[Federal Register Volume 64, Number 93 (Friday, May 14, 1999)] [Notices] [Pages 26365-26366] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 99-11785] ======================================================================= ----------------------------------------------------------------------- COMMODITY FUTURES TRADING COMMISSION Applications of the Chicago Mercantile Exchange for Designation as a Contract Market in Futures and Options on Three Month Eurodallar FRAs AGENCY: Commodity Futures Trading Commission. ACTION: Notice of availability of amended terms and conditions of proposed commodity futures and option contracts. ----------------------------------------------------------------------- SUMMARY: The Chicago Mercantile Exchange (CME or Exchange) has applied for designation as a contract market in futures and options on three- month Eurodallar FRAs (forward rate agreements). Following Commission receipt of the applications in July 1998, the Director of the Division of Economic Analysis (Division) of the Commission, acting pursuant to the authority delegated by Commission Regulation 140.96, published those proposals for public comment (63 FR 42617). That comment period ended on September 9, 1998. In a supplemental submission dated October 2, 1998, the CME proposed to amend the original application to provide that positions in the proposed three-month Eurodallar FRA futures contract would not be [[Page 26366]] offset. The Commission has determined that an additional period for public comment on the proposals will assist the Commission in considering the views of interested persons, and is consistent with the purposes of the Commodity Exchange Act. DATES: Comments must be received on or before June 14, 1999. ADDRESSES: Interested persons should submit their views and comments to Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st Street, NW, Washington, DC 20581. In addition, comments may be sent by facsimile transmission to facsimile number (202) 418-5521, or by electronic mail to [email protected]. Reference should be made to the CME three-month Eurodallar FRA futures and option contracts. FOR FURTHER INFORMATION CONTACT: Please contact David Van Wagner of the Division of Trading and Markets, telephone (202) 418-5481. Facsimile number (202) 418-5547. Electronic Mail: [email protected]. With respect to the individual contract terms and conditions, please contact Michael Penick of the Division of Economic Analysis, Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st Street NW, Washington, DC 20581, telephone (202) 418-5279. Facsimile number: (202) 418-5527. Electronic mail: [email protected]. SUPPLEMENTARY INFORMATION: In the original application, the terms and conditions of the proposed futures contract provided that the contract would be cash settled using procedures substantially identical to those of the existing CME Eurodollar futures contract. Other features of the proposed contract were also comparable to those approved for existing markets. In a supplemental filing, the CME has clarified which exchange procedures specifically would apply to the trading, clearing and settlement of the proposed three-month Eurodollar FRA futures contract. As proposed, CME Rule ____.00, Scope of Chapter, would be modified to state that the procedures for trading, clearing and settlement of the three-month Eurodollar FRA futures are governed by the rules of the Exchange except for Rule 806.\1\ Procedures requiring the posting of collateral to cover daily pays and collects would remain the same. --------------------------------------------------------------------------- \1\ CME Rule 806 states that ``a clearing member long or short any commodity to the Clearing House as a result of substitution may liquidate the position by acquiring an opposite position for its principal.'' --------------------------------------------------------------------------- Under the proposed revision, positions in the proposed three-month Eurodallar FRA futures contract would not be liquidated by offset. Rather, positions must be held to contract expiration once opened. As the CME explained in its supplemental filing: . . . the value of a price change in the Eurodollar FRA futures contract is not known until the final settlement date when the value of a tick is determined. Therefore, the Clearinghouse cannot determine accurately the pays and collects on Eurodollar FRA futures positions until the final settlement. . . Hence, as the Eurodollar FRA futures rules already reflect, the Eurodollar FRA futures contract is not subject to Rule 814 regarding daily pays and collects between the contract holder and the Clearinghouse. Similarly, because the Eurodollar FRA futures contract is not settled daily and because pays and collects do not occur daily as the Eurodollar futures contracts, the Clearinghouse cannot offset Eurodollar FRA futures contracts. Rather, pays and collects will be netted out across the settling Eurodollar FRA contracts on the settlement date.\2\ \2\ As mentioned, the Clearinghouse would require the posting of collateral to cover pays and collects on the final settlement date. --------------------------------------------------------------------------- The Commission is requesting comment on the proposed contract provisions with respect to exchange financial integrity, futures industry practices, and the application of any provisions of the Commodity Exchange Act or of any specific Commission policy or interpretation. Copies of the amended terms and conditions will be available for inspection at the Office of the Secretariat, Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st Street NW, Washington, DC 20581. Copies of the terms and conditions can be obtained through the Office of the Secretariat by mail at the above address or by phone at (202) 418-5100. Other materials submitted by the CME in support of the applications for contract market designation 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 (1997)), except to the extent they are entitled to confidential treatment as set forth in 17 CFR 145.5 ad 145.9. Requests for copies of such materials should be made to the FOI, Privacy and Sunshine Act Compliance Staff of the Office of 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 terms and conditions, or with respect to other materials submitted by the CME should send such comments to Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three Lafayette Central, 1155 21st Street NW, Washington, DC 20581 by the specified date. Issued in Washington, DC, on May 5, 1999. Jean A. Webb, Secretary of the Commission. [FR Doc. 99-11785 Filed 5-12-99; 9:17 am] BILLING CODE 6351-01M-M