[Federal Register Volume 61, Number 87 (Friday, May 3, 1996)]
[Rules and Regulations]
[Pages 19830-19832]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11014]
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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 fiscal 1996
reflects the actual costs to the Commission of providing those services
during fiscal years 1993, 1994 and 1995. Accordingly, the Commission
will change the fees as follows: Applications for contract market
designation for a futures contract will be reduced from $9,600 to
$8,300; contract market designation for an option contract will be
increased from $1,600 to $1,800; contract markets that simultaneously
submit designation applications for a futures and an option on that
futures contract will be reduced from a combined fee of $10,000 for
both to $9,200 for both; and leverage commodity registration will be
maintained at $4,500. In addition, the Commission will publish the
schedule of fees for registered futures association and exchange rule
enforcement and financial reviews.
EFFECTIVE DATE: Contract Market Designation and Leverage Commodity
Registration May 3, 1996. Registered Futures Association and Exchange
Rule Enforcement and Financial Reviews July 2, 1996.
FOR FURTHER INFORMATION CONTACT: Gerald P. Smith, Special Assistant to
the Executive Director, Office of the Executive Director, Commodity
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street,
NW., Washington, DC 20581, telephone number 202-418-5156.
SUPPLEMENTARY INFORMATION: The Commission periodically reviews the
actual costs of providing services for which fees are charged and
adjusts these 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
fiscal 1996 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
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 (direct costs), and
benefits and administrative costs (overhead costs).
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\1\ 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).
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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 that is
made up of two components--benefits and general and administrative
costs. Benefits, which include retirement, insurance and leave, are
based on a government-wide standard established by the Office of
Management and Budget in Circular A-76. General and administrative
costs include the
[[Page 19831]]
Commission's costs for space, equipment, utilities, etc. 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 prior fiscal years were 93% in 1993, 95% in 1994 and 92% in 1995.
Once the total personnel costs for each fee item (contract market
designation, rule enforcement review, etc.) have been determined for
each year the overhead factor is applied and the costs for fiscal years
1993, 1994 and 1995 are averaged. This results in a calculation of the
average annual cost 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 during that period of time. The fee charged was reviewed again
in fiscal 1985 and every year thereafter to determine the fee for the
current year. In fiscal 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 designation
applications. In fiscal 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 designation application was even lower than the
individual cost of reviewing the futures contract plus the option
contract.
The Commission staff reviewed the actual costs of processing
applications for contract market designation for a futures contract for
fiscal years 1993, 1994 and 1995 and found that the average cost over
the three year period was $8,313. The review of actual cost of
processing applications for contract market designation for an option
contract for fiscal years 1993, 1994 and 1995 revealed that the average
costs over the same three year period was $1,876. Accordingly, the
Commission has determined that the fee for applications for contract
market designation for a futures contract will be reduced to $8,300 and
the fee for applications for contract market designation as an option
contract will be increased to $1,800 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 reduced to $9,200.
III. Leverage Commodity Registration
No new applications for leverage commodity registration were
received by the Commission in fiscal years 1993, 1994 or 1995.
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
Under the formula adopted in 1993 (58 FR 42643, August 11, 1993,
which appears in 17 CFR part 1, appendix B), the Commission calculates
the rule enforcement and financial review fees based on its actual
costs, as well as actual exchange trading volume. The formula for
calculating the rule enforcement and financial review fee is 0.5a +
0.5vt = current fee. In the formula, ``a'' equals the average annual
costs, ``v'' equals the percentage of total volume across exchanges
over the last three years and ``t'' equals the average annual cost for
all exchanges.
To determine the fee, first the staff calculates actual costs for
the last three fiscal years. The average annual costs for that time
period for rule enforcement reviews and financial reviews for each
exchange are as follows:
------------------------------------------------------------------------
FY 1993-1995
average annual
Exchange costs for review
services
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Chicago Board of Trade................................ $264,915.17
Chicago Mercantile Exchange........................... 243,452.97
Coffee, Sugar and Cocoa Exchange...................... 64,169.59
New York Mercantile/COMEX Exchange.................... 240,870.26
New York Cotton/New York Futures Exchange............. 58,606.03
Kansas City Board of Trade............................ 17,129.09
Minneapolis Grain Exchange............................ 23,196.63
Philadelphia Board of Trade........................... 2,622.61
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Total........................................... 914,962.35
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Second, the staff calculates the trading volume for the past three
fiscal years to determine the cumulative volume for each exchange and
its percentage of total volume across all exchanges during that same
period. The trading volume figures for that period are as follows:
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Percentage
FY 1993-1995 of total
Exchange cumulative volume
volume across
exchanges
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Chicago Board of Trade................... 604,202,447 42.6254
Chicago Mercantile Exchange.............. 530,733,388 37.4423
Coffee, Sugar and Cocoa Exchange......... 34,865,386 2.4597
New York Mercantile/COMEX Exchange....... 223,922,964 15.7974
New York Cotton/New York Futures Exchange 16,103,681 1.1361
Kansas City Board of Trade............... 4,888,383 0.3449
[[Page 19832]]
Minneapolis Grain Exchange............... 2,644,863 0.1866
Philadelphia Board of Trade.............. 107,875 0.0076
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Total.............................. 1,417,468,987 100.0000
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Finally, the staff calculates the current fees by applying the
appropriate exchange data to the formula. The following is an example
of how the rule enforcement and financial review fees for exchanges are
calculated.
Example: The Minneapolis Grain Exchange (MGE) average annual
cost is $23,196.63 and its percentage of total volume over the last
three years is 0.1866. The annual average total cost for all
exchanges during that same time period is $914,962.35. As a result,
the MGE fee for fiscal 1996 is:
(.5)($23,196.63)+(.5)(.001866)($914,962.35) = current fee or
$11,598.32 + $853.69 = $12,452.01
As stated in 1993 when the formula was adopted, if the calculated
fee using this formula is higher than actual costs, the exchange pays
actual costs. If the calculated fee using the formula is less than
actual costs then the exchange pays the calculated fee. No exchange
will pay more than actual costs. Also, if an exchange has no volume
over the three-year period it pays a flat 50% of actual costs.
The National Futures Association (NFA) is a registered futures
association which is responsible for regulating the practices of its
members. In its oversight role, the Commission performs rule
enforcement and financial reviews of the NFA. The Commission's average
annual cost for reviewing the National Futures Association during
fiscal years 1993 through 1995 is $255,333.91. The National Futures
Association will continue to be charged 100% of its actual costs.
Based upon this formula the fees for all of the exchanges and the
NFA for fiscal 1996 are as follows:
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Exchange/NFA 1996 fee
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Chicago Board of Trade................................ $264,915.17
Chicago Mercantile Exchange........................... 243,452.97
Coffee, Sugar and Cocoa Exchange...................... 43,337.95
New York Mercantile/COMEX Exchange.................... 192,708.42
New York Cotton/New York Futures Exchange............. 34,480.14
Kansas City Board of Trade............................ 10,142.47
Minneapolis Grain Exchange............................ 12,452.01
Philadelphia Board of Trade........................... 1,346.08
National Futures Association.......................... 255,333.91
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Total........................................... 1,058,169.12
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As in the calculation of fees in previous years, the fiscal 1996
fee for the Chicago Board of Trade includes the MidAmerica Commodity
Exchange.
V. 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 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, D.C., on April 29, 1996, by the
Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 96-11014 Filed 5-02-96; 8:45 am]
BILLING CODE 6351-01-P