Market and Exempt Board of Trade Exemptions
COMMODITY FUTURES TRADING COMMISSION Federal Register Volume 80, Issue 191 (October 2, 2015)
Federal Register Volume 80, Issue 191 (October 2, 2015)
| Page Range | 59575-59578 | |
| FR Document | 2015-25029 |
[Federal Register Volume 80, Number 191 (Friday, October 2, 2015)] [Rules and Regulations] [Pages 59575-59578] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-25029] ======================================================================= ----------------------------------------------------------------------- COMMODITY FUTURES TRADING COMMISSION 17 CFR Parts 15, 18, 36, 40, 140 RIN 3038-AE10 Repeal of the Exempt Commercial Market and Exempt Board of Trade Exemptions AGENCY: Commodity Futures Trading Commission. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: The Commodity Futures Trading Commission (the ``Commission'') is taking final action to revise its regulations by removing the part 36 regulations. Those regulations implemented provisions of the Commodity Exchange Act (``CEA'') that established exempt boards of trade and exempt commercial markets--two categories of derivatives- trading platforms that were eliminated from the CEA by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ``Dodd-Frank Act''). This action also removes various cross-references in other Commission regulations implicating exempt boards of trade and exempt commercial markets. DATES: This rulemaking is effective on October 2, 2015. FOR FURTHER INFORMATION CONTACT: Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581; Dana R. Brown, Division of Market Oversight, telephone (202) 418-5093 and email [email protected]. SUPPLEMENTARY INFORMATION: I. Background On July 21, 2010, President Obama signed the Dodd-Frank Act into law. \1\ Title VII of the Dodd-Frank Act \2\ amended the CEA \3\ to establish a comprehensive framework for the regulation of over-the- counter derivatives, also known as swaps. Among other reforms, Title VII requires that any person who operates a facility to trade swaps register as a designated contract market (``DCM'') or a swap execution facility (``SEF''); \4\ the latter is a category of trading market newly established under the law. Concurrently, Title VII eliminated from the CEA two categories of exempt markets for the trading of derivatives originally established in the CEA by the Commodity Futures Modernization Act of 2000 (``CFMA''): \5\ exempt commercial markets (``ECMs'') and exempt boards of trade (``EBOTs''). --------------------------------------------------------------------------- \1\ Public Law 111-203, 124 Stat. 1376 (July 21, 2010). \2\ Pursuant to Section 701 of the Dodd-Frank Act, Title VII may be cited as the ``Wall Street Transparency and Accountability Act of 2010.'' \3\ 7 U.S.C. 1 et seq. (2012). \4\ Dodd-Frank Act Section 733 (amending the CEA to add new section 5h). \5\ Public Law 106-554, 114 Stat. 2763 (December 21, 2000). --------------------------------------------------------------------------- Under the CFMA's revisions to the CEA, ECMs could trade exempt commodities \6\ (i.e. any commodity other than an excluded commodity \7\ and agricultural commodities) on electronic trading facilities between eligible commercial entities \8\ without complying with comprehensive designation criteria and core principles that were applicable to designated contract markets. A facility that elected to operate as an ECM was generally exempt from regulation, but was still required to comply with certain informational and recordkeeping requirements, if the market satisfied the conditions for the exemption found in Sections 2(h)(3) through (5) of the CEA, 7 U.S.C. 2(h)(3)-(5), including a requirement that the ECM notify the Commission of its intent to rely upon the exemption.\9\ --------------------------------------------------------------------------- \6\ See CFMA Section 101(4) (amending CEA to add definition of ``Exempt Commodity,'' currently codified as CEA Section 1(a)(20), 7 U.S.C. 1a(20) (2012). \7\ ``Excluded Commodity'' is also a statutorily defined term, currently codified as CEA Section 1(a)(19), 7 U.S.C. 1a(19) (2012). Generally characterized, the term captures, among other things specified financial instruments, measures, and indexes (e.g., securities and security indexes, currencies, interest rates, debt instruments, and credit ratings); any ``other rate, differential, index, or measure of economic or commercial risk, return or value'' not substantially based on the value of a narrow commodity group or solely based on a commodity or commodities with no cash value; and other economic or commercial indexes, or occurrences and contingencies associated with an economic consequence, beyond the control of parties to the relevant contract, agreement or transaction. \8\ The definition of ``Eligible Commercial Entity'' is found in Section 1a(17) of the CEA. 7 U.S.C. 1a(17) (2006). \9\ The Commission's part 36 regulations established similar requirements for EBOTs. --------------------------------------------------------------------------- Under CEA Section 5d, 7 U.S.C. 7a-3, EBOTs were facilities that traded commodities (other than securities or securities indexes) that had a nearly inexhaustible deliverable supply and either no cash market or a cash market so liquid that any contract traded on the commodity was highly unlikely to be susceptible to manipulation. EBOT transactions were limited to eligible contract participants \10\ and subject to minimal trading prohibitions, including anti-fraud and anti- manipulation restrictions. EBOTs were required to file notice with the Commission of their election to operate as an EBOT.\11\ --------------------------------------------------------------------------- \10\ The definition of ``Eligible Contract Participant'' is found in Section 1a(18) of the CEA, 7 U.S.C. 1a(18) (2012). \11\ The Commission's Part 36 regulations established similar requirements for ECMs. --------------------------------------------------------------------------- Section 723 of the Dodd-Frank Act repealed CEA Section 2(h)(3) as it then existed,\12\ thus eliminating the ECM category. Section 734 of the Dodd-Frank Act similarly repealed CEA Section 5d,\13\ thus eliminating the EBOT category. Both Sections 723 and 734 of the Dodd- Frank Act contain grandfather provisions allowing existing ECMs and EBOTs to petition the Commission to continue to operate as ECMs and EBOTs subject to the requirements of the CEA Sections 2(h)(3) and 5d, respectively, for a limited period of time.\14\ Pursuant to these grandfather provisions, the Commission issued an order in September 2010 granting petitioning ECMs and EBOTs up to one year of grandfather relief from the general effective date of the Dodd-Frank Act amendments to the CEA (``Grandfather Relief Order'').\15\ --------------------------------------------------------------------------- \12\ The Dodd-Frank Act amended Section 2(h) of the CEA effective July 16, 2011, H.R. 4173, Section 723(a)(1), Public Law 111-203, 124 Stat. 1376, by striking existing subsection (h)-- ``Transactions in exempt commodities'' and inserting new subsection (h)--``Clearing requirement'' not addressed to exempt commercial markets. \13\ The Dodd-Frank Act repealed Section 5d of the CEA effective July 16, 2011, H.R. 4173, Section 734(a), Public Law 111-203, 124 Stat. 1376 (2010). \14\ ECMs and EBOTs were permitted to continue operations until July 16, 2012 pursuant to a grandfather relief order issued by the Commission pursuant to Sections 723(c)(2)(B) and 734(c)(2) of the Dodd-Frank Act, respectively. \15\ 75 FR 56513 (September 16, 2010). --------------------------------------------------------------------------- Subsequent to the Grandfather Relief Order, the Commission issued a series [[Page 59576]] of orders \16\ and Commission staff issued various no-action letters \17\ that effectively extended expiration of the relief provided to ECMs and EBOTs in the Grandfather Relief Order. Collectively, the Grandfather Relief Order and subsequent Commission orders and staff no- action letters allowed ECMs and EBOTs, as well as other markets that relied on various pre-Dodd-Frank Act provisions of the CEA,\18\ to continue operations under a regulatory status quo and, thus, ensured that industry practices would not be unduly disrupted during the transition to the new Dodd-Frank Act regulatory regime.\19\ --------------------------------------------------------------------------- \16\ 76 FR 42522 (July 19, 2011), 76 FR 80233 (December 23, 2011), and 77 FR 41260 (July 13, 2012). \17\ CFTC No-Action Letter No. 12-48 (December 11, 2012), available at: http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/12-48.pdf and CFTC No-Action Letter No. 13-28 (June 17, 2013), available at: http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/13-28.pdf. \18\ See e.g., CEA Sections 2(d), 2(e), 2(g), 2(h), and 5d. \19\ The Commission orders and no-action letters were generally structured to permit transactions and relevant persons and entities to continue to rely on various CEA exemptive and excluding provisions in place prior to July 16, 2011 subject to other conditions, various anti-fraud and anti-manipulation prohibitions and the expiration of exemptive relief orders as various Dodd-Frank Act implementing regulations became effective. --------------------------------------------------------------------------- The Grandfather Relief Order and various subsequent Commission orders have all expired, and entities that previously operated as ECMs or EBOTs are seeking registration to become either DCMs or SEFs to continue their operations. Accordingly, the Commission is removing all references to the Commission exemptive orders from Title 17 of the Code of Federal Regulations. As discussed in section III.A. below, the Commission is publishing this final rule pursuant to the Administrative Procedure Act, 5 U.S.C. 553(b)(A), which provides that the requirements for notice and opportunity for public comment do not apply to ``rules of agency organization, procedure, or practice . . . .'' \20\ The rulemaking conforms the Commission's regulations to the statutory requirements of the CEA by removing provisions that are of no legal effect because they concern exempt market categories that Congress, through the Dodd-Frank Act, removed from the statute; the Commission has no authority or discretion under the statute to retain the ECM and EBOT category designations in its regulations. As such, the amendments effected through this rulemaking--which have no impact on substantive rights or obligations under the CEA, as amended by the Dodd-Frank Act--are entirely ministerial and procedural in nature. --------------------------------------------------------------------------- \20\ See 5 U.S.C. 553(b) & (c). --------------------------------------------------------------------------- II. Amended Regulations A. Part 36 The Commission is removing part 36 of its regulations in its entirety in order to reflect the Dodd-Frank Act's elimination of the two categories of exempt markets--ECMs and EBOTs--from the CEA. B. Parts 15, 18, 40, and 140 The Commission is removing from parts 15, 18, 40, and 140 all references to the Grandfather Relief Orders added to the Commission's regulations by Adaptation of Regulations To Incorporate Swaps rulemaking,\21\ as the authority under which those orders were issued has expired, and is removing all references in the Commission's regulations to the terms ECMs, EBOTs, and electronic trading facilities (as sometimes used in the Commission's regulations to refer to ECMs).\22\ --------------------------------------------------------------------------- \21\ Adaptation of Regulations To Incorporate Swaps, 77 FR 66288 (November 2, 2012). \22\ The Commission proposed and finalized rules in the ``Adaptation of Regulations to Incorporate SEFs'' to make a number of conforming amendments to integrate the Commission's regulations more fully with the new swaps framework created by the Dodd-Frank Act. 77 FR 66288 (November 2, 2012). --------------------------------------------------------------------------- 1. Regulation 15.05: Designation of agent for foreign persons. The Commission is removing from regulation 15.05 all references to contracts identified in part 36. 2. Regulation 18.05: Maintenance of books and records. The Commission is removing from regulation 18.05 all references to ECMs and EBOTs. 3. Regulation 40.8: Availability of public information. The Commission is removing from regulation 40.8 all references to electronic trading facilities on which significant price discovery contracts are traded or executed. 4. Appendix D to Part 40--Submission Cover Sheet and Instructions. The Commission is removing from Appendix D to part 40 the reference to electronic trading facilities with a significant price discovery contract. 5. Regulation 140.99: Requests for exemptive, no-action and interpretative letters. The Commission is removing from regulation 140.99 all references to ECMs and EBOTs. III. Administrative Compliance A. Administrative Procedure Act The Administrative Procedure Act (``APA'') \23\ generally requires a Federal agency to publish notice of a proposed rulemaking in the Federal Register and allow opportunity for public comment before propounding a final rule.\24\ This requirement does not apply, however, to non-legislative rules of ``agency organization, procedure, or practice.'' \25\ In this case, the revisions to the Commission's regulations in this rulemaking do not establish any new substantive or legislative rules. Rather, this final rule makes technical amendments to various Commission regulations to reflect the fact that Congress has eliminated the ECM and EBOT category designations from the CEA. As such, the amendments effected through this rulemaking--which have no impact on substantive rights or obligations under the CEA, as amended by the Dodd-Frank Act--are entirely ministerial and procedural in nature. This final rule shall become effective upon publication in the Federal Register. --------------------------------------------------------------------------- \23\ 5 U.S.C. 551 et seq. \24\ See 5 U.S.C. 553(b) & (c). \25\ See 5 U.S.C. 553(b)(A). --------------------------------------------------------------------------- B. Regulatory Flexibility Act The Regulatory Flexibility Act requires the Commission to consider whether the regulations it adopts will have a significant economic impact on a substantial number of small entities.\26\ The Commission certifies that this rulemaking will have no significant impact on a substantial number of small entities as defined in the Regulatory Flexibility Act.\27\ There is no additional submission required as a result of this action. Accordingly, the Commission is not obligated to conduct a regulatory flexibility analysis for this rulemaking. --------------------------------------------------------------------------- \26\ See 5 U.S.C. 601 et seq. \27\ See id. --------------------------------------------------------------------------- C. Paperwork Reduction Act The Commission may not conduct or sponsor, and a respondent is not required to respond to, a collection of information contained in a rulemaking unless the information collection displays a currently valid control number issued by the Office of Management and Budget (``OMB'') pursuant to the Paperwork Reduction Act.\28\ This rulemaking contains no collection of information that obligates the Commission to obtain a control number from OMB. --------------------------------------------------------------------------- \28\ See 44 U.S.C. 3501 et seq. --------------------------------------------------------------------------- [[Page 59577]] D. Cost-Benefit Considerations 1. Introduction Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.\29\ Section 15(a) further specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission considers the costs and benefits resulting from its discretionary determinations with respect to the Section 15(a) factors. --------------------------------------------------------------------------- \29\ 7 U.S.C. 19(a). --------------------------------------------------------------------------- The Commission is removing its Part 36 regulations and amending Sec. Sec. 15.05, 18.05, 40.8, Appendix D to part 40, and Sec. 140.00. Part 36 originally implemented provisions of the pre-Dodd-Frank CEA that established EBOTs and ECMs--two categories of derivatives-trading platforms that were eliminated from the CEA by the Dodd-Frank Act-- while the other regulations contained references to ECM and EBOTs. The Commission is using the CEA, as amended by the Dodd-Frank Act, as the baseline for assessing whether and to what extent costs or benefits are likely to flow from the amendments, and is only considering the costs and benefits of its discretionary actions permissible within the parameters of the statute. 2. Costs Since the Dodd-Frank Act eliminated ECMs and EBOTs from the CEA, the Commission lacks authority to make or retain provisions for them within its regulations. Accordingly, there are no costs to the industry or the public associated with the amendments to remove implementing language for ECMs and EBOTs in part 36 and obsolete, vestigial references to ECMs and EBOTs in parts 15, 18, 40, and 140. 3. Benefits The Commission believes that market participants and the public will benefit from these ministerial rule amendments since they eliminate obsolete, vestigial provisions and references that otherwise could be construed to give rise to confusing inconsistencies between the Commission's regulations and the provisions of the CEA, as amended by the Dodd-Frank Act. 4. Section 15(a) Factors Protection of market participants and the public. By squaring its regulations with Dodd-Frank Act amendments to the CEA eliminating authorization for ECMs and EBOTs, the Commission believes it is furthering the interest of protecting market participants and the public. These amendments eliminate potential for confusion that otherwise might arise from retaining outdated provisions addressed to statutorily-obsolesced trading platforms. Efficiency, competitiveness, and financial integrity of futures markets. The Commission believes that the amendments will not materially affect the efficiency, competitiveness, and financial integrity of futures markets. Price discovery. The Commission believes that the amendments will not materially affect the price discovery process. Sound risk management practices. The Commission believes that the amendments will not materially affect sound risk management practices. Other public interest considerations. The Commission believes that the amendments will not materially affect other public interest considerations. List of Subjects 17 CFR Part 15 Brokers, Reporting and recordkeeping requirements. 17 CFR Part 18 Reporting and recordkeeping requirements. 17 CFR Part 36 Commodity futures. 17 CFR Part 40 Commodity futures, Reporting and recordkeeping requirements. 17 CFR Part 140 Authority delegations (government agencies), Conflicts of interest, Organization and functions (government agencies). For the reasons stated in the preamble, under the authority of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010), the Commodity Futures Trading Commission amends 17 CFR chapter I as set forth below: PART 15--REPORTS--GENERAL PROVISIONS 0 1. The authority citation for part 15 continues to read as follows: Authority: 7 U.S.C. 2, 5, 6a, 6c, 6f, 6g, 6i, 6k, 6m, 6n, 7, 7a, 9, 12a, 19, and 21, as amended by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010). 0 2. Revise paragraph (a) of Sec. 15.05 to read as follows: Sec. 15.05 Designation of agent for foreign persons. (a) For purposes of this section, the term ``futures contract'' means any contract for the purchase or sale of any commodity for future delivery, traded or executed on or subject to the rules of any designated contract market, or for the purposes of paragraph (i) of this section, a reporting market (including all agreements, contracts and transactions that are treated by a clearing organization as fungible with such contracts); the term ``option contract'' means any contract for the purchase or sale of a commodity option, or as applicable, any other instrument subject to the Act, traded or executed on or subject to the rules of any designated contract market, or for the purposes of paragraph (i) of this section, a reporting market (including all agreements, contracts and transactions that are treated by a clearing organization as fungible with such contracts); the term ``customer'' means any person for whose benefit a foreign broker makes or causes to be made any futures contract or option contract; and the term ``communication'' means any summons, complaint, order, subpoena, special call, request for information, or notice, as well as any other written document or correspondence. * * * * * PART 18--REPORTS BY TRADERS 0 3. The authority citation for part 18 continues to read as follows: Authority: 7 U.S.C. 2, 4, 5, 6a, 6c, 6f, 6g, 6i, 6k, 6m, 6n, 6t, 12a, and 19, as amended by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010). Sec. 18.05 [Amended] 0 4. Amend Sec. 18.05 as follows: 0 a. Remove paragraphs (a)(3) and (a)(4); 0 b. In paragraph (a)(2), add the word ``and'' after the semicolon at the end of the paragraph; and 0 c. Redesignate paragraph (a)(5) as paragraph (a)(3). PART 36--[REMOVED AND RESERVED] 0 5. Remove and reserve part 36. [[Page 59578]] PART 40--PROVISIONS COMMON TO REGISTERED ENTITIES 0 6. The authority citation for part 40 continues to read as follows: Authority: 7 U.S.C. 1a, 2, 5, 6, 7, 7a and 12, as amended by Titles VII and VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. 111-203, 124 Stat. 1376 (2010). Sec. 40.8 [Amended] 0 7. Amend Sec. 40.8 by removing and reserving paragraph (b). 0 8. Revise Appendix D to part 40 to read as follows: Appendix D to Part 40--Submission Cover Sheet and Instructions (a) A properly completed submission cover sheet shall accompany all rule and product submissions submitted electronically by a registered entity in a format and manner specified by the Secretary of the Commission to the Secretary of the Commission. A properly completed submission cover sheet shall include all of the following: 1. Identifier Code (optional)--A registered entity Identifier Code at the top of the cover sheet, if applicable. Such codes are commonly generated by registered entities to provide an identifier that is unique to each filing (e.g., NYMEX Submission 03-116). 2. Date--The date of the filing. 3. Organization--The name of the organization filing the submission (e.g., CBOT). 4. Filing as a--Check in the appropriate box indicating that the rule or product is being submitted by a designated contract market (DCM), derivatives clearing organization (DCO), swap execution facility (SEF), or swap data repository (SDR). 5. Type of Filing--An indication as to whether the filing is a new rule, rule amendment or new product. The registered entity should check the appropriate box to indicate the applicable category under that heading. 6. Rule Numbers--For rule filings, the rule number(s) being adopted or modified in the case of rule amendment filings. 7. Description--For rule or rule amendment filings, a description of the new rule or rule amendment, including a discussion of its expected impact on the registered entity, market participants, and the overall market. The narrative should describe the substance of the submission with enough specificity to characterize all material aspects of the filing. (b) Other Requirements--A submission shall comply with all applicable filing requirements for proposed rules, rule amendments, or products. The filing of the submission cover sheet does not obviate the registered entity's responsibility to comply with applicable filing requirements (e.g., rules submitted for Commission approval under Sec. 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). (c) Checking the box marked ``confidential treatment requested'' on the Submission Cover Sheet does not obviate the submitter's responsibility to comply with all applicable requirements for requesting confidential treatment in Sec. 40.8 and, where appropriate, Sec. 145.9 of this chapter, and will not substitute for notice or full compliance with such requirements. PART 140--ORGANIZATION, FUNCTIONS, AND PROCEDURES OF THE COMMISSION 0 9. The authority citation for part 140 continues to read as follows: Authority: 7 U.S.C. 2(a)(12), 12a, 13(c), 13(d), 13(e), and 16(b). 0 10. Revise paragraph (d)(2)(i) of Sec. 140.99 to read as follows: Sec. 140.99 Requests for exemptive, no-action and interpretative letters. * * * * * (d) * * * (2)(i) A request for a Letter relating to the provisions of the Act or the Commission's rules, regulations or orders governing designated contract markets, registered swap execution facilities, registered swap data repositories, registered foreign boards of trade, the nature of particular transactions and whether they are exempt or excluded from being required to be traded on one of the foregoing entities, made available for trading determinations, position limits, hedging exemptions, position aggregation treatment or the reporting of market positions shall be filed with the Director, Division of Market Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581. * * * * * Issued in Washington, DC, on September 28, 2015, by the Commission. Christopher J. Kirkpatrick, Secretary of the Commission. NOTE: The following appendix will not appear in the Code of Federal Regulations. Appendix To Repeal of the Exempt Commercial Market and Exempt Board of Trade Exemptions--Commission Voting Summary On this matter, Chairman Massad and Commissioners Bowen and Giancarlo voted in the affirmative. No Commissioner voted in the negative. [FR Doc. 2015-25029 Filed 10-1-15; 8:45 am] BILLING CODE 6351-01-P
![Federal Register / Vol. 80, No. 191 / Friday, October 2, 2015 / Rules and Regulations 59575
206–544–5000, extension 1; fax 206–766– I. Background conditions for the exemption found in
5680; Internet https:// Sections 2(h)(3) through (5) of the CEA,
www.myboeingfleet.com. On July 21, 2010, President Obama
signed the Dodd-Frank Act into law. 1 7 U.S.C. 2(h)(3)–(5), including a
(4) You may view this service information
at FAA, Transport Airplane Directorate, 1601 Title VII of the Dodd-Frank Act 2 requirement that the ECM notify the
Lind Avenue SW., Renton, WA. For amended the CEA 3 to establish a Commission of its intent to rely upon
information on the availability of this comprehensive framework for the the exemption.9
material at the FAA, call 425–227–1221. regulation of over-the-counter Under CEA Section 5d, 7 U.S.C. 7a–
(5) You may view this service information derivatives, also known as swaps. 3, EBOTs were facilities that traded
that is incorporated by reference at the Among other reforms, Title VII requires
National Archives and Records commodities (other than securities or
that any person who operates a facility securities indexes) that had a nearly
Administration (NARA). For information on
to trade swaps register as a designated inexhaustible deliverable supply and
the availability of this material at NARA, call
202–741–6030, or go to: http:// contract market (‘‘DCM’’) or a swap either no cash market or a cash market
www.archives.gov/federal-register/cfr/ibr- execution facility (‘‘SEF’’); 4 the latter is so liquid that any contract traded on the
locations.html. a category of trading market newly commodity was highly unlikely to be
established under the law. susceptible to manipulation. EBOT
Issued in Renton, Washington, on
September 16, 2015. Concurrently, Title VII eliminated from
transactions were limited to eligible
the CEA two categories of exempt
Michael Kaszycki, contract participants 10 and subject to
markets for the trading of derivatives
Acting Manager, Transport Airplane minimal trading prohibitions, including
originally established in the CEA by the
Directorate, Aircraft Certification Service. anti-fraud and anti-manipulation
Commodity Futures Modernization Act
[FR Doc. 2015–24677 Filed 10–1–15; 8:45 am] restrictions. EBOTs were required to file
of 2000 (‘‘CFMA’’): 5 exempt commercial
BILLING CODE 4910–13–P
markets (‘‘ECMs’’) and exempt boards of notice with the Commission of their
trade (‘‘EBOTs’’). election to operate as an EBOT.11
Under the CFMA’s revisions to the Section 723 of the Dodd-Frank Act
CEA, ECMs could trade exempt repealed CEA Section 2(h)(3) as it then
COMMODITY FUTURES TRADING commodities 6 (i.e. any commodity other existed,12 thus eliminating the ECM
COMMISSION than an excluded commodity 7 and category. Section 734 of the Dodd-Frank
17 CFR Parts 15, 18, 36, 40, 140 agricultural commodities) on electronic Act similarly repealed CEA Section
trading facilities between eligible 5d,13 thus eliminating the EBOT
commercial entities 8 without category. Both Sections 723 and 734 of
RIN 3038–AE10 complying with comprehensive the Dodd-Frank Act contain grandfather
designation criteria and core principles provisions allowing existing ECMs and
Repeal of the Exempt Commercial
that were applicable to designated EBOTs to petition the Commission to
Market and Exempt Board of Trade
contract markets. A facility that elected continue to operate as ECMs and EBOTs
Exemptions
to operate as an ECM was generally subject to the requirements of the CEA
AGENCY: Commodity Futures Trading exempt from regulation, but was still Sections 2(h)(3) and 5d, respectively, for
Commission. required to comply with certain a limited period of time.14 Pursuant to
ACTION: Final rule. informational and recordkeeping these grandfather provisions, the
requirements, if the market satisfied the Commission issued an order in
SUMMARY: The Commodity Futures September 2010 granting petitioning
1 Public Law 111–203, 124 Stat. 1376 (July 21,
Trading Commission (the ECMs and EBOTs up to one year of
2010).
‘‘Commission’’) is taking final action to 2 Pursuant to Section 701 of the Dodd-Frank Act, grandfather relief from the general
revise its regulations by removing the Title VII may be cited as the ‘‘Wall Street effective date of the Dodd-Frank Act
part 36 regulations. Those regulations Transparency and Accountability Act of 2010.’’ amendments to the CEA (‘‘Grandfather
implemented provisions of the 3 7 U.S.C. 1 et seq. (2012).
Relief Order’’).15
Commodity Exchange Act (‘‘CEA’’) that 4 Dodd-Frank Act Section 733 (amending the CEA
established exempt boards of trade and to add new section 5h). Subsequent to the Grandfather Relief
exempt commercial markets—two
5 Public Law 106–554, 114 Stat. 2763 (December Order, the Commission issued a series
21, 2000).
categories of derivatives-trading 6 See CFMA Section 101(4) (amending CEA to
9 The Commission’s part 36 regulations
platforms that were eliminated from the add definition of ‘‘Exempt Commodity,’’ currently
established similar requirements for EBOTs.
CEA by the Dodd-Frank Wall Street codified as CEA Section 1(a)(20), 7 U.S.C. 1a(20) 10 The definition of ‘‘Eligible Contract
Reform and Consumer Protection Act (2012).
7 ‘‘Excluded Commodity’’ is also a statutorily Participant’’ is found in Section 1a(18) of the CEA,
(the ‘‘Dodd-Frank Act’’). This action defined term, currently codified as CEA Section
7 U.S.C. 1a(18) (2012).
also removes various cross-references in 1(a)(19), 7 U.S.C. 1a(19) (2012). Generally
11 The Commission’s Part 36 regulations
other Commission regulations characterized, the term captures, among other established similar requirements for ECMs.
12 The Dodd-Frank Act amended Section 2(h) of
implicating exempt boards of trade and things specified financial instruments, measures,
and indexes (e.g., securities and security indexes, the CEA effective July 16, 2011, H.R. 4173, Section
exempt commercial markets. currencies, interest rates, debt instruments, and 723(a)(1), Public Law 111–203, 124 Stat. 1376, by
DATES: This rulemaking is effective on credit ratings); any ‘‘other rate, differential, index, striking existing subsection (h)—‘‘Transactions in
or measure of economic or commercial risk, return exempt commodities’’ and inserting new subsection
October 2, 2015. (h)—‘‘Clearing requirement’’ not addressed to
or value’’ not substantially based on the value of a
FOR FURTHER INFORMATION CONTACT:
asabaliauskas on DSK5VPTVN1PROD with RULES
narrow commodity group or solely based on a exempt commercial markets.
13 The Dodd-Frank Act repealed Section 5d of the
Commodity Futures Trading commodity or commodities with no cash value; and
other economic or commercial indexes, or CEA effective July 16, 2011, H.R. 4173, Section
Commission, Three Lafayette Centre, 734(a), Public Law 111–203, 124 Stat. 1376 (2010).
occurrences and contingencies associated with an
1155 21st Street NW., Washington, DC economic consequence, beyond the control of 14 ECMs and EBOTs were permitted to continue
20581; Dana R. Brown, Division of parties to the relevant contract, agreement or operations until July 16, 2012 pursuant to a
Market Oversight, telephone (202) 418– transaction. grandfather relief order issued by the Commission
5093 and email dbrown@cftc.gov. 8 The definition of ‘‘Eligible Commercial Entity’’ pursuant to Sections 723(c)(2)(B) and 734(c)(2) of
is found in Section 1a(17) of the CEA. 7 U.S.C. the Dodd-Frank Act, respectively.
SUPPLEMENTARY INFORMATION: 1a(17) (2006). 15 75 FR 56513 (September 16, 2010).
VerDate Sep<11>2014 20:30 Oct 01, 2015 Jkt 238001 PO 00000 Frm 00027 Fmt 4700 Sfmt 4700 E:\FR\FM\02OCR1.SGM 02OCR1](https://thefederalregister.org/doc/80_FR_59766/page/1.svg)
![Federal Register / Vol. 80, No. 191 / Friday, October 2, 2015 / Rules and Regulations 59577
D. Cost-Benefit Considerations 4. Section 15(a) Factors amended by Title VII of the Dodd-Frank Wall
Street Reform and Consumer Protection Act,
1. Introduction Protection of market participants and
Pub. L. 111–203, 124 Stat. 1376 (2010).
the public. By squaring its regulations
Section 15(a) of the CEA requires the with Dodd-Frank Act amendments to
Commission to consider the costs and ■ 2. Revise paragraph (a) of § 15.05 to
the CEA eliminating authorization for
benefits of its actions before read as follows:
ECMs and EBOTs, the Commission
promulgating a regulation under the believes it is furthering the interest of § 15.05 Designation of agent for foreign
CEA or issuing certain orders.29 Section protecting market participants and the persons.
15(a) further specifies that the costs and public. These amendments eliminate
benefits shall be evaluated in light of potential for confusion that otherwise (a) For purposes of this section, the
five broad areas of market and public might arise from retaining outdated term ‘‘futures contract’’ means any
concern: (1) Protection of market provisions addressed to statutorily- contract for the purchase or sale of any
participants and the public; (2) obsolesced trading platforms. commodity for future delivery, traded or
efficiency, competitiveness, and Efficiency, competitiveness, and executed on or subject to the rules of
financial integrity of futures markets; (3) financial integrity of futures markets. any designated contract market, or for
price discovery; (4) sound risk The Commission believes that the the purposes of paragraph (i) of this
management practices; and (5) other amendments will not materially affect section, a reporting market (including
public interest considerations. The the efficiency, competitiveness, and all agreements, contracts and
Commission considers the costs and financial integrity of futures markets. transactions that are treated by a
benefits resulting from its discretionary Price discovery. The Commission clearing organization as fungible with
determinations with respect to the believes that the amendments will not such contracts); the term ‘‘option
Section 15(a) factors. materially affect the price discovery contract’’ means any contract for the
The Commission is removing its Part process. purchase or sale of a commodity option,
36 regulations and amending §§ 15.05, Sound risk management practices. or as applicable, any other instrument
18.05, 40.8, Appendix D to part 40, and The Commission believes that the subject to the Act, traded or executed on
§ 140.00. Part 36 originally implemented amendments will not materially affect or subject to the rules of any designated
provisions of the pre-Dodd-Frank CEA sound risk management practices. contract market, or for the purposes of
that established EBOTs and ECMs—two Other public interest considerations. paragraph (i) of this section, a reporting
categories of derivatives-trading The Commission believes that the market (including all agreements,
platforms that were eliminated from the amendments will not materially affect contracts and transactions that are
CEA by the Dodd-Frank Act—while the other public interest considerations. treated by a clearing organization as
other regulations contained references List of Subjects fungible with such contracts); the term
to ECM and EBOTs. The Commission is ‘‘customer’’ means any person for whose
using the CEA, as amended by the 17 CFR Part 15 benefit a foreign broker makes or causes
Dodd-Frank Act, as the baseline for Brokers, Reporting and recordkeeping to be made any futures contract or
assessing whether and to what extent requirements. option contract; and the term
costs or benefits are likely to flow from ‘‘communication’’ means any summons,
the amendments, and is only 17 CFR Part 18
complaint, order, subpoena, special call,
considering the costs and benefits of its Reporting and recordkeeping request for information, or notice, as
discretionary actions permissible within requirements. well as any other written document or
the parameters of the statute. 17 CFR Part 36 correspondence.
2. Costs Commodity futures. * * * * *
Since the Dodd-Frank Act eliminated 17 CFR Part 40 PART 18—REPORTS BY TRADERS
ECMs and EBOTs from the CEA, the
Commodity futures, Reporting and
Commission lacks authority to make or
recordkeeping requirements. ■ 3. The authority citation for part 18
retain provisions for them within its
regulations. Accordingly, there are no 17 CFR Part 140 continues to read as follows:
costs to the industry or the public Authority delegations (government Authority: 7 U.S.C. 2, 4, 5, 6a, 6c, 6f, 6g,
associated with the amendments to agencies), Conflicts of interest, 6i, 6k, 6m, 6n, 6t, 12a, and 19, as amended
remove implementing language for Organization and functions (government by Title VII of the Dodd-Frank Wall Street
ECMs and EBOTs in part 36 and agencies). Reform and Consumer Protection Act, Pub. L.
obsolete, vestigial references to ECMs 111–203, 124 Stat. 1376 (2010).
For the reasons stated in the
and EBOTs in parts 15, 18, 40, and 140. preamble, under the authority of Title § 18.05 [Amended]
3. Benefits VII of the Dodd-Frank Wall Street
Reform and Consumer Protection Act, ■ 4. Amend § 18.05 as follows:
The Commission believes that market Public Law 111–203, 124 Stat. 1376 ■ a. Remove paragraphs (a)(3) and (a)(4);
participants and the public will benefit (2010), the Commodity Futures Trading
from these ministerial rule amendments ■ b. In paragraph (a)(2), add the word
Commission amends 17 CFR chapter I ‘‘and’’ after the semicolon at the end of
since they eliminate obsolete, vestigial as set forth below:
asabaliauskas on DSK5VPTVN1PROD with RULES
provisions and references that otherwise the paragraph; and
could be construed to give rise to PART 15—REPORTS—GENERAL ■ c. Redesignate paragraph (a)(5) as
confusing inconsistencies between the PROVISIONS paragraph (a)(3).
Commission’s regulations and the
provisions of the CEA, as amended by ■ 1. The authority citation for part 15 PART 36—[REMOVED AND
the Dodd-Frank Act. continues to read as follows: RESERVED]
Authority: 7 U.S.C. 2, 5, 6a, 6c, 6f, 6g, 6i,
29 7 U.S.C. 19(a). 6k, 6m, 6n, 7, 7a, 9, 12a, 19, and 21, as ■ 5. Remove and reserve part 36.
VerDate Sep<11>2014 20:30 Oct 01, 2015 Jkt 238001 PO 00000 Frm 00029 Fmt 4700 Sfmt 4700 E:\FR\FM\02OCR1.SGM 02OCR1](https://thefederalregister.org/doc/80_FR_59766/page/3.svg)
![59578 Federal Register / Vol. 80, No. 191 / Friday, October 2, 2015 / Rules and Regulations
PART 40—PROVISIONS COMMON TO Cover Sheet does not obviate the submitter’s SECURITIES AND EXCHANGE
REGISTERED ENTITIES responsibility to comply with all applicable COMMISSION
requirements for requesting confidential
■ 6. The authority citation for part 40 treatment in § 40.8 and, where appropriate, 17 CFR Part 232
continues to read as follows: § 145.9 of this chapter, and will not
[Release Nos. 33–9911; 34–75918; 39–2506;
Authority: 7 U.S.C. 1a, 2, 5, 6, 7, 7a and substitute for notice or full compliance with
IC–31823]
12, as amended by Titles VII and VIII of the such requirements.
Dodd-Frank Wall Street Reform and Adoption of Updated EDGAR Filer
Consumer Protection Act, Pub. L. 111–203, PART 140—ORGANIZATION, Manual
124 Stat. 1376 (2010). FUNCTIONS, AND PROCEDURES OF
THE COMMISSION AGENCY: Securities and Exchange
§ 40.8 [Amended]
Commission.
■ 7. Amend § 40.8 by removing and ■ 9. The authority citation for part 140 ACTION: Final rule.
reserving paragraph (b). continues to read as follows:
■ 8. Revise Appendix D to part 40 to SUMMARY: The Securities and Exchange
read as follows: Authority: 7 U.S.C. 2(a)(12), 12a, 13(c), Commission (the Commission) is
13(d), 13(e), and 16(b). adopting revisions to the Electronic Data
Appendix D to Part 40—Submission
■ 10. Revise paragraph (d)(2)(i) of Gathering, Analysis, and Retrieval
Cover Sheet and Instructions
§ 140.99 to read as follows: System (EDGAR) Filer Manual and
(a) A properly completed submission cover related rules to reflect updates to the
sheet shall accompany all rule and product § 140.99 Requests for exemptive, no- EDGAR system. The updates are being
submissions submitted electronically by a action and interpretative letters. made to add two new Security-based
registered entity in a format and manner
specified by the Secretary of the Commission * * * * * Swap Data Repository (SDR) submission
to the Secretary of the Commission. A form types; make available new exhibit
(d) * * * EX–36 (Depositor Certification for shelf
properly completed submission cover sheet
shall include all of the following: (2)(i) A request for a Letter relating to offerings of asset-backed securities) on
1. Identifier Code (optional)—A registered the provisions of the Act or the EDGARLink Online for submission form
entity Identifier Code at the top of the cover Commission’s rules, regulations or types SF–3, SF–3/A, 8–K, and 8–K/A;
sheet, if applicable. Such codes are orders governing designated contract accept Exhibit K and Exhibit L in
commonly generated by registered entities to
markets, registered swap execution eXtensible Business Reporting Language
provide an identifier that is unique to each
filing (e.g., NYMEX Submission 03–116). facilities, registered swap data (XBRL) format for submission form
2. Date—The date of the filing. repositories, registered foreign boards of types SDR, SDR/A, SDR–A, and
3. Organization—The name of the trade, the nature of particular SDR–W; consider valid XBRL file
organization filing the submission (e.g., transactions and whether they are attachments if they contain multiple
CBOT). identically tagged XBRL facts; make
4. Filing as a—Check in the appropriate
exempt or excluded from being required
to be traded on one of the foregoing documentation updates to Chapter 2 of
box indicating that the rule or product is the ‘‘EDGAR Filer Manual, Volume I:
being submitted by a designated contract entities, made available for trading
market (DCM), derivatives clearing determinations, position limits, hedging General Information’’ and Chapters 2, 3,
organization (DCO), swap execution facility and 7 of the ‘‘EDGAR Filer Manual,
exemptions, position aggregation
(SEF), or swap data repository (SDR). Volume II: EDGAR Filing’’ relating to
treatment or the reporting of market
5. Type of Filing—An indication as to Form NRSRO; and make formatting
whether the filing is a new rule, rule positions shall be filed with the changes to ‘‘EDGAR Filer Manual,
amendment or new product. The registered Director, Division of Market Oversight, Volume I: General Information’’,
entity should check the appropriate box to Commodity Futures Trading ‘‘EDGAR Filer Manual, Volume II:
indicate the applicable category under that Commission, Three Lafayette Centre, EDGAR Filing’’, and ‘‘EDGAR Filer
heading. 1155 21st Street NW., Washington, DC
6. Rule Numbers—For rule filings, the rule Manual, Volume III:
20581. N–SAR Supplement’’ for compliance
number(s) being adopted or modified in the
case of rule amendment filings. * * * * * with Section 508 of the U.S.
7. Description—For rule or rule
Issued in Washington, DC, on September
Rehabilitation Act. The Filer Manual is
amendment filings, a description of the new also being revised to address software
rule or rule amendment, including a 28, 2015, by the Commission.
changes made previously in EDGAR. On
discussion of its expected impact on the Christopher J. Kirkpatrick,
July 10, 2015, Regulation A submission
registered entity, market participants, and the Secretary of the Commission. form types DOS, DOS/A, 1–A, 1–A/A,
overall market. The narrative should describe
the substance of the submission with enough NOTE: The following appendix will not and
specificity to characterize all material aspects appear in the Code of Federal Regulations. 1–A POS were updated to prevent a filer
of the filing. from entering a response in Item 6(d)
(b) Other Requirements—A submission Appendix To Repeal of the Exempt when the ‘‘None’’ option has been
shall comply with all applicable filing Commercial Market and Exempt Board selected on Item 6. The EDGAR system
requirements for proposed rules, rule of Trade Exemptions—Commission is scheduled to be upgraded to support
amendments, or products. The filing of the Voting Summary this functionality on September 14,
submission cover sheet does not obviate the
2015.
asabaliauskas on DSK5VPTVN1PROD with RULES
registered entity’s responsibility to comply On this matter, Chairman Massad and
with applicable filing requirements (e.g., Commissioners Bowen and Giancarlo voted DATES: Effective October 2, 2015. The
rules submitted for Commission approval in the affirmative. No Commissioner voted in incorporation by reference of the
under § 40.5 must be accompanied by an the negative. EDGAR Filer Manual is approved by the
explanation of the purpose and effect of the Director of the Federal Register as of
proposed rule along with a description of any [FR Doc. 2015–25029 Filed 10–1–15; 8:45 am]
substantive opposing views). BILLING CODE 6351–01–P
October 2, 2015.
(c) Checking the box marked ‘‘confidential FOR FURTHER INFORMATION CONTACT: In
treatment requested’’ on the Submission the Division of Trading and Markets, for
VerDate Sep<11>2014 20:30 Oct 01, 2015 Jkt 238001 PO 00000 Frm 00030 Fmt 4700 Sfmt 4700 E:\FR\FM\02OCR1.SGM 02OCR1](https://thefederalregister.org/doc/80_FR_59766/page/4.svg)
Document Created: 2015-12-15 08:44:59
Document Modified: 2015-12-15 08:44:59
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final rule. | |
| Dates | This rulemaking is effective on October 2, 2015. | |
| Contact | Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581; Dana R. Brown, Division of Market Oversight, telephone (202) 418-5093 and email [email protected] | |
| FR Citation | 80 FR 59575 | |
| RIN Number | 3038-AE10 | |
| CFR Citation | 17
CFR
140 17 CFR 15 17 CFR 18 17 CFR 36 17 CFR 40 | |
| CFR Associated | Brokers; Reporting and Recordkeeping Requirements; Commodity Futures; Authority Delegations (government Agencies); Conflicts of Interest and Organization and Functions (government Agencies) |
2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR