[Federal Register Volume 64, Number 161 (Friday, August 20, 1999)]
[Notices]
[Pages 45515-45517]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21671]


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COMMODITY FUTURES TRADING COMMISSION


Citrus Associates of the New York Cotton Exchange: Proposed 
Amendments to the Frozen Concentrated Orange Juice-2 (FCOJ-2) Futures 
Contract Providing for Delivery of FCOJ Originating in Florida and 
Brazil Only, Changing the Contract's Quality Specifications and 
Providing for Trading of the FCOJ-2 Futures Contract at a Price 
Differential to the Existing FCOJ-1 Futures Contract

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of availability of proposed amendments to contract terms 
and conditions.

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SUMMARY: The Citrus Associates of the New York Cotton Exchange (CANYCE 
or Exchange) has proposed amendments to the Exchange's dormant frozen 
concentrated orange juice-2 (FCOJ-2) futures contract. The proposed 
amendments would provide for the delivery of FCOJ originating in 
Florida and Brazil only, make the contract's quality specifications 
conform to the quality specifications of the FCOJ-1 futures contract, 
amend the contract's speculative position limits, and provide for the 
trading of the FCOJ-2 futures contract as a differential price spread 
to the FCOJ-1 futures contract. The Exchange also proposes to 
recommence trading in this dormant contract pursuant to the provisions 
for Commission Regulation 5.2. The proposed amendments were submitted 
under the Commission's 45-day Fast Track procedures which provides 
that, absent any contrary action by the Commission, the proposed 
amendments may be deemed approved on September 27, 1999--45 days after 
the Commission's receipt of the proposals. The Acting Director of the 
Division of Economic Analysis (Division) of the Commission, acting 
pursuant to the authority delegated by Commission Regulation 140.96, 
has determined that the proposed amendments are of major economic 
significance, within the meaning of section 5a(a)(12) of the Commodity 
Exchange Act (Act), and that their publication is in the public 
interest and will assist the Commission in considering the views of 
interested persons.

DATES: Comments must be received on or before September 7, 1999.

ADDRESSES: Interested persons should submit their views and comments to 
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three

[[Page 45516]]

Lafayette Centre, 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 proposed amendments to the CANYCE FCOJ-2 futures 
contract.

FOR FURTHER INFORMATION CONTACT: Please contact John Bird of the 
Division of Economic Analysis, Commodity Futures Trading Commission, 
Three Lafayette Centre, 21st Street NW, Washington, DC 20581, telephone 
(202) 418-5274. Facsimile number: (202) 418-5527. Electronic mail: 
[email protected]

SUPPLEMENTARY INFORMATION: The Exchange currently is designated to 
trade two FCOJ futures contracts, the actively traded FCOJ-1 futures 
contract and dormant FCOJ-2 futures contract. The terms and conditions 
of the FCOJ-1 and FCOJ-2 futures contracts are identical, except with 
respect to the contracts' quality specifications. In this regard, the 
FCOJ-1 futures contract provides for the delivery of FCOJ having a Brix 
value of acid ratio of not less than 14.0 to 1 and not more than 18.0 
to 1 and a minimum score of 94, with minimum component quality factors 
of 37 for color, 37 for flavor, and 19 for defects. In contract, the 
FCOJ-2 futures contract provides for the delivery of FCOJ having a Brix 
value to acid ratio of not less than 13.0 to 1 and not more than 19.0 
to 1 and a minimum score of 92, with minimum component quality factors 
of 36 for color, 36 for flavor, and 19 for defects.
    The existing terms of the FCOJ-1 and FCOJ-2 futures contracts 
permit delivery of FCOJ of all origins, imported or domestic. In 
addition, both futures contracts provide for the delivery of shipping 
certificates, which require the certificate issuers to load FCOJ into 
transportation equipment provided by the certificate holder. The 
contracts' delivery points consist of approved delivery facilities 
located at Wilmington, Delaware; Newark and Port Elizabeth, New Jersey, 
in 11 specified counties in California; and in 16 specified counties in 
central Florida. FCOJ is deliverable at par at delivery facilities 
located in Florida, Wilmington, Newark and Port Elizabeth. FCOJ in 
delivery facilities in California is deliverable at a discount of 10 
cents per pound. Currently, a trader's combined position in the FCOJ-1 
and FCOJ-2 futures contracts is subject to speculative position limits 
of 3,000 contracts in all contract months combined, 1,800 contracts in 
individual non-spot contract months, and 300 contracts in the spot 
month.
    The proposed amendments to the FCOJ-2 futures contract would limit 
the origins of deliverable FCOJ to FCOJ produced in Florida and Brazil. 
In addition, the proposed amendments would make the FCOJ-2 futures 
contract's quality specifications identical to the quality 
specifications of the FCOJ-1 futures contract, as noted above.
    The proposed amendments also would provide for the trading of the 
FCOJ-2 futures contract as a component of a differential price spread 
between the FCOJ-2 and FCOJ-1 futures contracts (``FCOJ Differential 
Contracts'') during most of the trading life of an FCOJ-2 contract 
month. In this respect, the proposed amendments define a long FCOJ 
Differential Contract as consisting of a long FCOJ-2 futures contract 
and a short FCOJ-1 futures contract. A short FCOJ Differential Contract 
is defined as a short FCOJ-2 futures contract and a long FCOJ-1 futures 
contract. The FCOJ Differential Contract will be traded as a single 
contract until the second business day preceding the first delivery 
notice day for the expiring contract month. The proposed amendments 
would provide that, on the second business day preceding the first 
delivery notice day for a contract month, each FCOJ Differential 
Contract position in the expiring contract month will be divided into 
its component FCOJ-1 and FCOJ-2 positions, i.e., a trader will receive 
by book entry a long (short) position in the FCOJ-2 futures contract 
and an opposite short (long) position in the FCOJ-1 futures contract. 
Trading in the FCOJ-2 futures contract will then continue until the 
first delivery notice day, with the quoted prices reflecting the value 
of FCOJ originating in Florida and Brazil (not the price spread 
differential between the FCOJ-2 and FCOJ-1 futures contracts). Trading 
in the FCOJ-2 futures contract would end on the first delivery notice 
day for a contract month and all positions remaining open after the 
close of trading on that day would be settled by delivery. The proposed 
amendments would not change the existing trading and delivery notice 
periods for expiring FCOJ-1 futures contract months.
    In addition, the proposed amendments will provide for speculative 
position limits of 3,000 contracts for each of the FCOJ-1 and FCOJ-2 
futures contracts in all contract months combined and 1,800 contracts 
for each of the FCOJ-1 and FCOJ-2 futures contracts in individual non-
spot contract months. The spot month speculative position limit would 
continue to be applicable to a trader's combined gross position in the 
FCOJ-1 and FCOJ-2 futures contracts.
    The CANYCE intends to make the proposed amendments effective in 
October 1, 1999 with the commencement of trading in the revised FCOJ-2 
futures contract.
    In support of the proposed amendments, the CANYCE indicated that 
the proposal to trade the FCOJ-2 futures contract as a component of a 
differential price spread between the FCOJ-2 and FCOJ-1 futures 
contract is intended to avoid diluting the open interest and trading 
activity in the FCOJ-1 futures contract. The Exchange also indicated 
that proposal to divide each FCOJ Differential Contract position into 
its FCOJ-2 futures contract and FCOJ-1 futures contract components two 
business days before the first notice day of expiring contract months 
is intended to allow traders sufficient time to adjust their futures 
positions as necessary. In addition, the CANYCE indicated that, because 
FCOJ that meets the proposed delivery requirements of the FCOJ-2 
futures contract constitutes approximately 90% of all FCOJ currently 
deliverable on the FCOJ-1 futures contract, there will be an adequate 
deliverable supply of FCOJ available for the amended FCOJ-2 futures 
contract.
    The Division is requesting comments on the proposed amendments to 
the FCOJ-2 futures contract.
    Copies of the proposed amendments will be available for inspection 
at the Office of the Secretariat, Commodity Futures Trading Commission, 
Three Lafayette Centre, 21st Street NW, Washington, DC 20581. Copies of 
the proposed amendments can be obtained through the Office of the 
Secretariat by mail at the above address, by phone at (202) 418-5100, 
or via the Internet at [email protected].
    Other materials submitted by the CANYCE in support of the proposal 
may be available upon request pursuant to the Freedom of Information 
Act (5 U.S.C. 552) and the Commission's regulations thereunder (17 
C.F.R. Part 145 (1987)), except to the extent they are entitled to 
confidential treatment as set forth in 17 C.F.R. 145.5 and 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 C.F.R. 145.7 and 
145.8.
    Any person interested in submitting written data, views, or 
arguments on the proposed amendments, or with respect to other 
materials submitted by the CANYCE, should send such comments to Jean A. 
Webb, Secretary, Commodity

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Futures Trading Commission, Three Lafayette Centre, 21st Street NW, 
Washington, DC 20581 by the specified date.

    Issued in Washington, DC, on August 16, 1999.
John R. Mielke,
Acting Director.
[FR Doc. 99-21671 Filed 8-19-99; 8:45 am]
BILLING CODE 6351-01-M