[Federal Register Volume 64, Number 117 (Friday, June 18, 1999)]
[Proposed Rules]
[Pages 32829-32830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15441]


=======================================================================
-----------------------------------------------------------------------

COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 1 and 30


Access to Automated Boards of Trade

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rules; withdrawal.

-----------------------------------------------------------------------

SUMMARY: On March 24, 1999, the Commission issued proposed rules to 
permit the use in the United States of automated trading systems 
providing access to foreign electronic boards of trade. The Commission 
has decided to withdraw these proposed rules.

FOR FURTHER INFORMATION CONTACT: David M. Battan, Chief Counsel, 
Lawrence B. Patent, Associate Chief Counsel, or Charles T. O'Brien, 
Attorney Advisor, Division of Trading and Markets, Commodity Futures 
Trading Commission, 1155 21st Street, N.W., Washington, D.C. 20581. 
Telephone (202) 418-5450.

SUPPLEMENTARY INFORMATION: The Commission had first sought public 
comment on these matters in a concept release published July 24, 1998, 
followed by the proposed rules published in March. After an extension 
was granted at the request of a number of industry participants, the 
comment period on the proposed rules closed on April 30, 1999. During 
the comment period, the Commission held a Public Roundtable as well as 
a meeting of its Global Markets Advisory Committee (``GMAC'') to 
discuss these matter.
    On June 2, 1999, the Commission issued an order withdrawing the 
proposed rules and instructing the staff ``to begin immediately 
processing no-action requests from foreign boards of trade seeking to 
place terminals in the United States, and to issue responses where 
appropriate, pursuant to general guidelines included in the Eurex (DTB) 
no-action process,\1\ or other guidelines issued by the Commission, to 
be reviewed and applied as appropriate on a case-by-case basis.'' See 
Order of the Commission (June 2, 1999). In the same order, the 
Commission determined to ``commit to simultaneously initiate processes 
to address the comparative regulatory levels between U.S. and foreign 
electronic systems so as not to

[[Page 32830]]

provide one with a competitive advantage.'' Id.
---------------------------------------------------------------------------

    \1\ In February 1996, the Commission's Division of Trading and 
Markets (``Division'') issued a no-action letter to the Deutsche 
Terminborse (``DTB'' or ``Eurex''), an all-electronic futures and 
option exchange headquartered in Frankfurt, Germany, in which the 
Division agreed, subject to certain conditions, not to recommend 
enforcement action to the Commission if Eurex placed computer 
terminals in the U.S. offices of its members.
---------------------------------------------------------------------------

    As with the rapid developments in technology overtaking other 
industries, the growth of electronic exchanges and the placement of 
cross-border futures and option trading systems in the United States 
raise some of the most basic and fundamental issues facing the 
Commission and the futures industry. Among the critically important 
questions that need to be addressed are what role intermediation will 
play when technological developments make access to global markets far 
easier than before; what the future relationships will be between and 
among customers, futures commission merchants, exchanges, technology 
providers, and regulators; and how to provide a level-playing field and 
foster fair competition in the context of electronic trading systems 
between domestic and foreign market participants and between exchanges 
and FCMs while maintaining the protection of customers and the safety 
and soundness of larger and faster global markets.
    The Commission's July 1998 concept release was by necessity of a 
general nature, and the resulting comments were not able to address 
with specificity all of these difficult issues. Only with the release 
of the proposed rules have all of the interested parties focused fully 
on all of the specific questions at hand. Moreover, even in just the 
past few months, the technology and the business relationships among 
the various constituents in the futures industry have changed 
substantially, and continue to do so. In any event, the result of all 
this, as evidenced by the comments received on the proposed rules, and 
by the wide-ranging positions outlined at the recent Roundtable and 
GMAC meetings on these issues, is that further consensus among the 
various affected parties must be sought before rules or guidelines may 
be finalized in this area. In this environment, the Commission 
determined to withdraw its proposed rules and defer adoption of final 
rules or guidelines pending further consideration of these issues by 
the Commission.

    Issued in Washington, D.C. on June 11, 1999 by the Commission.
Jean A. Webb,
Secretary of the Commission.

U.S. Commodity Futures Trading Commission

Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581

June 2, 1999.

Order of the Commission

    It is hereby ordered that the Commodity Futures Trading 
Commission shall, effective immediately:
    Lift the moratorium and instruct the staff to begin immediately 
processing no-action requests from foreign boards of trade seeking 
to place trading terminals in the United States, and to issue 
responses where appropriate, pursuant to the general guidelines 
included in the Eurex (DTB) no-action process, or other guidelines 
established by the Commission, to be reviewed and applied as 
appropriate on a case-by-case basis;
    Commit to simultaneously initiate processes to address the 
comparative regulatory levels between U.S. and foreign electronic 
trading systems so as not to provide one with a competitive 
advantage; and
    Withdraw the proposed rules regarding access to automated boards 
of trade and proceed expeditiously toward adoption of rules and/or 
guidelines.

    Dated: June 2, 1999.
Commissioner Barbara P. Holum.
    Dated: June 2, 1999.
Commissioner David D. Spears.
    Dated: June 2, 1999.
Commissioner James E. Newsome.

[FR Doc. 99-15441 Filed 6-17-99; 8:45 am]
BILLING CODE 6351-01-M