[Federal Register Volume 59, Number 62 (Thursday, March 31, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-7580]
[[Page Unknown]]
[Federal Register: March 31, 1994]
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COMMODITY FUTURES TRADING COMMISSION
Financial Instrument Exchange Trading Session at the
International Financial Services Centre (Dublin, Ireland)
AGENCY: Commodity Futures Trading Commission.
ACTION: Request for Comment.
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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is
seeking comments on rule amendments submitted by the Financial
Instrument Exchange (``FINEX''), a Division of the New York Cotton
Exchange (``NYCE''), pursuant to Section 5a(a)(12)(A) of the Commodity
Exchange Act (``Act'') and Commission Regulations 1.41(b) and 1.41(c)
which would provide for the trading of certain FINEX contracts on the
floor of the International Financial Services Centre (``IFSC'') in
Dublin, Ireland. Specifically, the amendments would establish an
extended trading hours session from 8 a.m. through 1 p.m., Dublin time
(3 a.m. through 8 a.m., New York time), Monday through Friday. The
proposal would allow futures and options contracts on both the US
Dollar Index (``USDX'') and the European Currency Unit (``ECU'') to be
traded at the IFSC. The Commission believes that publication of the
proposal will assist the Commission in considering the views of
interested persons and is consistent with the purposes of the Act.
Copies of the proposed rule amendments and accompanying correspondence
are available from the Secretary of the Commission at the address and
telephone number set forth below.
DATES: Comments must be received on or before May 2, 1994.
FOR FURTHER INFORMATION CONTACT: David P. Van Wagner, Special Counsel,
Division of Trading and Markets, Commodity Futures Trading Commission,
2033 K Street, NW., Washington, DC 20581. Telephone: (202) 254-8955.
SUPPLEMENTARY INFORMATION: FINEX has submitted proposed rule amendments
which would provide for an extended trading hours session at the IFSC
in Dublin, Ireland. Under the proposed amendments, FINEX would list its
USDX and ECU futures and options contracts for trading on the floor of
the IFSC. In addition to full members of NYCE and FINEX licensees,
European permit holders--a new FINEX membership interest class--would
be able to trade such contracts on the IFSC floor.1
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\1\By letters dated January 21, 1994 through March 11, 1994,
FINEX submitted to the Commission, pursuant to Commission Regulation
1.41(c), a proposed new Rule 6.19 and a proposed amendment to By-Law
2.33 which would authorize issuance of European permits. By letter
dated March 14, 1994, the Division of Trading and Markets
(``Division'') informed FINEX that it had determined, pursuant to
the authority delegated by Commission Regulation 1.41a(a)(3), that
FINEX's proposal did not require prior Commission approval under
Section 5a(a)(12)(A) of the Act and could be made effective
immediately. In that same letter, the Division informed FINEX that
holders of European permits could only trade FINEX contracts upon
the Commission's approval of the currently pending proposal to
establish procedures for the trading of FINEX contracts on the floor
of the IFSC.
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FINEX's proposed IFSC trading session would run from 8 a.m. through
1 p.m., Dublin time (3 a.m. through 8 a.m., New York time), Monday
through Friday. Because FINEX already has an extended trading session
for USDX and ECU contracts on its New York floor, the proposed IFSC
session would be a revision of its existing extended trading session
scheme. The current extended session begins trading each Sunday through
Thursday evening at 7 p.m., recesses at 10 p.m., reopens ninety minutes
later at 11:30 p.m. and trades until the session's close at 8:19 a.m.
of the next day.2 FINEX's regular trading session follows each day
on Monday through Friday with an open at 8:20 a.m. and a close at 3
p.m.
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\2\The times for FINEX's current extended trading session are
all expressed in Eastern Standard Time. During Eastern Day Light
Savings Time, the session's open and close remains the same but the
recess shifts to between 11 p.m. and 12:30 a.m. of the next day. The
current extended trading session's hours were established to
coincide with active trading hours in both the Far East and European
exchange markets. In fact, the session's 90-minute recess
corresponds with a mid-day break for Japan's financial markets.
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Under FINEX's subject proposal, after the 7-10 p.m. segment of each
FINEX extended trading session, there would be a recess in trading from
10 p.m. until 3 a.m. of the next day. At that time, trading in the
designated FINEX contracts would recommence on the floor of IFSC and
continue until 8 a.m. (8 a.m. through 1 p.m., Dublin time). Thus, under
the proposal, FINEX's trading session at the IFSC essentially would
replace the 11:30 p.m. (or 12:30 a.m. during Day Light Savings Time) to
8:19 a.m. segment of FINEX's current extended trading session.
Under FINEX's current proposal, the opening and closing times of
each trading day would remain the same, opening at 7 p.m. of each
Sunday through Thursday with the start of the extended trading session
in New York and closing at 3 p.m. of the following Monday through
Friday with the conclusion of the regular trading session.
A contract's settlement price would continue to be established at
the end of the entire trading day--3 p.m. in New York. Daily price
limits on the futures contracts would continue to be calculated on the
basis of the settlement price and would apply to the entire following
trading day. Volume and open interest would continue to be calculated
after the end of each trading day.3
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\3\The Exchange plans to continue to publish a single price,
volume and open interest figure for each contract each trading day.
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FINEX represents that its clearing organization, the Commodity
Clearing Corporation (``CCC''), would not alter its current clearance
and settlement system in connection with FINEX's proposal. Regardless
of the membership status or location of the executing member, all
transactions in FINEX contracts at the IFSC would have to be cleared by
a CCC clearing member. Original and variation margin as well as option
premium payments for trades executed during a trading day (7 p.m.-3
p.m.) would continue to be due at 10 a.m. on the next trading day as is
presently the case. CCC also intends to continue to process an intra-
day variation margin call between the hours of noon and 3 p.m. This
intra-day variation margin call would use the previous trading day's
positions and the trades executed during the two immediately following
extended trading hours sessions in New York and Dublin and mark those
positions to market. The CCC does not plan to establish any special
intra-day margin call during the hours of the proposed extended trading
session at the IFSC.
Persons trading FINEX contracts at the IFSC, NYCE members, FINEX
licensees and European permit holders alike, would be subject,
generally, to all of the requirements of FINEX's various rules and by-
laws as a feature of their membership interests. Similarly, persons
trading at the IFSC would enjoy the various rights and privileges
established by those provisions such as arbitration and disciplinary
procedures.
FINEX's oversight of trading of FINEX contracts in Dublin would be
incorporated into the Exchange's current self-regulatory surveillance
and compliance programs. FINEX's Compliance Department in New York
would receive trade registers for FINEX trading activity at the IFSC
and use its customary review techniques and exception reports to detect
any improper trading activity. Just as it does on its New York floor,
FINEX would have selected personnel directly monitor trading activity
on the floor of the IFSC. The same FINEX personnel also would perform
various support tasks, such as document retrieval and witness
interviews, to assist the Compliance Department during investigations.
The CCC also would establish an IFSC Floor Committee to take summary
actions against market participants who violate any of FINEX's decorum
rules while trading at the IFSC.
In order to permit FINEX contracts to be traded at the IFSC, FINEX
states that it will be obtaining a certificate of authority from the
Irish Advisory Committee to do business in the Republic of Ireland. The
IFSC and FINEX would have a simple landlord-tenant relation, and the
IFSC would have no proprietary interest in FINEX or its trading
activity at the IFSC.
FINEX believes that all persons trading FINEX contracts would, as a
feature of their membership, be fully subject to all of FINEX's rules
as well as the Commodity Exchange Act and the Commission's regulations.
The Division is engaging in separate discussions with the Central Bank
of Ireland, the appropriate Irish regulatory body, to clarify
regulatory responsibilities between the Bank and the Commission and to
ensure effective information access and oversight with respect to FINEX
trading at the IFSC.
Any person interested in submitting written data, views or
arguments on the proposed trading of FINEX contracts at the IFSC and
proposed implementing rule amendments should send such comments to Jean
A. Webb, Secretary, Commodity Futures Trading Commission, 2033 K Street
NW., Washington, DC 20581, by the specified date.
Issued in Washington, DC, on March 24, 1994.
Alan L. Seifert,
Deputy Director.
[FR Doc. 94-7580 Filed 3-30-94; 8:45 am]
BILLING CODE 6351-01-P