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Federal Register / Vol. 72, No. 120 / Friday, June 22, 2007 / Proposed Rules
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Part 21
Special Calls
Commodity Futures Trading
Commission.
ACTION: Proposed rules.
AGENCY:

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SUMMARY: The Commodity Futures
Trading Commission (‘‘Commission’’) is
proposing to amend Part 21 of its
regulations relating to special calls for
information. The proposed amendments
would: add to the types of information
specified in § 21.02, which must be
furnished upon special call, information
regarding exchanges of futures for
physical commodities or for derivatives
positions, and information regarding
delivery notices issued and stopped;
and delegate to the Director of the
Division of Market Oversight and the
Director’s delegatees, the ability to issue
special calls pursuant to sections 21.01
and 21.02.
DATES: Comments must be received by
July 23, 2007.
ADDRESSES: Comments should be sent to
the Commodity Futures Trading
Commission, Three Lafayette Centre,
1155 21st Street, NW., Washington, DC
20581, attention: Office of the
Secretariat. Comments may be sent by
facsimile transmission to 202–418–
5521, or by e-mail to [email protected].
Reference should be made to ‘‘Proposed
Rules for Special Calls.’’
FOR FURTHER INFORMATION CONTACT: Don
Heitman, Senior Special Counsel
(telephone 202–418–5041, e-mail
[email protected]), Division of Market
Oversight, Commodity Futures Trading
Commission, Three Lafayette Center,
1155 21st Street, NW., Washington, DC
20581.
SUPPLEMENTARY INFORMATION:

I. Background
The Commodity Exchange Act
(‘‘Act’’), as amended by the Commodity
Futures Modernization Act of 2000
(‘‘CFMA’’), Pub. L. No. 106–554, is
intended, among other things, to ‘‘deter
and prevent price manipulation or any
other disruptions to market integrity.’’ 1
To that end, the Commission, through
its Division of Market Oversight
(‘‘Division’’), conducts a comprehensive
program of market surveillance. A
centerpiece of this program is its largetrader reporting system, under which all
large futures and option positions are
reported to the Commission. Each day,
for every active futures or option
1 Commodity

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Exchange Act § 3(b), 7 U.S.C. § 5(b).

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market, Division surveillance staff
monitors the activities of large traders,
key price relationships, and all relevant
supply and demand factors in a
continuous review for potential market
problems. An essential element of the
Commission’s market surveillance
program is the ability to make special
calls for information from Commission
registrants and other market
participants.
II. Information To Be Furnished Upon
Special Call
Part 17 of the Commission’s
regulations sets forth the routine reports
that futures commission merchants,
members of contract markets and
foreign brokers (collectively, ‘‘reporting
firms’’) are required to submit to the
Commission.2 These reports provide the
information for the Commission’s large
trader reporting system that it uses in its
market surveillance program to detect
and prevent market manipulation or
other disruptions to market integrity in
markets subject to Commission
oversight.
By contrast, the purpose of the
Commission’s special call authority in
Part 21 of the Commission’s regulations
is to provide the Commission with
relevant information that is not
routinely supplied to the Commission,
pursuant to other parts of the
Commission’s regulations such as Part
17. For example, the Commission may
need to know about futures positions
that are below the routine reporting
levels specified in Part 15 of the
Commission’s regulations. Among
possible reasons for such special needs
for information may be a particular
market situation that warrants
unusually close Commission market
surveillance, or when Commission staff
is conducting an audit of reporting firms
to ensure complete and accurate
reporting.
The proposed amendments to Part 21
would require reporting firms to retain
and make available to the Commission,
upon a special call, information similar
to that which they are required to report
to the Commission pursuant to Part 17
of the Commission’s regulations.
Specifically, the proposed amendments
would add two additional categories of
information to the types of information
specified in § 21.02, which must be
2 The Commission has recently proposed
amendments to its definition of the term, ‘‘foreign
broker.’’ The amended definition would also be
relocated, from its current location at § 15.00(g) to
§ 1.3(xx). See 72 FR 15637 (April 2, 2007). If such
amendments were to be adopted, there would be no
change in a foreign broker’s obligations to comply
with the Commission’s large trader or special call
regulations set forth in 17 CFR parts 15–21.

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furnished upon special call. The first
additional category of information that
would be subject to special call under
this proposal includes information
regarding futures contracts exchanged
for physical commodities (‘‘EFPs’’), as
well as futures contracts exchanged for
other derivatives contracts, including
exchanges of futures for options
(‘‘EFOs’’) and exchanges of futures for
swaps (‘‘EFSs’’). The second additional
category of information includes the
amount of futures contracts where
actual delivery of the underlying
commodity has been initiated (i.e.,
delivery notices have been issued or
received).
Section 21.02 applies to futures
commission merchants (‘‘FCMs’’),
introducing brokers (‘‘IBs’’), members of
contract markets and foreign brokers.
However, the first three of the foregoing
categories are already subject to
substantial reporting and recordkeeping
requirements under § 1.35 of the
Commission’s regulations, which,
among other things, requires FCMs, IBs
and contract market members to
maintain, and produce on request, the
records that are also the subject of these
proposed rules. Therefore, as a practical
matter, the proposed rules will impose
new requirements only on foreign
brokers (who are not subject to § 1.35).
Foreign brokers and other persons
receiving a special call pursuant to
§ 21.02 are required by that regulation to
furnish the information requested. Since
such persons cannot comply with the
legal requirement to furnish information
pursuant to a special call without
maintaining records from which to
generate the information requested, it
follows that persons subject to special
calls under § 21.02 are required, by the
Commission’s regulations, to maintain
such records. Therefore, such records—
including both those already listed in
§ 21.02, and those that would be added
by this proposed rule amendment—are
subject to the five-year record retention
requirements of § 1.31(a)(1) of the
regulations, which provides in relevant
part that:
All books and records required to be kept
by the Act or by these regulations shall be
kept for a period of five years from the date
thereof and shall be readily accessible during
the first two years of the five-year period.

III. Delegation of Authority
For reasons of administrative
efficiency, the Commission is also
proposing to delegate to the Director of
the Division of Market Oversight, and
the Director’s delegatees, the power to
issue special calls pursuant to sections
21.01 and 21.02. Consistent with other
delegations of authority to Commission

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Federal Register / Vol. 72, No. 120 / Friday, June 22, 2007 / Proposed Rules

senior staff, the proposed delegation of
the Part 21 special call authority allows
the Director to submit to the
Commission for its consideration any
matter that has been delegated pursuant
to the new section. The proposed
amendment also preserves the
Commission’s ultimate authority over
the special calls by providing that,
‘‘nothing in this section shall be deemed
to prohibit the Commission, at its
election, from exercising the authority
delegated * * * to the Director.’’
Ordinarily, the delegation of authority
to make special calls would not be
published for comment because the
Administrative Procedure Act provides
that ‘‘a matter relating to agency
management’’ 3 is not required to be
published for comment. However,
because the proposed delegation is
being published as part of a larger notice
that includes other proposed
amendments on which the Commission
is seeking comment, the Commission
will also accept public comments
regarding the proposed delegation of
authority to issue special calls from the
Commission to the Director of the
Division of Market Oversight.

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IV. Cost Benefit Analysis
Section 15 of the Act, as amended by
section 119 of the CFMA, requires the
Commission to consider the costs and
benefits of its action before issuing a
new regulation or order under the Act.
By its terms, § 15(a) does not require the
Commission to quantify the costs and
benefits of its action or to determine
whether the benefits of the action
outweigh its costs. Rather, § 15(a)
simply requires the Commission to
‘‘consider the costs and benefits’’ of the
subject rule or order.
Section 15(a) further specifies that the
costs and benefits of the proposed rule
or order 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 may, in its discretion, give
greater weight to any one of the five
enumerated areas of concern and may,
in its discretion, determine that,
notwithstanding its costs, a particular
rule or order is necessary or appropriate
to protect the public interest or to
effectuate any of the provisions or to
accomplish any of the purposes of the
Act.
35

U.S.C. 553(a)(2).

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The proposed amendments are
intended to supplement the
Commission’s rules regarding its market
surveillance program. That program
supports one of the Commission’s most
critical statutory responsibilities,
deterring and preventing price
manipulation or any other disruptions
to market integrity. Effective
surveillance activities are crucial not
only to protecting market participants
and the public from price manipulation,
but also to: promoting market efficiency,
competitiveness and financial integrity;
protecting the futures markets’ price
discovery function; and promoting
sound risk management practices.
In addition, the records that would be
subject to special call under these
proposed amendments are the type of
basic transaction records that any
foreign broker would create as a matter
of sound business practices. Because
these records would be created in any
event, independently of any regulatory
requirements, the proposed rules would
impose no additional costs on foreign
brokers in that area. There would be
minimal costs associated with providing
the records in answer to a special call,
but such costs would be far outweighed
by the benefits of protecting the markets
and the public. Finally, with respect to
the five-year record retention
requirement that would apply to these
records, the cost of retaining the records
would be minimal because Commission
rules allow such records to be
maintained electronically. Those
minimal costs would, again, be far
outweighed by the benefits of protecting
the marketplace and the public.
The Commission has considered the
costs and benefits of the proposed
amendments to Part 21 regarding special
calls in light of the above-noted specific
areas of concern identified in section 15.
The Commission believes that the
amended rules would impose the
minimum requirements necessary to
enable it to perform its oversight
functions and to carry out its mandate
to protect the public interest in markets
that are free of fraud, abuse and
manipulation.
After considering these factors, the
Commission has determined to propose
the rule amendments set forth below.
The Commission specifically invites
public comment on its application of
the criteria contained in the Act for
consideration. Commenters are also
invited to submit any quantifiable data
that they may have concerning the costs
and benefits of the proposed rules with
their comment letter.

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V. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act
(‘‘RFA’’), 5 U.S.C. 601 et seq., requires
federal agencies, in promulgating rules,
to consider the impact of those rules on
small entities. The proposed
amendment to § 21.02 would apply to
FCMs, IBs, members of contract markets
and foreign brokers. However, as noted
above, the first three of these categories
are already subject to substantial
reporting and recordkeeping
requirements under § 1.35 of the
Commission’s regulations. Among other
things, that section requires FCMs, IBs
and contract market members to
maintain, and produce on request, the
records that are also the subject of these
proposed rules. Therefore, as a practical
matter, the proposed rules will impose
new requirements only on foreign
brokers (who are not subject to § 1.35).
With respect to such foreign brokers,
the Commission recently published
proposed rules to exempt from
registration certain foreign persons
(including foreign brokers).4 In
reviewing the applicability of the RFA
to such foreign persons, the Commission
noted that it has previously established
certain definitions of ‘‘small entities’’ to
be used in evaluating the impact of its
regulations on such entities in
accordance with the RFA.5 The
Commission has previously determined
that FCMs are not small entities for
purposes of the RFA because each FCM
has an underlying fiduciary relationship
with its customers, regardless of the size
of the FCM.6 The Commission notes that
the foreign brokers affected by these
proposed changes to the Commission’s
regulations would be required to be
registered as FCMs if not for certain
exemptions provided in Commission
regulations. As such, they would
maintain a fiduciary relationship with
customers similar to the relationship
maintained by each registered FCM.
Therefore, in this context foreign
brokers, like FCMs, are not
appropriately categorized as small
entities. Accordingly, the Chairman, on
behalf of the Commission, hereby
certifies pursuant to 5 U.S.C. 605(b) that
the proposed rules will not have a
significant economic impact on a
substantial number of small entities.
B. Paperwork Reduction Act
When publishing proposed rules, the
Paperwork Reduction Act (PRA) 7
4 72

FR 15673 (April 2, 2007).
FR 18618 at 18621 (April 30, 1982).
6 Id. at 18619.
7 Pub. L. 104–13 (May 13, 1995).
5 47

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Federal Register / Vol. 72, No. 120 / Friday, June 22, 2007 / Proposed Rules

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imposes certain requirements on federal
agencies, including the Commission, in
connection with conducting or
sponsoring any collection of
information as defined by the PRA. In
compliance with the PRA, the
Commission through these proposed
rules solicits comments to: (1) Evaluate
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
agency, including the validity of the
methodology and assumptions used; (2)
evaluate the accuracy of the agency’s
estimate of the burden of the proposed
collection of information, including the
validity of the methodology and
assumptions used; (3) enhance the
quality, utility, and clarity of the
information to be collected; and (4)
minimize the burden of the collection
on those who are to respond, including
through the use of appropriate
automated, electronic, mechanical, or
other technological collection
techniques or other forms of information
technology. The Commission has
submitted the proposed rules and their
associated information collection
requirements to the Office of
Management and Budget (OMB). The
proposed rules are part of an approved
collection of information (OMB Control
No. 3038–0009). The estimated burden
associated with information to be
provided pursuant to special calls is as
follows:
Average burden of response: One
hour.
Number of respondents: 10 per year.
Frequency of response: One response
per respondent per year.
Annual reporting burden: 10 hours.
Persons wishing to comment on the
information that would be required by
these proposed rules should contact the
Desk Officer, CFTC, Office of
Management and Budget, Room 10202,
NEOB, Washington, DC 20503, (202)
395–7340. Copies of the information
collection submission to OMB are
available from the CFTC Clearance
Officer, 1155 21st Street, NW.,
Washington, DC 20581, (202) 418–5160.
Copies of the OMB-approved
information collection package
associated with the rulemaking may be
obtained from the Desk Officer,
Commodity Futures Trading
Commission, Office of Management and
Budget, Room 10202, NEOB,
Washington, DC 20503, (202) 395–7340.
List of Subjects in 17 CFR Part 21
Commodity futures, Commodity
Futures Trading Commission.
In consideration of the foregoing, and
pursuant to the authority in the
Commodity Exchange Act, the

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Commission hereby proposes to amend
Part 21 of Title 17 of the Code of Federal
Regulations as follows:

DEPARTMENT OF STATE

PART 21—SPECIAL CALLS

[Public Notice: 5837]

1. The authority citation for part 21
continues to read as follows:

RIN 1400–AC38

Authority: 7 U.S.C. 1a, 2, 2a, 4, 6a, 6c, 6f,
6g, 6i, 6k, 6m, 6n, 7, 7a, 12a, 19 and 21; 5
U.S.C. 552 and 552(b).

2. Section 21.02 is proposed to be
amended by:
a. Removing the word ‘‘and’’ at the
end of paragraph (f);
b. Redesignating paragraph (g) as
paragraph (i); and
c. Adding new paragraphs (g) and (h).
The additions read as follows:
§ 21.02 Special calls for information on
open contracts in accounts carried or
introduced by futures commission
merchants, members of contract markets,
introducing brokers, and foreign brokers.

*

*
*
*
*
(g) The total number of futures
contracts exchanged for commodities or
for derivatives positions;
(h) The total number of futures
contracts against which delivery notices
have been issued or received; and
*
*
*
*
*
3. Section 21.04 is added to read as
follows:
§ 21.04 Delegation of authority to the
Director of the Division of Market Oversight.

The Commission hereby delegates,
until the Commission orders otherwise,
to the Director of the Division of Market
Oversight, or to the Director’s delegates,
the authority set forth in section 21.01
of this Part to make special calls for
information on controlled accounts from
futures commission merchants and from
introducing brokers and the authority
set forth in section 21.02 of this Part to
make special calls for information on
open contracts in accounts carried or
introduced by futures commission
merchants, members of contract
markets, introducing brokers, and
foreign brokers. The Director may
submit to the Commission for its
consideration any matter that has been
delegated pursuant to this section.
Nothing in this section shall be deemed
to prohibit the Commission, at its
election, from exercising the authority
delegated in this section to the Director.
Issued in Washington, DC, on June 15,
2007 by the Commission.
Eileen Donovan,
Acting Secretary of the Commission.
[FR Doc. E7–11984 Filed 6–21–07; 8:45 am]
BILLING CODE 6351–01–P

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22 CFR Part 62

Exchange Visitor Program—Fees and
Charges for Exchange Visitor Program
Services
Department of State.
Proposed rule with request for
comment.

AGENCY:
ACTION:

SUMMARY: The Department is proposing
to revise its regulations regarding Fees
and Charges for Exchange Visitor
Program services. A new section will
contain all of the fees and charges for
Exchange Visitor Program services. The
long-range goal of these changes is to
recoup the full cost for providing such
services.
DATES: The Department will accept
comments from the public by August
21, 2007.
ADDRESSES: You may submit comments,
identified by any of the following
methods:
• Persons with access to the Internet
may view this notice and provide
comments by going to the
regulations.gov Web site at: http://
www.regulations.gov/index.cfm.
• Mail (paper, disk, or CD–ROM
submissions): U.S. Department of State,
Office of Exchange Coordination and
Designation, SA–44, 301 4th Street,
SW., Room 734, Washington, DC 20547.
• E-mail: [email protected]. You
must include the RIN (1400–AC38) in
the subject line of your message.
FOR FURTHER INFORMATION CONTACT:
Stanley S. Colvin, Director, Office of
Exchange Coordination and
Designation, U.S. Department of State,
SA–44, 301 4th Street, SW., Room 734,
Washington, DC 20547; 202–203–5096
or e-mail at [email protected].
SUPPLEMENTARY INFORMATION: The
Department of State designates U.S.
government, academic, and private
sector entities to conduct educational
and cultural exchange programs
pursuant to a broad grant of authority
provided by the Mutual Educational and
Cultural Exchange Act of 1961, as
amended (Fulbright-Hays Act), 22
U.S.C. 2451 et seq.; the Immigration and
Nationality Act, 8 U.S.C. 1101(a)(15)(J);
the Foreign Affairs Reform and
Restructuring Act of 1998, Public Law
105–277; as well as other statutory
enactments, Reorganization Plans and
Executive Orders. Under those
authorities, designated program
sponsors facilitate the entry of more

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