[Federal Register Volume 62, Number 189 (Tuesday, September 30, 1997)]
[Notices]
[Pages 51087-51088]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-25779]


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COMMODITY FUTURES TRADING COMMISSION


Chicago Board of Trade Futures Contracts in Corn and Soybeans; 
Proposed Disapproval of Exchange Listing for Trading of January 1999 
Soybean Futures Contract and March 1999 Corn Futures Contract

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of, and Request for Public Comment on, Proposed 
Disapproval of Contract Listing and Proposed Disapproval and Proposed 
Order to Change and to Supplement Chicago Board of Trade Proposal on 
Contract Specifications.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'') has 
issued a Proposed Order to the Board of Trade of the City of Chicago 
(``CBT''), under sections 5a(a)(10) and 15 of the Commodity Exchange 
Act (``Act''), 7 U.S.C. 7a(a)(10) and 19, to change and to supplement 
its proposal regarding the delivery terms of the CBT corn and soybean 
futures contracts. Notice of the Commission's Proposed Order was 
published in the Federal Register on Monday, September 22, 1997. 62 FR 
49474. The Proposed Order proposed a number of changes and supplements 
to the CBT proposal for its corn and soybean futures contracts. The 
Commission also proposed to disapprove, to change and to supplement the 
terms of the July and December 1999 corn futures contracts and the July 
and November 1999 soybean futures contracts proposed by the CBT.
    The Commission has become aware that the Board of Trade of the City 
of Chicago (CBT) notified its members on September 19, 1997, of its 
intent to propose listing for trading the January 1999 soybean futures 
contract and the March 1999 corn futures contract. By letter dated 
September 23, 1997, the Commission notified the CBT that the Commission 
is proposing under sections 5a(a)(10), 5a(a)(12), 8a(7) and 15 of the 
Act to disapprove the listing for trading and to disapprove, to change 
and to supplement the terms of the January 1999 soybean futures 
contract and the March 1999 corn futures contract on the same basis and 
for the same reasons as it has determined in its Proposed Order of 
September 15, 1997, to propose to disapprove, to change and to 
supplement the July and December 1999 corn futures contracts and the 
July and November 1999 soybean futures contracts.
    The Commission has determined that publication of the notice to the 
CBT proposing to disapprove the listing and to disapprove, to change 
and to supplement the terms of the January 1999 soybean futures 
contract and the March 1999 corn futures contract is in the public 
interest, will assist the Commission in considering the views of 
interested persons, and is consistent with the purposes of the 
Commodity Exchange Act.

DATES: Comment must be received by October 22, 1997.

ADDRESSES: Comments should be mailed to the Commodity Futures Trading 
Commission, Three Lafayette Centre, 1155 21st Street, N.W., Washington, 
D.C. 20581, attention: Office of the Secretariat; transmitted by 
facsimile at (202) 418-5521; or transmitted electronically at 
[[email protected]]. Reference should be made to ``Corn and Soybean 
Delivery Points--Additional Delivery Months.''

FOR FURTHER INFORMATION CONTACT: John Mielke, Acting Director, or Paul 
M. Architzel, Chief Counsel, Division of Economic Analysis, Commodity 
Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, 
N.W., Washington, D.C. 20581, (202) 418-5260, or electronically, Mr. 
Architzel at [PA[email protected]].

SUPPLEMENTARY INFORMATION: Section 5a(a)(10) of the Act provides that 
as a condition of contract market designation, boards of trade are 
required to:

permit the delivery of any commodity, on contracts of sale thereof 
for future delivery, of such grade or grades, at such point or 
points and at such quality and locational price differentials as 
will tend to prevent or diminish price manipulation, market 
congestion, or the abnormal movement of such commodity in interstate 
commerce. If the Commission after investigation finds that the rules 
and regulations adopted by a contract market permitting delivery of 
any commodity on contracts of sale thereof for future delivery, do 
not accomplish the objectives of this subsection, then the 
Commission shall notify the contract market of its finding and 
afford the contract market an opportunity to make appropriate 
changes in such rules and regulations. If the contact market within 
seventy-five days fails to make the changes which in the opinion of 
the Commission are necessary to accomplish the objectives of this 
subsection, then the Commission after granting the contract market 
an opportunity to be heard, may change or supplement such rules and 
regulations of the contract market to achieve the above objectives * 
* * .

    The Commission, on September 15, 1997, issued a Proposed Order 
under sections 5a(a)(10) and 15 of the Act to change and to supplement 
the proposal of the CBT relating to the delivery specifications of the 
corn and soybean futures contracts. That proposal was submitted in 
response to prior Commission notification to the CBT that its futures 
contracts for corn and soybeans no longer were in compliance with the 
requirements of section 5a(a)(10) of the Act. The text of the Proposed 
Order was published in the Federal Register, and public comment was 
requested thereon. 62 FR 49474 (September 22, 1997).
    The Commission has become aware that the CBT notified its members 
on September 19, 1997, of its intent to propose listing for trading of 
the January 1999 soybean futures contract and the March 1999 corn 
futures contract. By letter dated September 23, 1997, the Commission 
notified the CBT that it is proposing under sections 5a(a)(10), 
5a(a)(12), 8a(7) and 15 of the Act to disapprove the listing for 
trading and to disapprove, to change and to supplement the terms of the 
January 1999 soybean futures contract and the March 1999 corn futures 
contract on the same basis and for the same reasons as it has 
determined in its Proposed Order of September 15, 1997, to propose to 
disapprove, to change and to supplement the July and December 1999 corn 
futures contracts and the July and November 1999 soybean futures 
contracts.
    A public hearing on the Proposed Order has been scheduled for 
October 15, 1997, (or at an earlier date if the CBT requests) at the 
Commission's Washington, D.C. office. The CBT also will have an 
opportunity at that public hearing to make an oral presentation before 
the Commission on the matters raised in this notice to disapprove the 
listing and to disapprove, to change and to supplement the January 1999 
soybean futures contract and the March 1999 corn futures contract. The 
Commission will also accept written comments from the CBT on this issue 
on or before the date of the hearing. The text of this notification is 
as follows:

September 23, 1997.
Mr. Patrick Arbor,
Chairman of the Board, Board of Trade of the City of Chicago, 141 W. 
Jackson Blvd., Chicago, Illinois 60604-2994.


[[Page 51088]]


Re: Proposed Disapproval of Exchange Listing for Trading of January 
1999 Soybean Futures Contract and March 1999 Corn Futures Contract

    Dear Mr. Arbor: The Commission is aware that the Board of Trade 
of the City of Chicago (CBT) notified its members on September 19, 
1997, of its intent to propose listing for trading the January 1999 
soybean futures contract and the March 1999 corn futures contract.
    The Commodity Futures Trading Commission (Commission) hereby 
notifies the CBT that listing the above contract months is not 
consistent with the abbreviated review provisions of Commission rule 
1.41(l), 17 CFR 1.41(l), and will be subject to the usual review and 
approval procedures under section 5a(a)(12) of the Commodity 
Exchange Act (Act) and rule 1.41(b). Commission rule 1.41(l) 
provides that all changes in contract months shall be deemed 
approved by the Commission ten days after notice of the change is 
received by the Commission if consistent with the Act and the 
Commission's regulations.1
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    \1\ Commission rule 1.41(l) provides, in part, that:
    Notwithstanding the provisions of paragraph (b) of this section, 
all changes in trading months shall be deemed approved by the 
Commission ten days after written notice of such a change is 
received by the Commission if:
    (i) The change is consistent with a rule of the contract market 
governing the listing of trading months which has been approved by 
the Commission, and with the Act and the Commission's regulations; * 
* *.
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    The Commission, by letter dated December 19, 1996, notified the 
CBT that the delivery terms of its corn and soybean futures 
contracts are not consistent with the requirements of section 
5a(a)(10) of the Act. In its December 19, 1996 notification, the 
Commission stated:
    [i]n light of the Commission's determination that the CBT's 
futures contracts in corn and soybeans no longer comply with the 
requirements of section 5a(a)(10) of the Act, the CBT should refrain 
from listing additional months for trading in those contracts during 
the pendency of these proceedings.

61 FR 67998, 67999 (December 26, 1997).

    On September 15, 1997, the Commission issued a proposed Order to 
change and to supplement the CBT's response to the December 19, 1996 
section 5a(a)(10) notice and to disapprove, to change and to 
supplement the terms proposed by the CBT for the July and December 
1999 corn and July and November 1999 soybean futures contracts, 
which were listed by the CBT without Commission approval. The 
Commission has notified the CBT under the proposed Order that the 
CBT will have an opportunity to be heard by the Commission on 
October 15, 1997, or sooner if the CBT requests.
    The delivery specifications intended by the CBT to be applicable 
to the January 1999 soybean futures contract and the March 1999 corn 
futures contract are the same as those that the Commission proposed 
to disapprove for application to the July and December 1999 corn 
futures contracts and the July and November 1999 soybean futures 
contracts in its Proposed Order of September 15, 1997. Listing 
additional delivery months under either the contract terms found by 
the Commission to violate the provisions of section 5a(a)(10) or 
under proposed terms on which the Commission already has taken 
action proposing disapproval is not consistent with the provisions 
and policies of the Act. The Commission proposes to disapprove the 
listing of these contract months on those grounds.
    Because the Commission finds that listing these trading months 
is not consistent with Commission rule 1.41(l) and that Commission 
review and approval under section 5a(a)(12) and rule 1.41(b) is 
required prior to their listing, their listing for trading by the 
CBT is not legally authorized at the present time. Moreover, the 
Commission proposes under sections 5a(a)(10), 5a(a)(12), 8a (7) and 
15 of the Act to disapprove the listing for trading and to 
disapprove, to change and to supplement the terms of the January 
1999 soybean futures contract and the March 1999 corn futures 
contract on the same bases and for the same reasons as it has stated 
in its December 19, 1996 notification and its Proposed Order of 
September 15, 1997.
    A public hearing on the Proposed Order of September 15, 1997, 
has been scheduled for October 15, 1997, (or at an earlier date if 
the CBT requests) at the Commission's Washington, D.C. office. The 
CBT also will have an opportunity at that public hearing to make an 
oral presentation before the Commission on the matters raised in 
this notice to disapprove the listing and to disapprove, to change 
and to supplement the January 1999 soybean futures contract and the 
March 1999 corn futures contract. The Commission will also accept 
written comments from the CBT on this issue on or before the date of 
the hearing.
    The Commission also reserves all of its authority under the Act 
to bring appropriate legal action against the CBT for the violation 
of section 5a(a)(12) of the Act and Commission rules 1.41(b) and 
1.41(l) which require the CBT to obtain approval by the Commission 
prior to listing new delivery months for trading. Such reservation 
of authority relates to the January, July and November 1999 soybeans 
futures contracts and the March, July and December 1999 corn futures 
contracts, as well as any contract months CBT attempts to list 
without prior approval hereafter.2 As the Commission 
noted in its Proposed Order of September 15, 1997, the Commission is 
prepared to approve immediately the listing of delivery months which 
incorporate the Commission's proposed changes and supplements.
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    \2\ In this regard, the Commission notes that the listing of 
contract months under the current contract terms prior to the 
December notification's finding that the contracts' terms are in 
violation of section 5a(a)(10) of the Act is fundamentally different 
from the listing of trading months after such a finding has been 
made.
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    The Commission hereby instructs the CBT that it must notify all 
market participants that the Commission has not approved the listing 
of these contract months as required by law and that the Commission 
has proposed to disapprove the listing and to disapprove, to change 
and to supplement the terms proposed by the CBT.

    By the Commission.
Jean A. Webb,
Secretary of the Commission.

    The Commission has determined that publication of this Proposed 
Disapproval of Contract Listing and Proposed Order to Disapprove, to 
Change and to Supplement the Chicago Board of Trade Proposal on 
Contract Specifications relating to the January 1999 soybean futures 
contract and the March 1999 corn futures contract for public comment 
will assist the Commission in its consideration of these issues. 
Accordingly, the Commission is requesting written comments from 
interested members of the public.

    Issued in Washington, D.C., this 23rd day of September, 1997, by 
the Commodity Futures Trading Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 97-25779 Filed 9-29-97; 8:45 am]
BILLING CODE 6351-01-P