[Federal Register Volume 64, Number 104 (Tuesday, June 1, 1999)]
[Notices]
[Pages 29273-29274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13572]
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COMMODITY FUTURES TRADING COMMISSION
Performance of Certain Functions by National Futures Association
With Respect to Those Domestic and Foreign Firms Acting in the Capacity
of a Commodity Pool Operator or a Commodity Trading Advisor
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice and order.
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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is
authorizing the National Futures Association (``NFA'') to conduct
reviews of disclosure documents required to be filed with the
Commission pursuant to Rule 30.6(b)(2) by firms acting in the capacity
of commodity pool operators (``CPOs'') and commodity trading advisors
(``CTAs'').\1\ Further, the Commission is authorizing NFA to maintain
and serve as the official custodian of certain Commission records.
\1\ Commission rules referred to herein are found at 17 CFR Ch.
I (1999).
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EFFECTIVE DATE: July 1, 1999.
FOR FURTHER INFORMATION CONTACT: Laurie Plessala Duperier, Special
Counsel, or Andrew Chapin, Staff Attorney, Division of Trading and
Markets, Commodity Futures Trading Commission, 1155 21st Street, N.W.,
Washington, D.C. 20581. Telephone: (202) 418-5430.
Order Authorizing the Performance of Certain Functions With Respect
to U.S. and Non-U.S. Firms
I. Authority and Background
Section 8a(10) of the Commodity Exchange Act \2\ (``Act'') provides
that the Commission may authorize any person to perform any portion of
the registration functions under the Act, notwithstanding any other
provision of law, in accordance with rules adopted by such person and
submitted to the Commission for approval or, if applicable, for review
pursuant to Section 17(j) of the Act \3\ and subject to the provisions
of the Act applicable to registrations granted by the Commission.
Section 17(o)(1) of the Act \4\ provides that the Commission may
require NFA to perform Commission registration functions in accordance
with the Act and NFA rules. NFA has confirmed its willingness to
perform certain functions now performed by the Commission and has
provided the Commission with a detailed proposal setting forth
standards and procedures to be followed and reports to be generated in
administering the functions discussed below.\5\
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\2\ 7 U.S.C. 12a(10) (1998).
\3\ 7 U.S.C. 21(j) (1998).
\4\ 7 U.S.C. 21(o)(1) (1998).
\5\ U.S.C. Letter from Robert K. Wilmouth, President of NFA, to
Brooksley Born, Chairperson of the Commission, dated June 20, 1997.
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Upon consideration, the Commission has determined to authorize NFA,
effective July 1, 1999, to conduct reviews of disclosure documents
required to be filed pursuant to Rule 30.6(b)(2) by firms registered or
required to be registered as CPOs or CTAs under Part 30, or exempt from
registration pursuant to Rule 30.5, and to maintain and serve as the
official custodian of records for these disclosure documents.
Compliance With Rule 30.6(b)(2)
Rule 30.6(b)(2) \6\ requires CPOs and CTAs registered or required
to be registered under Part 30, or exempt from registration pursuant to
Rule 30.5, to provide a disclosure document \7\ to prospective U.S.
foreign futures and foreign options customers \8\ that do not meet the
definition of qualified eligible participants and qualified eligible
clients, respectively.\9\ Rule 30.6(b)(2) also requires CPOs and CTAs
to file the disclosure documents with the Commission in accordance with
Rule 4.26(d) and 4.36(d), respectively.\10\ Pursuant to an October 6,
1997 delegation order, the Commission authorized NFA to review
disclosure documents required to be filed with the Commission by CPOs
and CTA pursuant to Rules 4.26(d) and 4.36(d), respectively.\11\ In
light of NFA's experience in receiving and reviewing disclosure
documents filed in accordance with Rules 4.26(d) and 4.36(d), the
Commission believes that it is appropriate for NFA to undertake the
performance of this function as it relates to Rule 30.6(b)(2).
Accordingly, by this Order, NFA is authorized to review all disclosure
documents filed pursuant to Rule 30.6(b)(2) by firms registered or
required to be registered as CPOs or CTAs under Part 30, or exempt from
registration pursuant to Rule 30.5.
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\6\ On January 11, 1999, the Commission proposed to amend Rules
30.5 and 30.6. 64 FR 1566 (January 11, 1999).
\7\ The information contained in the disclosure document must
comply with Rule 4.21 for CPOs and Rule 4.31 for CTAs.
\8\ Pursuant to Rule 30.1(c), ``foreign futures or foreign
options customer'' means ``any person located in the United States,
its territories or possessions who trades in foreign futures or
foreign options, Provided, That an owner or holder of a proprietary
account defined in paragraph (y) or Sec. 1.3 of this Chapter shall
not be deemed to be a foreign futures or foreign options customer
within Secs. 30.6 and 30.7 of this part.''
\9\ Qualified eligible participants and qualified eligible
clients are defined in Rules 4.7(a)(1)(ii) and 4.7(b)(1)(ii),
respectively.
\10\ Rule 4.26(d)(1) requires that a CPO file a disclosure
document with the Commission for each pool that it operates or
intends to operate not less than 21 calendar days prior to the date
the CPO intends to deliver the document to prospective participants
in the pool. Similarly, Rule 4.36(d)(1) requires that a CTA file a
disclosure document with the Commission for each trading program
that it offers or intends to offer not less than 21 calendar days
prior to the date the CTA first intends to deliver the document to a
prospective client in the trading program. Further, pursuant to
Rules 4.26(d) and 4.36(d), CPOs and CTAs, respectively, must file
with the Commission all subsequent amendments to their disclosure
documents within 21 calendar days of the date upon which the CPO or
CTA first knows or has reason to know of the defect requiring
amendment. In addition, CPOs and CTAs may not use their disclosure
documents for more than nine months from the effective dates of such
documents, in accordance with Rules 4.26(a)(2) and 4.36(a)(2),
respectively.
\11\ 62 FR 52088 (October 6, 1997).
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II. Conclusion and Order
The Commission has determined, in accordance with Sections 8a(10)
and 17(o)(1) of the Act, subject to any restriction by a given
jurisdiction that information must pass directly between regulatory
authorities, to authorize NFA to perform the following functions:
(1) To conduct reviews of disclosure documents required to be
filed with the Commission pursuant to Rule 30.6(b)(2) by firms
registered or required to be registered as CPOs or CTAs under Part
30, or exempt from registration pursuant to Rule 30.5; and
(2) To maintain and to serve as the official custodian of
records for the disclosure documents required to Rule 30.6(b)(2).
NFA shall perform these functions in accordance with the standards
established by the Act and the regulations and Commission orders issued
thereunder and shall provide the Commission with such summaries and
periodic reports as the Commission may determine are necessary for the
effective oversight of this program.
These determinations are based on the Congressional intent
expressed in
[[Page 29274]]
Sections 8a(10) and 17(o) of the Act that the Commission shall have the
authority to delegate to NFA any portion of the Commission's
registration responsibilities under the Act for purposes of carrying
out these responsibilities in the most efficient and cost-effective
manner and upon NFA's representations concerning the standards and
procedures to be followed and the reports to be generated in
administering these functions.
This Order does not, however, authorize NFA to render ``no-action''
positions, exemptions or interpretations with respect to applicable
disclosure, reporting, recordkeeping and registration requirements.
Nothing in this Order or in Sections 8a(10) or 17(o) of the Act
shall affect the Commission's authority to review NFA's performance of
the Commission functions listed above.
NFA is authorized to perform all functions specified herein until
such time as the Commission orders otherwise. Nothing in this Order
shall prevent the Commission from exercising the authority delegated
herein. NFA may submit to the Commission for decision any specific
matters that have been delegated to it, and Commission staff will be
available to discuss with NFA staff issues relating to the
implementation of this Order. Nothing in this Order affects the
applicability of previous orders issued by the Commission under Parts 4
and 30.
Issued in Washington, DC, on May 21, 1999 by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 99-13572 Filed 5-28-99; 8:45 am]
BILLING CODE 6351-01-M
