SUPPLEMENTARY INFORMATION:

In accordance with section 9(a)(2) of the Federal Advisory Committee Act (FACA), 5 U.S.C. 1008, and 41 CFR 102-3.65, the CFTC is announcing the AAC's renewal and providing herein the Commission-approved public interest determination. The AAC's objectives and scope of activities are to provide the Commission with advice and recommendations on issues affecting agricultural producers; consumers; processors; lenders; other major market participants, including derivatives intermediaries, buy-side representatives, and exchanges; regulators; and others interested in or affected by the agricultural derivatives markets. The AAC will operate for two years from the date of renewal unless the Commission directs that the AAC terminate on an earlier date. A copy of the renewal charter will be posted on the CFTC's website at www.cftc.gov.

Public Interest Determination

Pursuant to 41 CFR 102-3.60(a), to establish, renew, reestablish, or merge a discretionary (agency discretion) advisory committee, an agency must first consult with the General Services Administration's Committee Management Secretariat (the Secretariat) and, as part of the consultation, provide a written public interest determination approved by the head of the agency to the Secretariat with a copy to the Office of Management and Budget. In addition, pursuant to 41 CFR 102-3.35, an agency shall follow the same consultation process and document in writing the same determination of need before creating a subcommittee under a discretionary committee that is not made up entirely of members of a parent advisory committee.

Information on the following factors for the committee is provided to the Secretariat to demonstrate that renewing the committee is in the public interest:

1. Annual budget: The estimated annual operating cost for supporting the AAC is $56, 227.

a. Federal personnel on a full-time equivalent (FTE) basis:.10 FTE.

b. Other Federal internal costs: $24,400.

c. Proposed payments to members: The CFTC does not compensate AAC members for their services. However, there are government costs (salary and ( printed page 45266) benefits) for Federal AAC members which are estimated at $6,684.

d. Proposed number of members: Approximately 30-40.

e. Reimbursable Costs: $0.

2. If applicable, the total dollar value of grants expected to be recommended during the fiscal year: N/A.

3. Criteria for selecting members to ensure the committee has the necessary expertise and fairly balanced membership: The AAC members are selected to represent a balance of viewpoints that reflect the groups and entities potentially affected by or interested in the AAC's recommendations and are necessary to effectively address the issues to be considered by the AAC. Members represent a wide range of perspectives and interests. The AAC requires members with deep expertise and experience in the following areas: risk management and hedging practices using futures, options, swaps, and other derivatives; trade execution associated with such practices; and the legal and regulatory regimes that govern hedging and risk management. Producers, end users, exchanges, and agribusiness and industry trade associations are among the primary sources of these forms of knowledge and experience, and these entities should be represented by individuals who share in this expertise and can represent their interests in a way that helps the Commission to understand and resolve highly technical issues. The AAC will also need to consider the intersection of these time-tested areas of expertise with the innovations currently in front of the Commission and derivatives industry namely digital assets, blockchain technology, artificial intelligence, and other evolving innovations. The Commission expects to hear from the AAC for policy recommendations that will enhance the U.S. role as a global derivatives leader.

4. List of all other Federal advisory committees of the agency: In addition to the AAC, the CFTC has one statutory committee that Congress has exempted from the FACA and two discretionary FACA committees:

(a) Energy and Environmental Markets Advisory Committee (statutory)

(b) Global Markets Advisory Committee (discretionary)

(c) Innovation Advisory Committee (discretionary)

5. Justification that the information or advice provided by the Federal advisory committee or subcommittee is not available from another Federal advisory committee, another Federal Government source, or any other more cost-effective and less burdensome source: The Commission is the Federal regulator of agricultural derivatives markets and the AAC is the most efficient and thorough means of obtaining advice on issues directly impacting those affected by the regulation of these markets, as well as indirectly affected by the market's price discovery function. Further, changes to agricultural market structure are ongoing and the issues arising from this change can only be addressed by an advisory committee comprised of representatives from agricultural and agriculture-related organizations—they cannot be properly addressed by the CFTC, or by ad hoc roundtables, public hearings, or other means of public engagement all of which are better suited to responding to specific, time-limited events and idiosyncratic concerns rather than ongoing, long-term issues. The nature of current market innovations such as digital assets, blockchain technologies, and artificial intelligence and their impact on price discovery emphasizes the importance of the Commission's engagement with agricultural derivatives practitioners. Through this engagement, the Commission endeavors to proactively formulate thoughtful policy that enables these innovations and technologies to solidify the preeminence of the U.S. derivatives markets. The AAC is the most cost-effective way to access input and information, particularly since the Commission does not compensate members and does not provide for members' travel expenses and accommodation for meetings.

6. If the consultation is a committee renewal, a summary of the previous accomplishments of the committee and the reasons it needs to continue: Historically, the AAC has served as a forum in which representatives of major agricultural and agriculture-related interests have provided the CFTC with their varying perspectives on agriculture-related issues within the agency's jurisdiction and where issues of mutual interest to the Commission and representatives can be aired. For example, in 2010, the AAC contributed to changes in business practices that addressed a significant pricing problem in the wheat futures market. In 2021, the AAC also made recommendations related to efficient and effective oversight of changes to agricultural futures contracts with open interest.

Additionally, at the April 2019 AAC meeting, the Committee heard from participants and exchange operators on “Cash Market Innovations” and “The Evolution of Electronic Trading in Agricultural Markets.” ^[1] At that time, there were significant evolutionary change in the industry that had particular impact to the agricultural sector and the forum for the meeting was Overland Park, Kansas, which enabled market users and producers to attend. As currently constructed, the current AAC expects to continue this integral outreach effort.

The Commission has determined that it is necessary to obtain advice on issues directly impacting those affected by the regulation of these markets, as well as indirectly affected by the market's price discovery function. The AAC provides a forum to facilitate interaction with and communications between the Commission and the diverse agricultural and agriculture-related organizations represented on the AAC.

7. Explanation of why the committee/subcommittee is essential to the conduct of agency business: The AAC was created in 1985 to advise the Commission on issues involving the trading of agricultural commodity derivatives and facilitate communications between the CFTC, the agricultural community, and agriculture-related organizations. As derivatives markets continuously evolve, it remains imperative that the Commission protect the price discovery and risk management functions provided by agricultural markets. Specifically, as the supply and demand for agricultural products is constantly fluctuating, the resultant changes in market structure have implications for the CFTC's mission of ensuring the integrity of the derivatives markets for agricultural products.

In order for the CFTC to carry out its mission, it must understand how market participants and the public—including agricultural producers; consumers; processors; lenders; other major market participants, including derivatives intermediaries, buy-side representatives, and exchanges; regulators; and others interested in or who are affected by these evolving markets—are impacted by exogenous factors such as changes in market structure or endogenous factors such as changes to the regulatory environment. Accordingly, the AAC is essential to the conduct of CFTC business because the committee provides advice on developments in the structure of the agricultural markets and the effects that such changes may have on producers, end users, and the public. The AAC also provides advice on appropriate regulatory responses to evolving market structure that supports ( printed page 45267) the Commission's mission of ensuring the integrity of the price discovery and risk management functions of derivatives markets.

At the December 2022 meeting,^[2] the AAC heard from agricultural leaders on “Domestic and International Shipping, Freight, and Storage Impacts on the Grain Trade.” This presentation serves as an example of the intersection of CFTC policy, U.S. grain and oilseed markets, and international commerce and how the AAC serves as a true advisor to the Commission on practical matters that are at the core of the agricultural community.

In conclusion, this public interest determination documents that renewing the committee is in the public interest, essential to the conduct of agency business, and that the information to be obtained is not already available through another advisory committee or source within the Federal Government.

91 FR 45265