[Federal Register Volume 59, Number 48 (Friday, March 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-5651]


[[Page Unknown]]

[Federal Register: March 11, 1994]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 1, 5, and 31

 

Fees for Applications for Contract Market Designation, Leverage 
Commodity Registration and Registered Futures Association and Exchange 
Rule Enforcement and Financial Reviews

AGENCY: Commodity Futures Trading Commission.

ACTION: Final schedule of fees.

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SUMMARY: The Commission periodically adjusts fees charged for certain 
program services to assure that they accurately reflect current 
Commission costs. In this regard, the staff recently reviewed the 
Commission's actual costs of processing applications for contract 
market designation (17 CFR part 5, appendix B), audits of leverage 
transaction merchants (17 CFR part 31, appendix B) and registered 
futures association and exchange rule enforcement and financial reviews 
(17 CFR part 1, appendix B). The following fee schedule for FY 1994 
reflects the costs to the Commission of providing those services during 
fiscal years 1991, 1992 and 1993. Accordingly, the fee for applications 
for contract market designation for a futures contract will be 
increased to $12,000 from $11,000, the fee for contract market 
designation for an option contract will remain at $3,000, the fee for 
contract markets which simultaneously submit designation applications 
for a futures and an option on that futures contract will be raised to 
a combined fee of $13,000 for both from $12,000 for both, the fee for 
leverage commodity registration will be maintained at $4,500 and the 
schedule of fees for registered futures association and exchange rule 
enforcement and financial reviews is published. These adjustments 
reflect the Commission's actual costs of providing these services 
during FY 1991, FY 1992 and FY 1993.

EFFECTIVE DATES: Contract Market Designation and Leverage Commodity 
Registration March 11, 1994. Registered Futures Association and 
Exchange Rule Enforcement and Financial Reviews May 10, 1994.

FOR FURTHER INFORMATION CONTACT: Gerry Smith, Special Assistant to the 
Executive Director, Office of the Executive Director, Commodity Futures 
Trading Commission, 2033 K Street NW., Washington, DC 20581, telephone 
number 202-254-6090.

SUPPLEMENTARY INFORMATION: The Commission periodically reviews the 
actual costs of providing services for which fees are charged and 
adjusts its fees accordingly. In connection with its most recent 
review, the Commission has determined that fees for contract market 
designations should be adjusted. Also, this release announces the FY 
1994 schedule of fees for registered futures association and exchange 
rule enforcement and financial reviews and maintains leverage commodity 
registration fees.

Background Information

I. Computation of Fees

    In accordance with Section 237 of the Futures Trading Act of 1982 
(7 U.S.C. 16a) the Commission has established fees for certain 
activities and functions performed by the Commission.1 In 
calculating the actual cost of processing applications for contract 
market designation, registering leverage commodities, and performing 
registered futures association and exchange rule enforcement and 
financial reviews, the Commission takes into account personnel costs, 
benefits and administrative costs.
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    \1\For a broader discussion of the history of Commission fees, 
see 52 FR 46070 (Dec. 4, 1987).
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    The Commission first determines personnel costs by extracting data 
from the agency's Management Accounting Structured Code (MASC) system. 
Employees of the Commission record the time spent on each project under 
the MASC system. The Commission then adds an overhead factor for 
benefits, including retirement, insurance and leave, based on a 
government-wide standard established by the Office of Management and 
Budget in Circular A-76. An overhead factor is also added for general 
and administrative costs, such as space, equipment and utilities. These 
general and administrative costs are derived by computing the 
percentage of Commission appropriations spent on these non-personnel 
items. The overhead calculations fluctuate slightly due to changes in 
government-wide benefits and the percentage of Commission 
appropriations applied to non-personnel costs from year to year. The 
actual overhead factor for the preceding fiscal years is as follows: FY 
1991--94%; FY 1992--99%; FY 1993--93%.
    Once the total personnel costs and overhead for each project have 
been determined, the costs for FY 1991, FY 1992 and FY 1993 are 
averaged. This results in a calculation of the average annual cost for 
each project over the three-year period.

II. Applications for Contract Market Designation

    On August 23, 1983 the Commission established a fee for Contract 
Market Designation. 48 FR 38214. This fee was based upon a three year 
moving average of the actual costs expended and the number of contracts 
reviewed in that period of time. The fee charged was reviewed again in 
FY 1985 and every year thereafter to determine the fee for the current 
year. In FY 1985 the overwhelming majority of designation applications 
was for futures contracts as opposed to option contracts. Therefore, 
the proposed fee covered both futures and option applications. In FY 
1992 the Commission reviewed its data on the actual costs for reviewing 
designation applications for both futures and option contracts and 
determined that the cost of reviewing a futures contract designation 
application was much higher than the cost of reviewing an option 
contract. It also determined that, when designation applications for 
both a futures contract and an option on that futures contract are 
submitted simultaneously, the cost for review of the option contract 
application was even lower.
    In FY 1993 the Commission lowered the fees for designation 
applications to $11,000 for a futures contract and $3,000 for an option 
contract from the FY 1992 levels of $15,000 and $7,000 respectively. In 
addition, the combined fee for designation applications submitted 
simultaneously for a futures contract and option on that futures 
contract was lowered to $12,000 from $17,000. These lower fees were 
based on a decline in costs through FY 1992 as well as an anticipated 
further decline in costs due to revisions of Guideline No. 1.
    A review of actual costs of processing applications for contract 
market designation for a futures contract for FY 1991, FY 1992 and FY 
1993 indicates that, while actual costs have continued to decline, the 
average cost over the three year period was $12,199. A review of actual 
costs of processing applications for contract market designation for an 
option contract for FY 1991, FY 1992 and FY 1993 reveals that the 
average costs over the three year period was $3,086. Accordingly, the 
Commission has determined that the fee for applications for contract 
market designation for a futures contract will be raised to $12,000. 
The fee for applications for contract market designation as an option 
contract will be maintained at $3,000 in accordance with the 
Commission's regulations (17 CFR part 5, appendix B). In addition, the 
combined fee for contract markets simultaneously submitting designation 
applications for a futures contract and an option contract on that 
futures contract will be raised to $13,000.

III. Leverage Commodity Registration

    No new applications for leverage commodity registration were 
received by the Commission in FY 1993. Accordingly, the Commission will 
maintain the present fee of $4,500 for leverage commodity registration.

IV. Registered Futures Association and Exchange Rule Enforcement and 
Financial Reviews

    The average annual costs for rule enforcement reviews and financial 
reviews for each exchange are as follows: 

------------------------------------------------------------------------
                                                           FY 1991-1993 
                                                          average annual
                       Exchange                             costs for   
                                                         review services
                                                                        
------------------------------------------------------------------------
Chicago Board of Trade.................................      $217,644.28
Chicago Mercantile Exchange............................       229,993.05
Commodity Exchange, Inc................................        69,032.61
Coffee, Sugar and Cocoa Exchange.......................        87,703.08
New York Mercantile Exchange...........................        74,624.26
New York Cotton Exchange...............................       142,015.07
Kansas City Board of Trade.............................        36,226.23
New York Futures Exchange..............................       129,357.71
Minneapolis Grain Exchange.............................        41,014.37
Philadelphia Board of Trade............................         3,542,42
Amex Commodity Corporation.............................         1,507.53
                                                        ----------------
      Total............................................     1,032,660.60
------------------------------------------------------------------------

    The average annual cost for the National Futures Association is 
$298,050.22.
    Under the formula adopted in 1993 (58 FR 42643, August 11, 1993, 
which appears in 17 CFR part 1, appendix B), the Commission also takes 
volume into account in the calculation of these fees. The Commission 
looks at trading volume for the three fiscal years to determine the 
actual volume for each exchange and its percentage of total trading 
volume across all exchanges during that same period. Volume figures are 
as follows: 

------------------------------------------------------------------------
                                                              Percentage
                                                               of total 
                 Exchange                      Three-years      volume  
                                             average volume     across  
                                                              exchanges 
------------------------------------------------------------------------
Chicago Board of Trade.....................      457,111,353     43.1740
Chicago Mercantile Exchange................      378,706,178     34.9627
Commodity Exchange, Inc....................       46,220,246      4.1671
Coffee, Sugar and Cocoa Exchange...........       29,746,285      2.7462
New York Mercantile Exchange...............      138,175,629     12.7566
New York Cotton Exchange...................       11,676,287      1.0780
Kansas City Board of Trade.................        4,495,318       .4150
New York Futures Exchange..................        4,265,358       .3938
Minneapolis Grain Exchange.................        2,136,936       .1973
Philadelphia Board of Trade................          101,725       .0094
Amex Commodity Corporation.................  ...............  ..........
                                            ----------------------------
      Total................................    1,083,172,202    100.0000
------------------------------------------------------------------------

    The formula for calculating the fee is as follows

    :0.5a+0.5vt

where:

    a=actual cost
    v=% of total volume
    t=total cost for all exchanges

    If the calculated fee using this formula is higher than actual 
costs, the exchange would pay only actual costs. If the calculated fee 
using the formula is less than actual costs then the exchange would pay 
the calculated fee. No exchange would pay more than actual costs. Also, 
if an exchange has no volume over the three year period it would pay a 
flat 50% of actual costs. The National Futures Association will 
continue to be charged 100% of its actual costs.
    For example:
    The Minneapolis Grain Exchange had an actual cost of $41,014.37 
(a), and its three-year volume was 0.1973% of the total three year 
volume. As a result, the exchange's fee for FY 1994 is:

(.5)($41,014.37) + (.5)(.001973)($1,032,660.60) = or 
20,507.19+1,018.72=21,525.91

    Based upon this formula the fees for all of the exchanges and the 
NFA for FY 1994 are as follows: 

------------------------------------------------------------------------
                       Exchange/NFA                              Fee    
------------------------------------------------------------------------
Chicago Board of Trade.....................................     $217,644
Chicago Mercantile Exchange................................      229,993
Commodity Exchange, Inc....................................       56,549
Coffee, Sugar and Cocoa Exchange...........................       58,031
New York Mercantile Exchange...............................       74,624
New York Cotton Exchange...................................       76,574
Kansas City Board of Trade.................................       20,255
New York Futures Exchange..................................       66,712
Minneapolis Grain Exchange.................................       21,526
Philadelphia Board of Trade................................        1,820
Amex Commodity Corporation.................................          754
National Futures Association...............................      298,050
                                                            ------------
      Total................................................   1,122,532 
------------------------------------------------------------------------

    As in the calculation of fees in previous years, the FY 1994 fee 
for the Chicago Board of Trade includes the MidAmerica Commodity 
Exchange and the Chicago Rice and Cotton Exchange.

II. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq., 
requires agencies to consider the impact of rules on small businesses. 
The fees implemented in this release affect contract markets (also 
referred to as ``exchanges'') and registered futures associations. The 
Commission has previously determined that contract markets are not 
``small entities'' for purposes of the Regulatory Flexibility Act, 5 
U.S.C. 601 et seq., 47 FR 18618 (April 30, 1982). Registered futures 
associations also are not considered ``small entities'' by the 
Commission. Therefore, the requirements of the Regulatory Flexibility 
Act do not apply to contract markets or registered futures 
associations. Accordingly, the Acting Chairman, on behalf of the 
Commission, certifies that the fees implemented herein do not have a 
significant economic impact on a substantial number of small entities.
* * * * *
    Issued in Washington, DC, on March 7, 1994, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 94-5651 Filed 3-10-94; 8:45 am]
BILLING CODE 6351-01-P