[Federal Register Volume 59, Number 10 (Friday, January 14, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-962]
[[Page Unknown]]
[Federal Register: January 14, 1994]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Parts 1 and 5
Contract Market Rule Review Procedures
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rules.
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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is
amending Regulation 1.41 to revise the Commission's requirements with
respect to the number of copies of rule change proposals that an
exchange must provide to the Commission. The Commission also is
adopting amendments that would revise certain of the procedures and
standards set forth in the Commission's expedited approval rules,
Regulations 1.41(h) through 1.41(t), to reflect recent innovations by
the exchanges as well as miscellaneous amendments to the procedural
aspects of the expedited approval rules. Other proposed amendments
include miscellaneous clarifying amendments to the Commission's
Guideline No. 1.
EFFECTIVE DATE: February 14, 1994.
FOR FURTHER INFORMATION CONTACT: Richard A. Shilts, Supervisory
Economist, Division of Economic Analysis, Commodity Futures Trading
Commission, 2033 K Street, NW., Washington, DC 20581. Telephone: (202)
254-7303.
SUPPLEMENTARY INFORMATION:
I. Introduction
Section 5a(a)(12) of the Commodity Exchange Act (``Act''), 7 U.S.C.
7a(12), provides that all rules\1\ of a contract market which relate to
terms and conditions\2\ in futures or option contracts traded on or
subject to the rules of a contract market must be submitted to the
Commission for its prior approval. Section 5a(a)(12) further requires
that contract markets submit all other rules to the Commission. Such
other rules may be made effective ten days after Commission receipt
unless, within the ten-day period, the Exchange requests Commission
approval or the Commission notifies the Exchange that it intends to
review the rules for approval.
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\1\Commission Regulation 1.41(a)(1) defines ``rule'' of a
contract market as follows:
* * * any constitutional provision, article of incorporation,
bylaw, rule, regulation, resolution, interpretation, stated policy,
or instrument corresponding thereto, in whatever form adopted, and
any amendment or addition thereto or repeal thereof, made or issued
by a contract market, or by the governing board of thereof or any
committee thereof.
\2\Commission Regulation 1.41(a)(2) defines ``terms and
conditions'' as follows:
Any definition of the trading unit or the specific commodity
underlying a contract for the future delivery of a commodity or
commodity option contract, specification of settlement or delivery
standards and procedures, and establishment of buyers' and sellers'
rights and obligations under the contract. Terms and conditions
shall be deemed to include provisions relating to the following:
(i) Quality or quantity standards for a commodity and any
applicable exemptions or discounts;
(ii) Trading hours, trading months and the listing of contracts;
(iii) Minimum and maximum price limits and the establishment of
settlement prices;
(iv) Position limits and position reporting requirements;
(v) Delivery points and locational price differentials;
(vi) Delivery standards and procedures, including alternatives
to delivery and applicable penalties or sanctions for failure to
perform;
(vii) Settlement of the contract; and
(viii) Payment or collection of commodity option premiums or
margins.
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Commission Regulation 1.41 sets forth procedures for submitting
proposed exchange rules for Commission approval, permitting certain
exchange rules to go into effect without Commission approval, and
dealing with exchange emergency rules. All proposed exchange rules
relating to the terms and conditions of a commodity futures or option
contract must, and any other rule may, be submitted for prior
Commission approval, under Section 5a(a)(12) of the Act, pursuant to
procedures set forth in Regulation 1.41(b). Regulation 1.41(c) sets
forth the submission requirements for rules that do not relate to terms
and conditions and which may be placed into effect without Commission
approval ten days after receipt by the Commission. Regulation 1.41(d)
sets forth the submission requirements for rules that are exempt from
the requirements of Section 5a(a)(12) of the Act. Regulations 1.41(h)
through (t) set forth conditions under which, in lieu of submission
under Regulation 1.41(b), certain types of exchange rule proposals
relating to terms and conditions requiring Commission approval may be
deemed approved either upon adoption by the exchange or within a
specified number of days of Commission receipt, which ranges from one
to ten days.\3\
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\3\Regulations 1.41(e) and 1.41(f), respectively, set forth the
submission requirements for exchange membership and contract market
rules relating to temporary emergencies. These regulations are not
affected by the amendments proposed in this notice.
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In submitting rules to the Commission under any of Regulations
1.41(b), 1.41(c), or 1.41(h) through (t), an exchange is required to
furnish three copies of the proposal to the Commission's Washington, DC
headquarters and one copy to the regional office of the Commission
having local jurisdiction over that exchange. For rules submitted under
the provisions of Regulation 1.41(d), an exchange is required to
furnish one copy of the proposal to the Commission's Washington, DC
headquarters and one copy to the regional office of the Commission
having local jurisdiction over that exchange.
Commission Regulation 1.41a sets forth procedures delegating to the
Directors of the Divisions of Trading and Markets (T&M) and Economic
Analysis (DEA) the authority to make certain decisions regarding rule
submissions. Specifically, this regulation delegates to the Directors
of T&M and DEA the authority to determine: (1) Whether to remit and not
accept for review rules submitted under Regulations 1.41(b), (c) or (d)
that do not comply with the applicable submission requirements of those
regulations; (2) whether a rule submission submitted under Regulation
1.41(c) or (d) relates to terms and conditions thus requiring prior
Commission approval pursuant to the provisions of Regulation 1.41(b);
(3) whether rules submitted under Regulation 1.41(c) do not require
prior approval under Section 5a(a)(12) of the Act and Regulation
1.41(b) and whether such rules may become effective prior to the
expiration of the ten-day period following receipt for such rules by
the Commission; and (4) whether proposals submitted under any of the
expedited procedures of Regulations 1.41(h) through (t) comply with the
applicable provisions of these regulations and, if not, to notify the
contract market that the submission is subject to the provisions of
Regulation 1.41(b).
II. Amendments to Regulation 1.41
The Commission is adopting amendments to Regulation 1.41 that would
revise the requirements of Regulations 1.41(b), 1.41(c) and 1.41(h)
through (t) to reduce to one from three the number of copies of rule
change proposals that an exchange must furnish to the Commission at its
Washington, DC headquarters for rule changes submitted under these
regulations. However, with respect to applications for contract market
designation, under the amendments the exchanges would continue to be
required to submit three copies of the application, including the
proposed rules, to the Commission at its Washington, DC headquarters.
Amendments to appendix A to part 5 of the Commission's regulations
reflect this continuing requirement.
Also, the Commission is eliminating the requirement that exchanges
must submit one copy of rules submitted under Regulations 1.41(d) and
1.41(h) through (t) to the regional office of the Commission having
local jurisdiction over that exchange. The exchanges would continue to
be required to submit one copy of rule proposals submitted under
Commission Regulations 1.41(b) and 1.41(c) to the regional office of
the Commission having local jurisdiction over that exchange.
The Commission has reviewed its procedures for processing rule
submissions under Regulations 1.41(b), 1.41(c), and 1.41(h) through
(t), and, as a result of that review, the Commission has determined
that the submission of more than one copy of a rule change proposal to
the Washington, DC headquarters is not necessary. Moreover, the
Commission has determined that, for rule change proposals submitted
under Regulations 1.41(d) and 1.41(h) through (t), the submission of a
copy of such rule to the regional office of the Commission having local
jurisdiction over that exchange also is not necessary.\4\ Further,
these amendments would diminish the paperwork burden on the exchanges
and would reduce costs associated with filing submissions under these
regulations.
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\4\These changes would not affect the current submission
requirements under paragraph (f) of Regulation 1.41 regarding
temporary emergency rules, where the exchange is required to notify
the Commission at its Washington, DC headquarters by the fastest
available means of communication. A written copy of the emergency
rule shall be furnished to the Commission at its Washington, DC
headquarters and two copies of the rule shall be furnished to the
regional office of the Commission having local jurisdiction over
that exchange.
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The Commission also is adopting amendments that would clarify and
update the standards set forth in the expedited approval procedures in
paragraphs (h), (l), (o), (p), and (q) of Regulation 1.41. Paragraph
(h) establishes an expedited review procedure for changes to the
composition, computation, or method of stock selection of a stock index
in which a contract market is designated to trade futures contracts, or
options on such futures contracts. Currently, such changes are deemed
approved upon adoption by the contract market if: (i) The index is
compiled for commercial purposes by an independent third party; (ii)
the change is consistent with a rule of the contract market which has
been approved by the Commission for this purpose which specifically
defines, or establishes standards governing, the composition of the
stock index upon which the designated futures contracts are authorized
to trade; (iii) the contract market provides the Commission with
written notice of the change within five days after the change is
adopted by the contract market; and (iv) the contract market labels the
written notice as being submitted under Regulation 1.41(h). This
expedited procedure was established because routine changes to an index
to maintain its continuity were not expected to require detailed review
by the Commission under paragraph (b) of Regulation 1.41.
Based on approximately 10 years of experience in administering the
provisions of Regulation 1.41(h), the Commission has determined that
the submission to the Commission on a routine basis of changes which
relate to maintaining the continuity of a stock index is not necessary.
Further, deleting this requirement would reduce the paperwork burden on
the exchanges.
Accordingly, the amendment to Regulation 1.41(h) would delete items
(iii) and (iv) above, so that a contract market no longer would be
required to submit routinely to the Commission a written notice of a
change in the composition, computation, or method of stock selection
that is made to maintain the continuity of a stock index in which that
contract market is designated to trade futures or futures option
contracts. In order for such a change to be deemed approved by the
Commission pursuant to Regulation 1.41(h) as amended, the index must
continue to be compiled for commercial purposes by an independent third
party, and the change must be consistent with a rule of the contract
market which has been approved by the Commission for this purpose which
defines, or establishes standards governing, the composition of the
stock index. Under the amended regulation, however, such changes would
not routinely be required to be submitted to the Commission following
adoption by the exchange. As currently provided, contract markets would
continue to be required to submit to the Commission for review and
approval under Regulation 1.41(b) all changes to the composition,
computation, or method of stock selection that are for purposes other
than the continuity of the index.
Further, under amended Regulation 1.41(h), contract markets would
be required to provide to the Commission, upon special call to the
contract market, information regarding the composition, computation, or
method of stock selection of the index, including any change or changes
related to the continuity of the index, or any other issues relating to
the index, as instructed, and within the time, and for the period,
specified in the call. Such a special call would provide the Commission
with information, as requested, to assure that the contract market
continued to meet its regulatory obligations.
Paragraph (l) of Regulation 1.41 establishes an expedited procedure
for changes in trading months. Such changes are deemed approved 10 days
after the Commission receives written notification of the proposal,
provided certain conditions are satisfied. The amendment to paragraph
(l) would clarify that this paragraph applies to exchange proposals to
delist contract months without open interest as well as to exchange
proposals to list new months. In that regard, the division directors or
their delegees routinely process requests to delist contact months
under Regulation 1.41(l), as long as the months to be delisted have no
open interest. The amendment simply clarifies the division directors'
delegated authority in this regard.
Paragraph (o) establishes an expedited procedure for changes in
strike price listing procedures. Such changes are deemed approved 10
days after the Commission receives written notification of the
proposal, provided certain conditions are satisfied. The amendment to
paragraph (o) would clarify that this paragraph applies to exchange
proposals to amend strike price listing procedures for listed options
without open interest, as well as for options not listed, at the time
the rule goes into effect.
Paragraph (p) establishes an expedited procedure for changes in the
last trading day of an option contract. Such changes are deemed
approved 10 days after the Commission receives written notification of
the proposal, provided certain conditions are satisfied. One amendment
to paragraph (p) would clarify that this paragraph applies to listed
options without open interest, as well as to options not listed, at the
time the rule goes into effect. Another amendment is non-substantive
and would correct a typographical error in section (3) of that
paragraph. Specifically, the amendment would clarify that the
Commission will, within 10 days after receipt of a submission regarding
a change in option last trading day specifications, notify the contract
market if the change appears to not be consistent with the provisions
of this paragraph.
Paragraph (q) of Regulation 1.41 provides that changes related to
``cabinet trade'' provisions for options may be approved under
expedited procedures. A cabinet trade currently is defined as an option
trade that represents a closing transaction for both parties to the
trade and which is specifically identified as such in the contract
market's rules. The amendments to paragraph (q) revise the expedited
approval standard to remove the requirement that option cabinet trade
rules eligible for treatment under this paragraph must involve closing
transactions exclusively. This revision in the expedited approval
standard reflects recent innovations by the exchanges with respect to
cabinet trade provisions. An amendment to section (3) of that paragraph
is non-substantive and corrects a typographical error. Specifically,
the amendment clarifies that the Commission will, within 10 days after
receipt of a submission regarding a change in the cabinet trade
provisions of an option contract, notify the contract market if the
change appears to not be consistent with the provisions of this
paragraph.
III. Amendments to Regulation 1.41a
In connection with the foregoing amendments to Regulation 1.41, the
Commission is adopting amendments to paragraph (a)(5) of Regulation
1.41a. Currently, as noted above, this regulation delegates to the
Director of the Division of Trading and Markets and to the Director of
the Division of Economic Analysis, or their respective delegees,
authority to determine whether changes submitted under paragraphs (h)-
(t) of Regulation 1.41 are inconsistent with the relevant provisions of
those paragraphs and to notify contract markets if such submissions are
to be subject to the usual review procedures under Section 5a(a)(12) of
the Act and Regulation 1.41(b).
One amendment to Regulation 1.41a provides that the Director of the
Division of Trading and Markets and the Director of the Division of
Economic Analysis, or their respective delegees, have the delegated
authority to give notice that rules submitted pursuant to
Secs. 1.41(k)-(t) comply with the provisions of Secs. 1.41(k)-(t), as
applicable, and therefore shall be deemed approved prior to the end of
the period specified in the applicable rule. Such period commences on
the day the rule is received by the Commission at its Washington, DC
headquarters. The Commission has received requests from exchanges for
notice that rules submitted under the expedited procedures of
Secs. 1.41(k)-(t) are deemed approved prior to the end of the specified
period in order to provide for timely implementation of rules to
respond to rapidly changing market conditions or to avoid a market
problem.
Another amendment to Regulation 1.41a would expand the delegated
authority of the Director of the Division of Trading and Markets and
the Director of the Division of Economic Analysis, or their respective
delegees, to notify a contract market that a rule submitted under
Section 5a(a)(12) of the Act and Sec. 1.41(b) will be treated as if
submitted pursuant to Secs. 1.41(h)-(t), as applicable, if the rule
submitted pursuant to the provisions of Sec. 1.41(b) complies with any
of the provisions of Secs. 1.41(h)-(t). Current procedures can delay
processing of the proposal and impede timely implementation of the
rule.
IV. Amendments to Commission Guideline No. 1
Guideline No. 1 sets forth the Commission's economic and public
interest requirements for initial and continuing designation of a
contract market in a particular commodity. The Commission is proposing
to revise this guideline to correct an improper rule reference.
Specifically, item 5 in column 2 of the ``Option Designation Checklist
For Options On Futures Contracts'' (option on futures checklist) and
the ``Option Designation Checklist For Options on Physicals'' (option
on physicals checklist) regarding the option expiration criteria cites
Commission Regulation 33.4(d)(1) as the applicable Commission
regulation for these criteria. However, as a result of substantive
revisions to the Commission's option regulations adopted in September
1991 (56 FR 43694), many of the Commission's option regulations were
renumbered, including Regulation 33.4(d)(1) which was renumbered as
33.4(b)(2). Therefore, the Commission hereby is amending the option
checklists to replace 33.4(d)(1) with 33.4(b)(2) as the cited
Commission regulation for the option expiration criteria in each of
those checklists.
Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq.,
requires that agencies, in adopting rules, consider their impact on
small businesses. The Commission has previously determined that
contract markets are not small entities for purposes of the Regulatory
Flexibility Act. 47 FR 18618 (April 30, 1982). Moreover, no additional
regulatory burdens are imposed by these amendments. Therefore, the
Acting Chairman on behalf of the Commission hereby certifies, pursuant
to 5 U.S.C. 605(b), that the action taken herein will not have a
significant economic impact on a substantial number of small entities.
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1980 (PRA), 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 Paperwork Reduction Act. In
compliance with the Act, the Commission has submitted these amended
rules and their associated information collection requirements to the
Office of Management and Budget.
While these amended rules result in no increased burden, the group
of rules (OMB control # 3038-0007) of which they are a part has the
following burden:
Average Burden Hours per Response: 50.34.
Number of Respondents: 10,727,182.
Frequency of Response: Monthly.
Persons wishing to comment on the estimated paperwork burden
associated with these amended rules should contact Gary Waxman, Office
of Management and Budget, room 3228, NEOB, Washington, DC 20503. Copies
of the information collection submission to OMB are available from Joe
F. Mink, CFTC Clearance Officer, 2033 K Street, NW., Washington, DC
20581, (202) 254-9735.
C. Notice and Comment
Section 553(b) of the Administrative Procedure Act, 5 U.S.C.
553(b), requires in most instances that a notice of proposed rulemaking
be published in the Federal Register and that opportunity for comment
be provided when an agency promulgates new regulations. Section 553(b)
sets forth an exception, however, for rules of agency organization,
procedure, or practice. The instant amendments provide expedited
procedures for the approval of certain contract market rules. The
Commission has determined that these amendments, which will reduce the
burden on the exchanges, relate to Commission procedure and practice
and therefore that notice and comment is not required.
Section 553(b) also sets forth an exception to the requirement of
notice and opportunity for public comment when the Commission for good
cause finds such notice and public comment are unnecessary or contrary
to the public interest. The Commission finds that notice and public
comment on the rule changes announced herein are unnecessary because
the changes are procedural in nature and do not establish any new
obligations under the Act.
List of Subjects in 17 CFR Parts 1 and 5
Commodity futures, Contract market rules, Consumer protection, Rule
review procedures, Reporting and recordkeeping requirements.
In consideration of the foregoing and pursuant to the authority
contained in the Commodity Exchange Act and, in particular, sections
4c, 5a, and 8a thereof, 7 U.S.C. 6c, 7a and 12a, the Commission hereby
amends parts 1 and 5 of chapter I of title 17 of the Code of Federal
Regulations as follows:
PART 1--GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT
1. The authority citation for part 1 continues to read as follows:
Authority: 7 U.S.C. 2, 2a, 4, 4a, 6, 6a, 6b, 6c, 6d, 6e, 6f, 6g,
6h, 6i, 6j, 6k, 6l, 6m, 6n, 6o, 6p, 7, 7a, 7b, 8, 9, 12, 12a, 12c,
13a, 13a-1, 16, 16a, 19, 21, 23, and 24, unless otherwise stated.
2. Section 1.41 is amended by revising paragraphs (b) introductory
text, (c)(1), (d)(2) and (h), by redesignating (l)(1)(iii) as
(l)(1)(iv) and adding a new (l)(1)(iii), and by revising (o)(1)(ii),
(p)(2)(ii), (p)(3), and (q) to read as follows:
Sec. 1.41 Contract market rules; submission of rules to the
Commission; exemption of certain rules.
* * * * *
(b) Submission of rules for prior Commission approval. Except as
provided herein and in paragraph (f) of this section, all proposed
contract market rules that relate to terms and conditions and any other
rules that the Commission has determined pursuant to paragraph (c) of
this section require prior approval must, and any other rule may, be
submitted to the Commission for approval pursuant to section 5a(a)(12)
of the Act prior to their proposed effective dates. One copy of each
such rule submitted under this section shall be furnished to the
Commission at its Washington, DC headquarters, and, excluding
submissions under paragraphs (h) through (t) of this section, one copy
shall be furnished to the regional office of the Commission having
local jurisdiction over the contract market. Provided, however, that
for submissions under appendix A to part 5 of the Commission's
Regulations with respect to contract market designation applications,
three copies of such submissions shall be furnished to the Commission
at its Washington, DC headquarters. Each submission under this
paragraph (b) shall, in the following order:
* * * * *
(c) Rules that do not relate to terms and conditions. (1) Except as
provided in paragraphs (d) and (f) of this section (exempt or temporary
emergency rules), one copy of any rule which does not relate to terms
and conditions or which a contract market proposes to place into effect
without submission to the Commission for approval under section
5a(a)(12) of the Act and paragraph (b) of this section shall be
furnished to the Commission at its Washington, DC headquarters at least
ten days prior to its proposed effective date. One copy also shall be
transmitted by the contract market to the regional office of the
Commission having local jurisdiction over the contract market. Each
such submission shall be labeled as being submitted pursuant to
paragraph (c) of this section and include the information required by
paragraphs (b)(2) through (b)(5) of this section.
* * * * *
(d) * * *
(2) Rules that are exempt from the requirements of section
5a(a)(12) of the Act in accordance with the provisions of this
paragraph (d) shall nonetheless be submitted to the Commission pursuant
to the provisions of section 5a(a)(1) of the Act. Each such submission
shall be labeled as being submitted pursuant to section 5a(a)(1) of the
Act and paragraph (d) of this section. One copy of each such submission
shall be furnished to the Commission at its Washington, DC
headquarters.
* * * * *
(h) Stock index contracts. (1) Notwithstanding the provisions of
paragraph (b) of this section, all changes in the composition,
computation, or method of stock selection of a stock index in which a
contract market is designated to trade futures contracts, or options on
such futures contracts, shall be deemed approved by the Commission at
the time such changes are adopted by a contract market if:
(i) The index is compiled for commercial purposes by an independent
third party; and
(ii) The change is consistent with a rule of the contract market
which has been approved by the Commission for this purpose which
specifically defines, or establishes standards governing, the
composition of the stock index upon which the designated futures
contracts are authorized to trade.
(2) The contract market must provide to the Commission, upon
special call, information regarding the composition, computation, or
method of stock selection of the index, including any change or
changes, or any other issues relating to the index, as instructed, and
within such time, and for such a period, specified in the call.
* * * * *
(l) * * *
(1) * * *
(iii) For proposals to delist previously listed futures or option
contract months, the months to be delisted have no open interest at the
time of delisting.
* * * * *
(o) * * *
(1) * * *
(ii) The amended rule does not affect any option with open interest
at the time the rule goes into effect.
* * * * *
(p) * * *
(2) * * *
(ii) The amended last trading day rule does not apply to any option
with open interest at the time the rule goes into effect.
* * * * *
(3) The Commission will, within 10 days after receipt by the
Commission of notice of a change in the last trading day specification
of an option contract, notify the contract market making the submission
if it appears that the change is not consistent with the provisions of
this paragraph. Upon such notification by the Commission to the
contract market, the change will be subject to the usual procedures
under section 5a(a)(12) of the Act and paragraph (b) of this section.
(q) Option cabinet trade provisions. (1) For purposes of this
paragraph, a cabinet trade is defined as an option trade that
represents a transaction whereby the per-contract value of the cabinet
trade is less than the per-contract value associated with a trade at
the existing minimum premium fluctuation specified in the contract
market's rules for that option contract.
(2) Notwithstanding the provisions of paragraph (b) of this
section, all initial specifications of, and changes to, option cabinet
trade provisions shall be deemed approved by the Commission 10 days
after written notice of such change is received by the Commission if:
(i) The initial specification of a cabinet trade rule or a change
thereto provides that the per-contract value (or values) of the cabinet
trade is (are) less than the per-contract value associated with a trade
at the existing minimum premium fluctuation specified in the contract
market's rules for that option contract.
(ii) The contract market labels the written notice as being
submitted pursuant to paragraph (q) of this section.
(3) The Commission will, within 10 days after receipt by the
Commission of notice of a change in the cabinet trade provisions of an
option contract, notify the contract market making the submission if it
appears that the change is not consistent with the provisions of this
paragraph. Upon such notification by the Commission to the contract
market, the change will be subject to the usual procedures under
section 5a(a)(12) of the Act and paragraph (b) of this section.
* * * * *
3. Section 1.41a is amended by revising paragraph (a)(5) to read as
follows:
Sec. 1.41a Delegation of authority to the Directors of the Division of
Trading and Markets and the Division of Economic Analysis to process
certain contract market rules.
(a) * * *
(5) Pursuant to Secs. 1.41(h) through (t) to determine:
(i) Whether contract market rules submitted pursuant to Section
5a(a)(12) of the Act and the provisions of Secs. 1.41(h) through (t)
comply with the provisions of Secs. 1.41(h) through (t), as applicable;
(ii) To give notice that rules submitted pursuant to Secs. 1.41(k)
through (t) comply with the provisions of Secs. 1.41(k) through (t), as
applicable, and therefore shall be deemed approved prior to the end of
the period specified in the applicable rule, commencing on the day the
rule is received by the Commission at its Washington, DC headquarters;
(iii) If contract market rules submitted pursuant to the provisions
of Secs. 1.41(h) through (t) do not comply with the applicable
provisions of these regulations, to notify the submitting contract
market that such rules are therefore subject to the procedures
specified in Section 5a(a)(12) of the Act and Sec. 1.41(b); and
(iv) If contract market rules submitted pursuant to the provisions
of Sec. 1.41(b) comply with any of the provisions of Secs. 1.41(h)
through (t), to notify the contract market that such rules will be
treated as if submitted pursuant to Secs. 1.41(h) through (t) as
applicable.
* * * * *
PART 5--DESIGNATION OF AND CONTINUING COMPLIANCE BY CONTRACT
MARKETS
4. The authority citation for part 5 continues to read as follows:
Authority: 7 U.S.C. 6c, 7, 7a, 8 and 12a, unless otherwise
noted.
5. Appendix A to part 5, Commission Guideline No. 1, is amended by
revising the introductory text of the appendix and by revising the
option designation checklists in paragraph (b)(2) and paragraph (c)(5)
to read as follows:
Appendix A to Part 5--Guideline No. 1; Interpretive Statement Regarding
Economic and Public Interest Requirements for Contract Market
Designation
For purposes of a board of trade seeking designation as a contract
market and thereafter for the purpose of demonstrating continued
compliance with the requirements of sections 4c, 5 and 5a of the
Commodity Exchange Act, and regulations thereunder, the following shall
be provided to the Commission. The board of trade shall furnish to the
Commission at its Washington, DC headquarters three copies of the
application including the proposed rules.
* * * * *
(b) * * *
(2) * * *
Option Designation Checklist for Options on Futures Contracts
------------------------------------------------------------------------
Applicable Met by
Criteria Commission Rule, Standard exchange rule
17 CFR number
------------------------------------------------------------------------
1. Speculative 1.61............ Combined net
limits. position in futures
and options on a
futures-equivalent
basis at the
futures position
levels, with inter-
month spread
exemptions that are
consistent with
those of the
futures contracts.
2. Aggregation 1.61(g)......... Same as section
rule. 1.61(g) of this
chapter or
previously approved
language.
3. Reporting 15.00(b)(2)..... 50 contracts or
level. fewer.
4. Strike prices 33.4(b)(1)...... Procedures for
listing strikes are
specified and
automatic.
5. Option 33.4(b)(2)...... Options, except for
expiration. options on cash-
settled futures
contracts, expire
not less than one
business day before
the earlier of the
last trading day or
the first notice
day of the
underlying futures
contract.
6. Minimum tick. 33.4(d)......... Tick is equal to, or
less than, the
underlying futures
tick.
7. Daily price 33.4(d)......... Price limit, if any,
limit, if is equal to, or
specified. greater than,
underlying futures
price limit .
------------------------------------------------------------------------
* * * * *
(c) * * *
(5) * * *
Option Designation Checklist for Options on Physicals
------------------------------------------------------------------------
Applicable Met by
Criteria Commission Rule, Standard exchange rule
17 CFR number
------------------------------------------------------------------------
1. Speculative 1.61............ If there is a
limits. futures contract in
the same commodity
on the same
exchange, combined
futures and options
on a futures-
equivalent basis at
the futures
position levels,
with inter-month
spread exemptions
that are consistent
with those of the
futures contracts.
2. Aggregation 1.61(g)......... Same as Section
rule. 1.61(g) of this
chapter or
previously approved
language.
3. Reporting 15.00(b)(2)..... 50 contracts or
level. fewer.
4. Strike prices 33.4(b)(1)...... Procedures for
listing strikes are
specified and
automatic.
5. Option 33.4(b)(2)...... Options expire not
expiration. less than one
business day before
the earlier of the
last trading day or
the first notice
day of any futures
contract in the
same or a related
commodity, except
for cash-settled
futures contracts .
------------------------------------------------------------------------
* * * * *
Issued in Washington, DC on January 10, 1994, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 94-962 Filed 1-13-94; 8:45 am]
BILLING CODE 6351-01-M
