2022-13141. Fees for Reviews of the Rule Enforcement Programs of Designated Contract Markets and Registered Futures Associations

AGENCY:

Commodity Futures Trading Commission.

ACTION:

Notification of 2021 schedule of fees.

SUMMARY:

The Commodity Futures Trading Commission (“CFTC” or “Commission”) charges fees to designated contract markets and registered futures associations to recover the costs incurred by the Commission in the operation of its program of oversight of self-regulatory organization rule enforcement programs, specifically National Futures Association (“NFA”), a registered futures association, and the designated contract markets. Fees collected from each self-regulatory organization are deposited in the Treasury of the United States as miscellaneous receipts. The calculation of the fee amounts charged for 2021 by this document is based upon an average of actual program costs incurred during fiscal year (“FY”) 2018, FY 2019, and FY 2020.

DATES:

Each self-regulatory organization is required to remit electronically the applicable fee on or before August 16, 2022.

FOR FURTHER INFORMATION CONTACT:

Joel Mattingley, Chief Financial Officer, Commodity Futures Trading Commission; [phone]; Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581; [e-mail]. For information on electronic payments, contact Jennifer Fleming; [phone]; [e-mail].

SUPPLEMENTARY INFORMATION:

I. Background Information

A. General

This document relates to fees for the Commission's review of the rule enforcement programs at the registered futures associations ^[1] and designated contract markets (“DCM”), each of which is a self-regulatory organization (“SRO”) regulated by the Commission. The Commission recalculates the fees charged each year to cover the costs of operating this Commission program.^[2] The fees are set each year based on direct program costs, plus an overhead factor. The Commission calculates actual costs, then calculates an alternate fee taking volume into account, and then charges the lower of the two.^[3]

B. Overhead Rate

The fees charged by the Commission to the SROs are designed to recover program costs, including direct labor costs and overhead. The overhead rate is calculated by dividing total Commission-wide overhead direct program labor costs into the total amount of the Commission-wide overhead pool. For this purpose, direct program labor costs are the salary costs of personnel working in all Commission programs. Overhead costs generally consist of the following Commission-wide costs: Indirect personnel costs (leave and benefits), rent, communications, contract services, utilities, equipment, and supplies. This formula has resulted in the following overhead rates for the most recent three years (rounded to the nearest whole percent): 182 percent for FY 2018, 174 percent for FY 2019, and 158 percent for FY 2020.

C. Conduct of SRO Rule Enforcement Reviews

Under the formula adopted by the Commission in 1993, the Commission calculates the fee to recover the costs of its rule enforcement reviews and examinations, based on the three-year average of the actual cost of performing such reviews and examinations at each SRO. The cost of operation of the Commission's SRO oversight program varies from SRO to SRO, according to the size and complexity of each SRO's program. The three-year averaging computation method is intended to smooth out year-to-year variations in cost. Timing of the Commission's reviews and examinations may affect costs—a review or examination may span two fiscal years and reviews and examinations are not conducted at each SRO each year.

As noted above, adjustments to actual costs may be made to relieve the burden on an SRO with a disproportionately large share of program costs. The Commission's formula provides for a reduction in the assessed fee if an SRO has a smaller percentage of United States industry contract volume than its percentage of overall Commission oversight program costs. This adjustment reduces the costs so that, as a percentage of total Commission SRO oversight program costs, they are in line with the pro rata percentage for that SRO of United States industry-wide contract volume.

The calculation is made as follows: The fee required to be paid to the Commission by each DCM is equal to the lesser of actual costs based on the three-year historical average of costs for that DCM or one-half of average costs incurred by the Commission for each DCM for the most recent three years, plus a pro rata share (based on average trading volume for the most recent three years) of the aggregate of average annual costs of all DCMs for the most recent three years.

The formula for calculating the second factor is: 0.5a + 0.5 vt = current fee. In this formula, “a” equals the average annual costs, “v” equals the percentage of total volume across DCMs over the last three years, and “t” equals the average annual costs for all DCMs. NFA has no contracts traded; hence, its fee is based simply on costs for the most recent three fiscal years. This table summarizes the data used in the calculations of the resulting fee for each entity:

Table 1—Summary of Data Used in Fee Calculations

	Actual total costs			3-Year average actual costs	3-Year total volume %	Adjusted volume costs	2021 Assessed fee
	FY 2018	FY 2019	FY 2020
Cantor Futures Exchange, L.P	$56,551		$22,702	$26,418	0.03	$13,319	$13,319
CBOE Futures Exchange, LLC	16,033	$40,517	23,325	26,625	1.24	17,482	17,482
Chicago Board of Trade	2,296	22,835	56,041	27,058	33.31	125,158	27,058
Chicago Mercantile Exchange, Inc	235,127	383,995	260,723	293,282	42.97	290,666	290,666
Eris Exchange, LLC	33,170			11,057	0.00	5,540	5,540
ICE Futures U.S., Inc	50,096	73,464	193,300	105,620	6.59	74,885	74,885
Minneapolis Grain Exchange, Inc	438	39,525		13,321	0.05	6,813	6,813
Nasdaq OMX Futures Exchange, Inc	109,413	1,741		37,051	0.27	19,444	19,444
New York Mercantile Exchange/Commodity Exchange, Inc	3,397	45,425	99,311	49,377	15.11	75,328	49,377
Nodal Exchange, LLC	33,162	2,312		11,825	0.08	6,180	6,180
North American Derivatives Exchange, Inc	6,986	135,159	2,598	48,248	0.21	24,844	24,844
OneChicago, LLC Futures Exchange	61,276			20,425	0.13	10,648	10,648
Subtotal	607,946	744,973	658,001	670,307	100.00	670,307	546,255
National Futures Association	507,673	540,821	567,719	538,738			538,738
Total	1,115,619	1,285,794	1,225,720	1,209,044	100.00	670,307	1,084,993
Columns may not add due to rounding.

An example of how the fee is calculated for one exchange, the Chicago Board of Trade, is set forth here:

a. Actual three-year average costs = $27,058.

b. The alternative computation is: [(.5) ($27,058)] + (.5) [(.33307) ($670,307)] = $125,158.

c. The fee is the lesser of a or b; in this case $27,058.

As noted above, the alternative calculation based on contracts traded is not applicable to NFA because it is not a DCM and has no contracts traded. The Commission's average annual cost for conducting oversight review of the NFA rule enforcement program during fiscal years 2018 through 2020 was $538,738. The fee to be paid by the NFA for the current fiscal year is $538,738.

II. Schedule of Fees

Fees for the Commission's review of the rule enforcement programs at the registered futures associations and DCMs regulated by the Commission are as follows:

Table 2—Schedule of Fees

	3-Year average actual costs	3-Year total volume %	Adjusted volume costs	2021 Assessed fee
Cantor Futures Exchange, L.P	$26,418	0.03	$13,319	$13,319
CBOE Futures Exchange, LLC	26,625	1.24	17,482	17,482
Chicago Board of Trade	27,058	33.31	125,158	27,058
Chicago Mercantile Exchange, Inc	293,282	42.97	290,666	290,666
Eris Exchange, LLC	11,057	0.00	5,540	5,540
ICE Futures U.S., Inc	105,620	6.59	74,885	74,885
Minneapolis Grain Exchange, Inc	13,321	0.05	6,813	6,813
Nasdaq OMX Futures Exchange, Inc	37,051	0.27	19,444	19,444
New York Mercantile Exchange/Commodity Exchange, Inc	11,825	0.08	6,180	6,180
Nodal Exchange, LLC	48,248	0.21	24,844	24,844
North American Derivatives Exchange, Inc	20,425	0.13	10,648	10,648
OneChicago, LLC Futures Exchange	49,377	15.11	75,328	49,377
Subtotal	670,307	100.00%	670,307	546,255
National Futures Association	538,738			538,738
Total	1,209,044	100.00	670,307	1,084,993
Columns may not add due to rounding.

III. Payment Method

The Debt Collection Improvement Act (DCIA) requires deposits of fees owed to the government by electronic transfer of funds. See 31 U.S.C. 3720. All payments should be made via the government payment website https://www.pay.gov/​public/​form/​start/​105542374/​. Credit card payments are only acceptable for amounts less than or equal to $24,999. All payments equal to or above $25,000 can be made by electronice funds transfer. Fees collected from each self-regulatory organization shall be deposited in the Treasury of the United States as miscellaneous receipts. See 7 U.S.C 16a.

Issued in Washington, DC, on this 14th day of June, 2022, by the Commission.

Robert Sidman,

Deputy Secretary of the Commission.

Footnotes

1.  National Futures Association is the only registered futures association.

2.   See Section 237 of the Futures Trading Act of 1982, 7 U.S.C. 16a, and 31 U.S.C. 9701. For a broader discussion of the history of Commission fees, see 52 FR 46070, Dec. 4, 1987.

3.  58 FR 42643, Aug. 11, 1993, and 17 CFR part 1, app. B