[Federal Register Volume 60, Number 57 (Friday, March 24, 1995)]
[Notices]
[Pages 15536-15537]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-7262]



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COMMODITY FUTURES TRADING COMMISSION


Citrus Associates of the New York Cotton Exchange: Proposed 
Amendments Pertaining to Financial Requirements for Facilities Licensed 
for Delivery on the Frozen Concentrated Orange Juice Futures Contract

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed contract market rule changes.

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SUMMARY: The Citrus Associates of the New York Cotton Exchange 
(``CANYCE or Exchange'') has submitted proposed amendments to its 
frozen concentrated orange juice (``FCOJ'') futures contract. The 
primary proposed amendments will revise the contract's financial 
requirements concerning the dollar value of performance bonds or 
letters of credit operators of CANYCE-licensed delivery facilities must 
obtain in support of shipping certificates and warehouse receipts 
issued for delivery on the futures contract.
    In accordance with section 5a(a)(12) of the Commodity Exchange Act, 
and acting pursuant to the authority delegated by Commission Regulation 
140.96, the Acting Director of the Division of Economic Analysis 
(``Division'') of the Commodity Futures Trading Commission 
(``Commission'') has determined, on behalf of the Commission, that 
publication of the proposed amendments would be in the public interest 
and would assist the Commission in considering the views of interested 
persons. On behalf of the Commission, the Division is requesting 
comment on this proposal.

DATES: Comments must be received on or before April 24, 1995.

ADDRESSES: Interested persons should submit their views and comments to 
Jean A. Webb, Secretary, Commodity Futures Trading Commission, 2033 K 
Street NW, Washington, DC 20581. Reference should be made to the 
proposed amendments to the CANYCE's financial requirements for licensed 
delivery facilities.

FOR FURTHER INFORMATION CONTACT: Frederick V. Linse, Division of 
Economic Analysis, Commodity Futures Trading Commission, 2033 K Street 
NW, Washington, DC 20581, telephone (202) 254-7303.

SUPPLEMENTARY INFORMATION: The current provisions of the FCOJ futures 
contract provide that delivery may be effected by tendering to the 
CANYCE a shipping certificate or warehouse receipt issued by an 
Exchange-licensed delivery facility.\1\ The existing terms of the 
futures contract provide that the number of shipping certificates 
issued by a CANYCE-licensed tank facility operator may not exceed the 
sum of the following two calculations: (1) The number obtained by 
dividing the facility operator's net worth\2\ by $40,000 and (2) the 
number obtained by dividing the total principal amounts of all 
performance bonds and letters of credit\3\ issued to the facility 
operator by $25,000. The futures contract also currently provides that 
a facility [[Page 15537]] operator that desires to increase the number 
of shipping certificates it may issue for futures delivery may provide 
additional performance bonds or letters of credit to the Exchange equal 
to $1 million.

    \1\Under the contract's current terms, a shipping certificate 
issuer is required to load out FCOJ from the issuer's CANYCE-
licensed tank storage facility upon the request of the certificate 
holder. Deliverable warehouse receipts represent FCOJ packed in 
drums in store at the receipt issuers' Exchange-licensed warehouses.
    \2\The contract's existing terms define ``net worth'' as the 
excess of assets over liabilities.
    \3\The contract's existing rules provide that performance bonds 
must be in a form approved by, and issued by sureties satisfactory 
to, the Exchange. Under the current rules, letters of credit must be 
in a form approved by the CANYCE, issued by a bank satisfactory to 
the Exchange and written in favor of the CANYCE. In addition, such 
letters of credit must be unconditional, irrevocable, and available 
to be drawn upon by the CANYCE on demand by clean sight drafts.
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    The primary proposed amendments would specify that the maximum 
number of shipping certificates that could be issued by a CANYCE-
licensed delivery facility will be determined in accordance with a 
CANYCE specified schedule based on the amount of performance bonds or 
letters of credit posted with the Exchange. The minimum performance 
bond would be $1,000,000, which would permit the facility posting such 
a bond to issue and have outstanding up to 44 shipping certificates. 
The schedule specifying the maximum number of shipping certificates 
that may be issued for given dollar amounts of performance bonds or 
letters of credit is set forth below:

------------------------------------------------------------------------
                                                             Maximum No.
                                                                 of     
 Amount of performamce bond or letter of credit in dollars  certificates
                                                             or receipts
                                                              issuable  
------------------------------------------------------------------------
1,000,000.................................................            44
2,260,000.................................................           100
3,760,000.................................................           200
5,260,000.................................................           300
6,760,000.................................................           400
8,260,000.................................................           500
9,760,000.................................................           600
11,260,000................................................           700
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    The proposed amendments would require that a licensed delivery 
facility operator or owner must submit to the Exchange a letter of 
credit or performance bond issued by a bank, insurance company or other 
financial institution that is acceptable to the CANYCE. The proposed 
amendments specify that such bonds or letters of credit must be 
approved by a special Exchange committee.\4\ The CANYCE also is 
proposing amendments to certain other Exchange rules to facilitate 
implementation of the above-noted proposed financial requirements.

    \4\The proposed amendments also would specify that the above-
noted special committee shall consist of a minimum of seven and a 
maximum of ten members, with each member and the committee's 
chairman being appointed by the CANYCE's President. Under the 
proposed amendments, the special committee would have authority to 
decide all matters pertaining to the financial requirements of 
CANYCE-licensed delivery facilities.
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    The CANYCE indicates that the purpose of the proposed amendments is 
to better protect the holders of shipping certificates and warehouse 
receipts against performance failure on the part of a CANYCE-licensed 
delivery facility and, therefore, increase the confidence of shipping 
certificate and warehouse receipt holders in the FCOJ futures market. 
The Exchange also indicates that the proposed amendments will simplify 
the contract's financial requirements for CANYCE-licensed delivery 
facility operators.
    Copies of the proposed amendments will be available for inspection 
at the Office of the Secretariat, Commodity Futures Trading Commission, 
2033 K Street NW., Washington, DC 20581. Copies of the amended terms 
and conditions can be obtained through the Office of the Secretariat by 
mail at the above address or by telephone at (202) 254-6314.
    The materials submitted by the CANYCE in support of the proposed 
amendments may be available upon request pursuant to the Freedom of 
Information Act (5 U.S.C. 552) and the Commission's regulations 
thereunder (17 CFR part 145 (1987)). Requests for copies of such 
materials should be made to the FOI, Privacy and Sunshine Act 
Compliance Staff of the Office of the Secretariat at the Commission's 
headquarters in accordance with 17 CFR 145.7 and 145.8.
    Any person interested in submitting written data, views or 
arguments on the proposed 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 17, 1995.
Blake Imel,
Acting Director.
[FR Doc. 95-7262 Filed 3-23-95; 8:45 am]
BILLING CODE 6351-01-P