[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    
------------------------------------------------------------------------
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
                                                       -----------------
      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:

------------------------------------------------------------------------
                                                              Percentage
                                             FY 1993-1995      of total 
                 Exchange                     cumulative        volume  
                                                volume          across  
                                                              exchanges 
------------------------------------------------------------------------
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
                                          ------------------------------
      Total..............................     1,417,468,987     100.0000
------------------------------------------------------------------------


    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:

------------------------------------------------------------------------
                     Exchange/NFA                           1996 fee    
------------------------------------------------------------------------
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
                                                       -----------------
      Total...........................................      1,058,169.12
------------------------------------------------------------------------

    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