[Federal Register Volume 64, Number 227 (Friday, November 26, 1999)]
[Rules and Regulations]
[Pages 66373-66381]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-30510]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 5

RIN 3038-AB42


Revised Procedures for Listing New Contracts

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rules.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is 
adopting a final rule permitting exchanges to list contracts for 
trading without Commission approval. In response to continued 
expressions of industry concern that the ability to list new contracts 
for trading without delay is vital to the exchanges' continued 
competitiveness, the Commission proposed a two-year pilot program to 
permit the listing of contracts for trading prior to Commission 
approval. 64 FR 40528 (July 27, 1999). Based upon the comments 
received, the Commission is modifying the proposed rule to permit 
exchanges to list commodity futures or option contracts for trading 
without Commission approval of the contract or its terms and 
conditions, including any subsequent amendments thereto. This new 
listing procedure is an alternative to regular or fast-track procedures 
for contract market designation. To meet its statutory mission of 
ensuring market integrity and customer protection, the Commission will 
place greater reliance on its existing oversight authorities to 
disapprove, alter or supplement exchange rules or to take emergency 
action, as appropriate. The Commission also is making a number of 
technical changes to the rule, as suggested by the comments.
    In a companion release published elsewhere in this edition of the 
Federal Register, the Commission is proposing to permit all exchange 
rules and rule amendments to be made effective without Commission 
approval. As part of that proposed rulemaking, the Commission will seek 
comment on whether the new procedure for listing contracts for trading 
without approval which the Commission is adopting herein should become 
the exclusive means of offering new exchange products and amending 
their terms and conditions. In a second companion notice in this issue 
of the Federal Register, the Commission is also proposing to delete 
fees for applications for contract market designation in order to 
remove any economic disincentive for using regular or fast-track review 
procedures.

EFFECTIVE DATE: January 25, 2000.

FOR FURTHER INFORMATION CONTACT: 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, [PA[email protected]].

SUPPLEMENTARY INFORMATION:

[[Page 66374]]

I. The Proposed Rules

    The Commission recently proposed rules to enable boards of trade to 
list for trading new contracts \1\ without any waiting period. 64 FR 
40528 (July 27, 1999). This proposal responded to testimony of 
representatives of U.S. exchanges that the ability to list contracts 
more quickly than currently possible is necessary for them to meet 
competitive challenges by foreign exchanges.\2\ The proposed rule, 
pursuant to the Commission's 4(c) exemptive authority, provided that 
boards of trade already designated as a contract market in one 
commodity could list new contracts for trading while their application 
for designation in the contract was pending approval. Thus, the 
proposed rules responded to the need for immediacy in listing new 
contracts within the current statutory framework which requires that 
the Commission designate boards of trade as a contract market in a 
commodity and that the Commission approve that contract's terms and 
conditions.\3\
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    \1\ However, the Commission proposed that contracts subject to 
the accord provision of section 2(a)(1)(B) of the Commodity Exchange 
Act (Act) not be eligible for this relief, consistent with the 
provisions of section 4(c) of the Act.
    \2\ During hearings before the Subcommittee on Risk Management 
and Specialty Crops of the House Committee on Agriculture, 
representatives of four U.S. futures exchanges testified that the 
current regulatory structure is overly burdensome and that statutory 
changes are necessary to achieve ``parity'' with foreign exchanges 
and to better enable U.S. exchanges to compete in the growing global 
marketplace. CFTC Reauthorization: Hearings Before the Subcommittee 
on Risk Management and Specialty Crops of the House Committee on 
Agriculture, 106th Cong., 1st Sess. (1999). See, statements of the 
Chicago Board of Trade, the Board of Trade of the City of New York, 
the Chicago Mercantile Exchange, and the New York Mercantile 
Exchange (NYMEX).
    In particular, the U.S. exchanges urged Congress to eliminate 
the requirement that the Commission review and approve new contracts 
before they begin trading and amendments to exchange rules before 
they can be implemented. For example, Daniel Rappaport, Chairman of 
the Board of Directors of NYMEX testified that, ``detailed CFTC 
review and approval of the specific terms and conditions of the 
contract has not been necessary, provides marginal, if any value, 
and adds cost, uncertainty, and delay to the roll-out of new 
contracts.''
    \3\ As the Commission noted, although the contracts during that 
initial listing period would not have been designated, they would 
have been designated subsequently using the current procedures, 
including fast-track review. During the initial review period, the 
contracts would have been valid and enforceable pursuant to the 
Commission's rule which was proposed under the Commission's 
exemptive authority. Id. at 40531.
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    Specifically, the proposed rule would have required boards of trade 
to file a contract's terms and conditions with the Commission by close 
of business on the business day prior to, and an application for 
contract market designation within forty-five days of, initially 
listing a contract for trading. Boards of trade would have been 
permitted to list and maintain up to a full year's trading months prior 
to designation. Finally, they would have been required to identify the 
contract as listed pending Commission designation, to enforce the 
contract's terms and conditions, and to fulfill all of a contract 
market's self-regulatory obligations during the period prior to its 
designation as a contract market in that commodity. The proposed rule 
also provided that while a designation application submitted under 
regular or fast track procedures was pending, a second exchange could 
not list the same, or a substantially similar, contract to trade under 
the rule, nor could the listing procedure be used to evade an adverse 
Commission proceeding involving the same or a substantially similar 
contract.\4\
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    \4\ Accordingly, where the Commission has initiated a proceeding 
to alter an exchange rule under section 8a(7) of the Act, to 
disapprove a proposed or existing contract term or condition under 
section 5a(a)(12) of the Act, to alter or change delivery points or 
commodity or locational differentials under section 5a(a)(10) of the 
Act or to disapprove an application for designation or suspend a 
designation under section 6 of the Act, or any similar adverse 
action, an exchange could not list a ``new'' contract for trading 
and thereby frustrate the proceeding against, or evade application 
of the Commission's process applicable to, the original, designated 
contract market.
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II. Comments Received

    Seven entities commented on the proposed rule-- five futures 
exchanges, a futures industry association and an association 
representing commodity merchandisers.\5\ The exchanges generally 
commented that the proposed rule did not provide sufficient relief. 
They unanimously opposed the Commission designating a contract after it 
has been listed for trading, advocating instead that the Commission 
limit its role to disapproving a new contract or requiring its terms to 
be amended. They also opposed limiting to one year the trading months 
that initially could be listed and the Commission characterizing the 
proposed rule's implementation as a ``pilot program.'' One commenter 
supported the proposal. The comments are discussed in greater detail 
below.
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    \5\ The thirty-day comment period closed on August 26, 1999.
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    Based on its administrative experience and in response to the 
comments received, the Commission is adopting a final rule permitting 
exchanges to list contracts for trading pursuant to exchange 
certification, and without prior Commission approval. As one exchange 
commenter noted, ``contract approval, while arguably useful in an era 
before exchanges had developed [sophisticated] * * * self-regulatory 
systems and procedures,'' is no longer necessary. New York Board of 
Trade (NYBOT) comment letter at 3. The Commission agrees that it can, 
and should, place greater reliance on the exchanges' role as self-
regulatory organizations, particularly in connection with their 
decisions to list new products for trading.
    As the NYBOT points out, commodity futures and option exchanges 
over the years have developed increasingly sophisticated self-
regulatory mechanisms and procedures to keep pace with the changing 
nature of the products which they offer. During that time, the 
Commission has kept pace with those changes by periodically updating 
the requirements for an application for contract market designation and 
its processing procedures.\6\ Based on that experience, the Commission 
is confident that commodity futures and option exchanges stand ready to 
assume greater responsibility for ensuring that their new products meet 
the applicable statutory and regulatory requirements. The Commission is 
equally assured that the exchanges will return that confidence through 
their cooperative response to the Commission's efforts to exercise 
greater oversight authority and to decrease its direct regulation.
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    \6\ See, Guideline No. 1, 17 CFR Part 5, Appendix A, and 17 CFR 
5.1 (fast-track designation procedures.)
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III. The Final Rule

A. Legal Certainty

    All of the commenters opposing the proposed rule cited the need for 
increased legal certainty. Several, such as the Chicago Mercantile 
Exchange (CME) and the New York Mercantile Exchange (NYMEX) opposed 
implementation of the rule as a two-year pilot program. They reasoned 
that a pilot program created undue uncertainty because there was no 
assurance that the rule would be continued or expanded at the end of 
the initial two-year period. NYMEX additionally observed that ``the 
Commission has not provided guidance on how it would evaluate the pilot 
program.'' \7\ In order to provide greater legal certainty to the 
market, the Commission is promulgating the rule for

[[Page 66375]]

an unlimited duration and not as a pilot program.
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    \7\ NYMEX comment letter at p. 3. NYMEX also suggested that the 
Notice of Proposed Rulemaking's description of certain benefits of 
Commission review of exchange rules with no ``original assessment'' 
of the costs of that review called into question the Commission's 
commitment to its proposed pilot program.'' The Commission 
disagrees. The proposed rule on its face either reduced or did not 
increase regulatory costs.
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    All of the exchanges opposed the proposed rule's requirement that 
boards of trade submit to the Commission an application for contract 
market designation within forty-five days of listing a contract to 
trade. The CME reasoned that the possibility that the Commission might 
``disapprove the contract or require its terms to be amended * * * is 
likely to discourage market participants from trading the new 
contract.'' CME comment letter at 4. The Chicago Board of Trade (CBT) 
objected that,

    the Commission is expressly retaining the requirement of 
Commission review of contract terms, along with the concomitant 
authority to disapprove or require changes to the contract terms, 
post-listing. The risk that contract terms could change by 
Commission fiat during a post listing review period will discourage 
market use of any contract listed under the pilot program.

CBT comment letter at 2. NYMEX concluded that ``uncertainty regarding 
whether or not a pending application for designation would be approved 
or denied, or perhaps modified from the original filing under terms 
dictated to an exchange by the CFTC, could continue for a whole year.'' 
\8\ NYMEX comment letter at 3. The exchanges therefore concluded that 
the proposed rule would better serve their competitive needs by 
permitting them to ``list new contracts without Commission approval-not 
``pending'' such approval.'' NYBOT comment letter at 2.
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    \8\ NYMEX's conclusion regarding the relative degree and length 
of any such uncertainty is based upon the assumption that the 
Commission would take the entire statutorily-provided time for the 
post-listing review and designation of new contracts. However, 
nothing in either the fast-track or the proposed rule would have 
precluded use of the Commission's fast track procedures (17 CFR 
5.1), which provide either a ten or forty-five day review period. 
Moreover, the fast-track rule empowers exchanges to request that, if 
the Commission terminates fast track review, it either approve the 
contract as submitted or initiate disapproval proceedings.
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    The Commission, in response to the comments, is modifying the rule 
as proposed to replace the requirement that boards of trade submit for 
Commission review and approval an application for contract market 
designation within forty-five days of listing a contract. Instead, 
boards of trade only will be required to certify that the contract 
listed for trading meets the requirements of the Commodity Exchange Act 
and the Commission's rules thereunder. This certification must be filed 
along with the contract's terms and conditions no later than the close 
of business of the business day preceding the contract's listing. The 
exchange's certification that the contract meets the statutory and 
regulatory requirements is in lieu of the otherwise required 
application for contract market designation and the Commission's review 
and approval of the application and of the contract's terms. Under the 
final rule, contracts may be listed for trading indefinitely in 
reliance on the exchange's certification; \9\ and as discussed below 
the Commission generally will not review and approve the contract's 
terms under section 5a(a)(12) of the Act and Commission rule 1.41.
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    \9\ The exchanges also commented that the proposed limitation of 
delivery months which could be listed prior to designation to one 
rolling year would discourage trading in contracts listed under the 
rule. The final rule includes no limitation on the listing of 
distant trading months.
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    The exchange commenters also objected to the proposed requirement 
that they notify the public on all public references to the contract or 
its trading months that the contract is trading pending Commission 
designation. The CBT stated that, according to certain market users, 
highlighting the revised terms for deferred contract months in its 
soybean oil contract as ``pending Commission approval'' ``discouraged 
calendar spread trading'' and that ``even though open interest began to 
slowly increase while [it] * * * waited for final Commission action, 
that growth was slower than anticipated.'' \10\ CBT comment letter at 
2. The NYMEX concurred, stating that ``uncertainty regarding whether or 
not a pending application for designation would be approved or denied * 
* * could continue for a whole year,'' and ``during that period * * * a 
board of trade would have a continuing duty to notify the public * * * 
that the contract was trading pending Commission designation.'' NYMEX 
comment at 3.
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    \10\ The CBT amendments to the soybean contract raised a number 
of potential issues under U.S. antitrust laws which the Commission, 
under section 15 of the Act, was obliged to consider in approving 
the rule. In addition, the Commission found it necessary to amass a 
sizeable administrative record to determine the relative merit of 
the claims of non-members of the exchange opposed to the CBT's 
amendment.
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    However, as long as boards of trade have available two means of 
listing contracts, either by self-certification or Commission approval, 
the public has a right to know the legal status of a contract. The 
final rule clarifies that this public notice obligation is satisfied 
through an appropriate reference in the board of trade's rule book and 
includes other conforming changes. Accordingly, the Commission is 
adopting as final a requirement that the board of trade identify the 
contract in its rules as ``listed for trading pursuant to exchange 
certification.''
    Two commenters suggested that trading in contracts listed pursuant 
to the rule would be discouraged without greater legal certainty that a 
subsequent Commission finding disapproving or altering a contract term 
would not also invalidate open contracts. As the Futures Industry 
Association (FIA) noted:

    although the Commission states in the Federal Register release 
accompanying the proposed rule that any contract listed under the 
revised procedures would be valid and enforceable pending approval, 
the proposed rule itself is silent on this issue. Without such 
certainty, the enforceability of any contract subsequently 
determined to be in violation of the Act would also be open to 
question.

FIA comment letter at 2. The NYBOT concurred in this view. NYBOT 
comment letter at 3. Others informally have expressed the view that the 
applicability of the Act would be uncertain legally unless contracts 
which are ``listed pursuant to exchange certification'' were also 
deemed to be ``designated contract markets'' under the Act. The final 
rule addresses both of these concerns.
    The final rule, in response to these comments, explicitly preserves 
the validity and enforceability of contracts listed pursuant to 
exchange certification despite a possible violation of the rule by the 
listing board of trade. For example, if a board of trade incorrectly 
certifies that the terms of a contract that it is listing for trading 
do not violate the Act, it will be subject to Commission remedial 
action for that violation. However, the individual contracts that have 
been traded are valid and enforceable nonetheless.\11\ The Commission 
in the final rule also has made explicit that all sections of the Act 
and Commission rules which refer to ``designated contract markets'' are 
applicable to contracts listed for trading pursuant to rule 5.3.\12\
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    \11\ Similarly, although the Commission found that the CBT corn 
and soybean futures contract markets violated the provisions of 
section 5a(a)(10) of the Act, the individual contracts traded were 
valid, enforceable contracts.
    \12\ Compare, 17 CFR 33.2.
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    Accordingly, in exempting boards of trade from the designation and 
rule approval requirements of the Act, the Commission is not thereby 
ceding any of its broad oversight authorities over designated contract 
markets. These include, among others, its authority to disapprove, 
alter or supplement contract

[[Page 66376]]

rules under sections 5a(a)(12) \13\ and 8a(7) \14\ of the Act and its 
section 8a(9) authority to direct a contract market to take action in 
market emergencies.\15\ The Commission has used these authorities 
sparingly in the past.\16\ In light of the futures exchanges' steadfast 
commitment to fulfilling their self-regulatory responsibilities, the 
Commission anticipates that despite the absence of its affirmative 
prior review of exchange contracts and rules, such adverse actions will 
continue to be infrequent.\17\
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    \13\ Section 5a(a)(12) of the Act provides in part that: ``the 
Commission shall disapprove, after appropriate notice and 
opportunity for hearing, any such rule which the Commission 
determines at any time to be in violation of the provisions of this 
Act or the regulations of the Commission. If the Commission 
institutes proceedings to determine whether a rule should be 
disapproved pursuant to this paragraph, it shall provide the 
contract market with written notice of the proposed grounds for 
disapproval, including the specific sections of this Act or the 
Commission's regulations which would be violated. At the conclusion 
of such proceedings, the Commission shall approve or disapprove such 
rule. Any disapproval shall specify the sections of this Act or the 
Commission's regulations which the Commission determines such rule 
has violated or, if effective, would violate.'' The Commission is 
not waiving in any way its authority under section 5a(a)(12) to 
disapprove ``at any time'' a rule of a contract which has been 
listed for trading pursuant to this exemption.
    \14\  Section 8(a)(7) of the Act provides in part that the 
Commission is authorized: ``to alter or supplement the rules of a 
contract market insofar as necessary or appropriate by rule or 
regulation or by order, if after making the appropriate request in 
writing to a contract market that such contract market effect on its 
own behalf specified changes in its rules and practices, and after 
appropriate notice and opportunity for hearing, the Commission 
determines that such contract market has not made the changes so 
required, and that such changes are necessary or appropriate for the 
protection of persons producing, handling, processing, or consuming 
any commodity traded for future delivery on such contract market, or 
the product or byproduct thereof, or for the protection of traders 
or to insure fair dealing in commodities traded for future delivery 
on such contract market. Such rules, regulations, or orders may 
specify changes with respect to such matters as--
    (A) terms or conditions in contracts of sale to be executed on 
or subject to the rules of such contract market; (B) the form or 
manner of execution of purchases and sales for future delivery; (C) 
other trading requirements, excepting the setting of levels of 
margin; (D) safeguards with respect to the financial responsibility 
of members; (E) the manner, method, and place of soliciting 
business, including the content of such solicitations; and (F) the 
form and manner of handling, recording, and accounting for 
customers' orders, transactions, and account; The Commission is not 
in any way waiving its authority to alter, supplement or amend a 
rule of a contract that has been listed for trading pursuant to this 
exemption.
    \15\ Section 8a(9) of the Act provides in part that the 
Commission is authorized: ``to direct the contract market, whenever 
it has reason to believe that an emergency exists, to take such 
action as in the Commission's judgment is necessary to maintain or 
restore orderly trading in or liquidation of any futures contract, 
including, but not limited to, the setting of temporary emergency 
margin levels on any futures contract, and the fixing of limits that 
may apply to a market position acquired in good faith prior to the 
effective date of the Commission's action.'' The Commission is not 
in any way waiving its authority to declare a market emergency in a 
contract which has been listed for trading pursuant to this 
exemption and to order appropriate remedial measures.
    \16\ The CME maintains that a new standard for rule disapproval 
is necessary. It suggests that an exchange rule be subject to 
disapproval only when the rule ``is likely to cause fraud, render 
trading readily susceptible to manipulation, or threaten the 
financial integrity of the market.'' CME comment at 6. However, 
under section 5a(a)(12) of the Act, exchange rules are subject to 
disapproval if they are in ``violation of the provisions of this Act 
or the regulations of the Commission.'' This standard is far less 
ambiguous than the one proposed by the CME. Moreover, in light of 
the limited number of times that the Commission has in fact 
instituted a proceeding to disapprove or alter a rule, the CME's 
fear that the Act's current disapproval standard has been, or is, 
subject to overuse, is misplaced. Moreover, the CME points to the 
Commission's process for approving an increase to the tick size of 
the E-Mini S&P 500 contract as an example of Commission 
micromanagement and why a new standard for disapproval is warranted. 
Reliance on that example is also misplaced. The Commission's review 
and request for public comment was triggered by section 15 of the 
Act and the potential anti-trust implications of increasing the 
contract's tick size. However, if a contract is not submitted for 
Commission approval, potential anti-trust issues involving its terms 
and conditions generally would not be considered by the Commission.
    \17\ Section 8c(a)(1) of the Act provides the Commission with 
the authority to discipline directly any exchange member if the 
exchange, as the self-regulator, fails to act. The Commission is not 
waiving this oversight authority in any way.
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B. Approval of Contract Terms and Conditions

    Currently, the Commission approves a contract's initial terms and 
conditions under section 5a(a)(12) of the Act and Commission rule 1.41 
when it issues an Order designating a board of trade as a contract 
market in that commodity. The Commission also reviews and approves all 
amendments to the contract's terms and conditions. As proposed, rule 
5.3 would have preserved this framework by requiring the exchange to 
file an application for designation after the contract initially was 
listed for trading. Filing an application for designation would have 
triggered the Commission's authority to review and approve the 
contract's terms and conditions as well as any subsequent amendments. 
64 FR at 40532.
    As modified, the final rule permits a board of trade indefinitely 
to list a contract for trading under its provisions. Accordingly, the 
final rule does not require that an application for contract market 
designation be submitted to the Commission. Consistent with that 
provision, a contract listed pursuant to the rule will not have its 
initial terms and conditions approved by the Commission.\18\
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    \18\  However, the Commission on its own initiative and in its 
sole discretion may review and approve certain exchange rules, such 
as exchange speculative position limits, when Commission approval 
would be in the public interest. The Commission is empowered under 
section 4a(5) of the Act to enforce exchange speculative position 
limits which it has ``approved.'' This authority is an important 
enforcement tool in cases where the violation is by a non-member of 
an exchange. Accordingly, the Commission may determine to approve 
some, or all, of the speculative position limits of contracts 
trading pursuant to this rule. Commission review and approval of 
such an exchange rule, however, would require no action by, and 
place no burden on, the board of trade.
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    However, as the Commission noted in the Notice of Proposed 
Rulemaking, contract amendments may raise additional issues for 
Commission review, such as their potential

    impact on open positions. They may affect the economic utility 
of contracts. Moreover, exchange rule changes may be the subject of 
divergent interests or, potentially, conflicts of interest at an 
exchange or raise broad public policy issues * * *.

64 FR 40528. Nevertheless, the exchange commenters suggested that 
amendments to contract terms and conditions be accorded the same 
treatment as newly listed contracts. As the NYBOT stated, ``if a new 
contract can be listed without prior approval, then rules that relate 
to contract terms and conditions, amendments thereto, and any other 
rules should likewise be allowed to become effective immediately upon 
filing with the Commission. NYBOT Comment letter at 4.
    The Commission is modifying the final rule to permit boards of 
trade to amend the terms of a contract listed for trading by exchange 
certification on the same conditions that apply to its initial listing. 
As proposed, all contract terms and conditions would have been subject 
to Commission review and approval soon after the contract's initial 
listing. The proposed requirement that the Commission also approve 
contract amendments was consistent with that framework. However, 
because under the final rule a contract's initial terms no longer will 
be approved by the Commission, significant public confusion would ensue 
were the Commission to retain authority to approve contract amendments. 
That inconsistency could result in Commission approval of only the 
amendments to a contract term, but not of the underlying exchange rule 
itself. Moreover, had the Commission in the final rule retained the 
proposed requirement that contract amendments be subject to Commission 
pre-approval while initial contract terms were not, simply listing an 
amended contract as a

[[Page 66377]]

new one would provide a ready means to bypass the requirement.\19\
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    \19\ It is not unusual for contract markets currently to list 
for simultaneous trading an ``A'' and a ``B'' contract when 
substantial amendments to a contract's terms have been made and the 
board of trade wishes to list nearby trading months with the amended 
contract terms.
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    Accordingly, the Commission is modifying the final rule from the 
rule as proposed to make consistent the regulatory treatment and status 
of the contract's initial terms and any amendments thereto. Thus, the 
final rule provides that the text of a contract amendment be submitted 
to the Commission by close of business of the business day preceding 
its being implemented. The board of trade must also submit its 
certification that the rule amendment does not violate and is not 
inconsistent with any provisions of the Commodity Exchange Act or the 
rules thereunder.\20\
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    \20\ Proposed rule 5.3 (c) provided that boards of trade must 
enforce each bylaw, rule, regulation and resolution that relates to 
the terms or conditions of a contract listed for trading under the 
rule. This is to make operative section 5a(8) of the Act which 
requires each contract market to enforce its rules which have been 
approved by the Commission, which have become effective under 
section 5a(a)(12) of the Act or which ``must be enforced pursuant to 
any commission rule. * * *'' As self-regulatory organizations, 
boards of trade are expected to follow, be bound by, and to enforce 
their rules. This provision requires that boards of trade trading 
contracts pursuant to this rule adhere to this high standard. No 
comments specifically discussed this provision and the Commission is 
adopting it as final.
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    In addition, the final rule requires that amendments to the terms 
and conditions of contracts trading pursuant to exchange certification 
be implemented only for contract months having no open interest. That 
implementation practice generally has been required by the Commission 
when reviewing proposed exchange rules for its approval to provide 
traders with legal certainty regarding the contract's terms and 
conditions.\21\ Even in the absence of rule 5.3 so requiring, boards of 
trade would adhere to this practice. As the NYBOT observed, ``any 
changes to terms and conditions * * * should be made effective only 
with respect to contract months in which there is no open interest. 
This is consistent with the approach taken by the exchanges today, and 
endorsed by the Commission, when amendments which affect terms and 
conditions are introduced to existing contracts.'' NYBOT comment at 3.
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    \21\ The Commission has approved contract amendments for 
implementation in trading months with open interest only where 
implementation of the proposed rule change would not affect the 
value of existing positions or traders had notice of the impending 
change prior to opening their positions.
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    This exemption from the requirement of prior Commission approval 
applies only to the amendment of contracts that are traded pursuant to 
rule 5.3. In a companion notice being published in this edition of the 
Federal Register, the Commission is proposing a similar exemption for 
amendments to the rules of a designated contract market. That Notice of 
Proposed Rulemaking raises two issues that also are applicable to these 
final rules. First, should the exemption specifically require that 
contract amendments be implemented only in delivery months with no open 
interest at the time the rule is made effective? Secondly, to reduce 
public confusion, should the Commission withdraw the availability of 
designation of new contracts under regular and fast-track procedures 
and of Commission approval of exchange rules and rule changes and make 
the rule 5.3 procedure the sole means of listing new contracts and 
amending their terms? The Commission is also proposing by separate 
notice in this edition of the Federal Register, to delete application 
fees for contract market designation. If the Commission determines to 
retain regular and fast-track designation procedures as alternative 
methods to rule 5.3 for introducing new products, retaining fees for 
contract market designation would operate as a disincentive to their 
use.

C. Conditions

    The proposed rule included a number of qualifying conditions for 
boards of trade and the contracts to be listed thereunder. The 
Commission proposed that a qualifying board of trade must be designated 
as a contract market in at least one other non-dormant contract. The 
CME concurred with the proposed requirement that a board of trade 
already be a designated contract market in one non-dormant contract, 
noting that:

    start up exchanges are not appropriate candidates for the 
proposed pilot program because the initial designation of a board of 
trade as a contract market entails a more lengthy review and 
analysis of its trading and clearing systems and its self-regulatory 
programs. This restriction makes sense, and we support it.

CME comment letter at 3. The Commission is adopting this provision as 
final without modification.
    In addition, the Commission proposed that a contract not be 
eligible for immediate listing under the rule if it is the same or 
substantially the same as one for which an application for contract 
designation is pending before the Commission. As it explained in the 
Notice of Proposed Rulemaking, the proposed restriction on listing 
contracts which are the same as contracts pending before the Commission 
for contract market designation and approval of their terms and 
conditions is necessary in order to avoid a ``competing exchange [from] 
* * * short-circuit[ing] the review process and to disadvantage the 
exchange choosing to subject a proposed contract to prior Commission 
review.'' 64 FR at 40531. The Commission concluded that such a use of 
the proposed listing procedure would have been ``an unwarranted 
competitive use of the proposed rule.'' Id. The Minneapolis Grain 
Exchange (MGE) agreed that the ``proposed rule adequately prevents 
attempts by exchanges to use the * * * pilot program to jump ahead of 
an exchange submitting the same or similar contract under regular or 
fast track procedures.'' MGE comment letter at 2.
    The CME opposed the proposal. It reasoned that an exchange which is 
lagging in developing a new product ``could file an application for 
contract market designation under the regular or fast track procedures, 
thereby preventing the exchange that is ready to list the new product 
sooner from using the pilot procedure to exploit its timing 
advantage.'' CME comment letter at 4-5. However, as the Commission 
pointed out in the notice,

    exchanges would not be able to use this proposed rule to 
forestall a competitor from introducing a new contract * * *. 
[N]othing would prevent the second exchange from filing an 
application for review and approval by the Commission on its own 
merits.

64 FR 40531, n. 19. Presumably were the second exchange really further 
along in developing a new contract, it would retain its timing 
advantage by being the first approved, while the exchange, which had 
filed an incomplete application preemptively, continued its contract 
development.\22\ Accordingly, the Commission is adopting the provision 
as proposed. If in practice the rule is subject to the ``competitive 
gamesmanship'' postulated by the CME, the Commission will propose 
deleting it.\23\
---------------------------------------------------------------------------

    \22\ In this regard, fast-track approval procedures are 
available only for applications for contract market designation 
which are not amended once filed.
    \23\ The CME also suggests that the language of the proposed 
rule be modified to make clear that ``an exchange is not prevented 
from using the pilot procedure to expedite listing a new contract 
even though it had originally submitted the same contract to the 
CFTC for pre-approval under the regular or fast track procedures.'' 
CME comment letter at 4. Nothing in the Act or Commission rules 
prevents an exchange from withdrawing an application for contract 
market designation at any time. Accordingly, an exchange could have 
simply withdrawn its application for contract market designation and 
listed the contract under the rule as proposed. Nevertheless, the 
Commission is making explicit in the rule that this limitation 
applies only to a board of trade other than the one with the pending 
application. Of course, an exchange which abandons a pending 
application for contract market designation in favor of listing 
without Commission approval must be able to make the required 
certification taking into consideration any adverse information 
arising during consideration of the application. Moreover, in order 
to conserve its resources, the Commission may determine not to 
continue processing an application for contract market designation 
if it is listed for trading while the application is pending.

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[[Page 66378]]

    The Commission also proposed that rule 5.3 not be able to be used 
``as a means of evading an adverse Commission proceeding involving the 
same or a substantially similar contract.'' 64 FR 40531. As the 
---------------------------------------------------------------------------
Commission explained in the Notice of Proposed Rulemaking:

    Accordingly, where the Commission has initiated a proceeding to 
alter an exchange rule under section 8a(7) of the Act, to disapprove 
a proposed or existing contract term or condition under section 
5a(a)(12) of the Act, to alter or change delivery points or 
commodity or locational differentials under section 5a(a)(10) of the 
Act or to disapprove an application for designation or suspend a 
designation under section 6 of the Act, or any similar adverse 
action, an exchange could not list a ``new'' contract for trading 
and thereby frustrate the proceeding against, or evade application 
of the Commission's process applicable to the original, designated 
contract.

Id. One commenter, the MGE, discussed this provision, noting that it 
``believes the Commission's proposed rule adequately prevents attempts 
by exchanges to use the predesignation listing to evade an adverse 
Commission proceeding involving the same or similar contract * * * .'' 
The Commission is adopting the limitation as proposed, and notes that 
it applies to all boards of trade, not just to the respondent in the 
adverse action.\24\
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    \24\ This limitation applies to all boards of trade because the 
Commission presumes that no exchange could make the required 
certification for a new contract with the same terms and conditions 
as one against which the Commission has initiated an adverse action. 
However, a competing exchange would not be estopped from listing a 
contract for the same commodity but which did not include the 
allegedly violative terms or conditions. On the other hand, the 
respondent exchange might be precluded from doing so if listing the 
revised contract were determined to be an attempt to frustrate the 
prosecution of the adverse action or in violation of a Commission 
Order issued in the course of the adverse action.
---------------------------------------------------------------------------

    Finally, rule 5.3 as proposed would not apply to futures contracts 
on stock indexes, commodities which are subject to the specific 
approval procedures of the Johnson-Shad jurisdictional accord.\25\ That 
limitation is statutory in origin and is adopted as proposed.
---------------------------------------------------------------------------

    \25\ See, section 2(a)(1)(B) of the Act.
---------------------------------------------------------------------------

IV. Section 4(c) Findings

    Commission rule 5.3 was proposed under section 4(c) of the Act, 
which grants the Commission broad exemptive authority. In proposing 
rule 5.3, the Commission found that

    because the proposed rule applies to contracts listed on 
designated exchanges subject to the self-regulatory requirements of 
the Act, * * * all traders are ``appropriate'' for application of 
this proposed exemptive rule. Moreover, for the reasons explained 
above, the Commission believes that the proposed rule would be 
consistent with the public interest and would not have a material 
adverse effect on the ability of the Commission to discharge its 
regulatory responsibilities or of any contract market to discharge 
its self-regulatory responsibilities under the Act.

64 FR 40532. The Commission specifically requested comment on its 
findings.
    The CME and the CBT both objected that the Commission should not 
apply the exemptive criteria of section 4(c)(2) of the Act because in 
their view, ``the standards of Section 4(c)(1) apply to exemptive 
relief for existing exchanges with contract designation in place.'' CBT 
comment letter at n.1; See also, CME comment letter at n.1. However, 
section 4(c)(2) of the Act provides that the Commission shall grant an 
exemption from the requirements of section 4(a) of the Act only if 
certain specified conditions are met. Section 4 (a)(1) of the Act 
provides that to be lawful, transactions must be ``conducted on or 
subject to the rules of a board of trade which has been designated by 
the Commission as a `contract market' for such commodity.'' 7 U.S.C. 
6(a)(1) (emphasis added). Rule 5.3 exempts boards of trade from that 
designation requirement. Thus, an exemption under section 4(c)(2) of 
the Act is necessary and its criteria for exemption must be satisfied 
for futures contracts to be lawfully traded on a board of trade 
pursuant to rule 5.3 without Commission designation in that 
commodity.\26\ The Commission in the Notice of Proposed Rulemaking 
found that proposed rule 5.3 met the criteria for exemption.\27\
---------------------------------------------------------------------------

    \26\ For administrative convenience, the Commission treats 
separately traded contracts for the same generic commodity with 
differing terms and conditions and pricing characteristics as 
separate commodities for purposes of contract market designation. 
See, Part 5, Appendix A, 64 FR 29221 (June 1, 1999).
    \27\ Section 4(c)(2) of the Act provides that: The Commission 
shall not grant any exemption under paragraph (1) from any of the 
requirements of subsection (a) unless the Commission determines 
that--(A) the requirement should not be applied to the agreement, 
contract, or transaction for which the exemption is sought and that 
the exemption would be consistent with the public interest and the 
purposes of this Act; and (B) the agreement, contract, or 
transaction--(i) will be entered into solely between appropriate 
persons; and (ii) will not have a material adverse effect on the 
ability of the Commission or any contract market to discharge its 
regulatory or self-regulatory duties under this Act.
---------------------------------------------------------------------------

    The FIA disagreed with the Commission's findings that the proposed 
rule met those criteria. It concluded that because the proposed rule 
``would create both practical and legal uncertainty with respect to any 
contract listed under the revised procedures * * * [it] question[s] 
whether adoption of the proposed rule `would be consistent with the 
public interest.' '' FIA comment letter 1. The Commission has addressed 
the basis for FIA's questioning whether adoption of the proposed rule 
would be in the public interest by modifying the final rule as 
recommended by FIA and the other commenters.
    The Commission's section 4(c) findings were based, in part, on 
proposed rule 5.3's provision that, after having been listed for 
trading, contracts were required to be designated and their terms and 
conditions approved by the Commission. The Commission noted that 
proposed rule 5.3 would have preserved the public interest in 
Commission approval of new contracts and of contract amendments. That 
interest, it explained, arose because ``appropriate contract design is 
the best deterrent to market manipulation, price distortion or market 
congestion * * *. [C]ontract approval assures that contracts meet these 
widely-accepted design criteria.'' 64 FR 40530. The Commission further 
noted, however, that the proposed rule was ``consistent with the spirit 
of the Act's provision which contemplates that in certain instances 
exchanges may make proposed rules effective pending Commission 
action.'' 64 FR 40531.
    The exchange commenters disagreed that there was a public interest 
in Commission designation of contracts and approval of their terms and 
conditions. The NYBOT countered that:

    An effective market surveillance system is the best way to avoid 
such market situations. Therefore, to us it is most important that 
an exchange has a self-regulatory track record to ensure that 
trading will be conducted in a fair and orderly manner. We believe 
the sophisticated systems developed over decades of experience, 
coupled with the oversight provided by the Commission, have proven 
to be exceptionally effective in identifying and dealing with the 
types of market situations which the Commission

[[Page 66379]]

seeks to protect against. This track record strongly suggests that 
contract approval, while arguably useful in an era before exchanges 
had developed these self-regulatory systems and procedures, no 
longer serves any positive purpose.

NYBOT comment letter at 3. The CME concurred, stating that it did not 
agree with the premise that ``in-depth CFTC review of new contract 
applications serves an important public purpose by providing an 
opportunity for public comment and by improving contract design.'' The 
CME explained that it agrees with those objectives, ``has a strong 
business interest in designing its contracts so that they are not 
readily susceptible to manipulation'' and in developing contracts 
``talks with commercial users.'' CME comment letter at 3. NYMEX argued 
that:

    in view of the powerful economic forces that drive exchanges to 
be thorough and vigilant in developing a new product, the Commission 
should be confident in allowing exchanges to list contracts for 
trading and implement rules without detailed prior review. In this 
regard, NYMEX finds it significant that * * * British exchanges are 
not currently subject to a preapproval process for their contracts 
and rules.

NYMEX comment letter at 4; But see, ``Futures Exchange and Contract 
Authorization Standards and Procedures in Selected Countries,'' 
Office of International Affairs, Commodity Futures Trading 
Commission, August 3, 1999.

    The Commission agrees with the exchanges that a strong self-
regulatory program and an effective market surveillance system are 
necessary to remedy adverse market situations and to deter potential 
manipulators. However, it is generally accepted that appropriate 
contract design is a key component of an effective market surveillance 
system.\28\ In this regard, exchanges have a strong business incentive 
to design contracts that will not be susceptible to manipulation.\29\
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    \28\ The view that appropriate contract design is an important 
component of a market surveillance program and deters manipulation, 
price distortion and market congestion is widely accepted 
internationally. See, the Tokyo Communique on Supervision of 
Commodity Futures Markets issued at the Tokyo Commodity Futures 
Markets Regulators' Conference on October 31, 1997.
    \29\ One commenter, the National Grain and Feed Association, 
supported proposed rule 5.3, in part, because ``industry groups will 
still have an opportunity to comment during the formal approval 
process.'' The final rule no longer provides a formal opportunity 
for comment by industry groups. However, the exchanges have assured 
the Commission that it is their practice to seek out such views when 
designing their contracts. Moreover, the Commission will continue to 
provide a forum for industry groups to make their views known to it 
regarding the terms and conditions of all contracts, including newly 
listed contracts.
---------------------------------------------------------------------------

    Prior to the 1974 amendments to the Act, the statutory scheme did 
not require the Commodity Exchange Authority, the Commission's 
predecessor agency, to approve in advance the trading of all new 
futures contracts,\30\ nor did it require agency approval of exchange 
rules before they became effective. Rather, exchange rules amending the 
terms and conditions of futures contracts were subject only to 
disapproval after becoming effective.\31\ The prior approval 
requirements were included in the 1974 amendments to the Act as one of 
a number of measures to strengthen federal regulatory oversight of the 
futures industry. These measures included the Commission's authority 
under section 8a(7) of the Act to alter or amend contract market rules 
and its section 8a(9) emergency authority.
---------------------------------------------------------------------------

    \30\ Prior to 1974, the Act defined ``commodity'' by specific 
enumeration. Accordingly, new contracts that were not so enumerated 
were unregulated. The definition of commodity periodically would be 
updated to include additional commodities in which trading had 
commenced on those exchanges which traded other regulated contracts. 
For example, livestock and livestock products were added to the 
Act's definition of ``commodity'' as part of the 1968 amendments to 
the Act, after such contracts had already begun trading on the 
Chicago Mercantile Exchange. Pub. L. No. 90-258 Sec. 1(a), 49 Stat. 
1491 (1968). Other futures exchanges, including the Commodity 
Exchange, Inc. and the former Coffee and Sugar, and the Cocoa 
exchanges, operated wholly outside of the regulatory scheme.
    \31\ See, Pub. L. No. 90-258, Sec. 23, 82 Stat. 33 (1968).
---------------------------------------------------------------------------

    The exchanges argue forcefully that their ability to counter 
competition from foreign exchanges requires that the Commission rely 
less on its prior-approval authority. They argue that the ability to 
list contracts without Commission approval is central to their ability 
to meet foreign competition. To date, relatively few contracts traded 
on foreign exchanges directly compete with contracts traded on U.S. 
exchanges, and for those that do, few, if any, U.S. contracts have been 
displaced by a foreign competitor.\32\ Nevertheless, the Commission 
believes that, consistent with its mandate to protect market integrity, 
financial integrity, guard against market manipulation and protect 
customers, it should ensure that the regulatory scheme not 
unnecessarily impede the exchanges from competing. By this rulemaking, 
the Commission is exercising its mandate flexibly to accomplish those 
goals.
---------------------------------------------------------------------------

    \32\ See, ``The Global Competitiveness of U.S. Futures Markets 
Revisited,'' Report of the Division of Economic Analysis to the 
Commodity Futures Trading Commission (October, 1999).
---------------------------------------------------------------------------

    The public interest in the integrity and fairness of the futures 
markets can be achieved through greater reliance by the Commission on 
its surveillance and enforcement authorities. As the exchanges 
recognize, the Commission has available to it strong oversight 
authorities over boards of trade and their contracts without approving 
an application for contract market designation and the contract's 
terms. As one exchange noted, ``by letting such an exchange list new 
contracts without Commission approval * * * the CFTC would not have 
lost oversight authority over the exchange or its contracts.'' NYBOT 
comment letter at 2. The CBT observed that, ``eliminating the 
requirement of Commission approval of new contracts would not affect 
the Commission's general authority over a contract's terms and 
conditions.'' CBT comment letter at 3.
    For the reasons explained above, the Commission believes that rule 
5.3 is consistent with the public interest and would not have a 
material adverse effect on the ability of the Commission to discharge 
its regulatory responsibilities or of any contract market to discharge 
its self-regulatory responsibilities under the Act. Moreover, because 
the rule applies to contracts listed on exchanges subject to the self-
regulatory requirements of the Act, the Commission finds all traders 
are ``appropriate'' for application of this exemptive rule under 
section 4(c) of the Act.

V. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., 
requires that agencies, in promulgating rules, consider the impact of 
these rules on small entities. The Commission has previously determined 
that contract markets are not ``small entities'' for purposes of the 
RFA, 5 U.S.C. 601 et seq. 47 FR 18618 (April 30, 1982). These final 
amendments permit exchanges under section 4(c) of the Act to list new 
contracts for trading without designation as a contract market in that 
contract. Accordingly, the Chairman, on behalf of the Commission, 
hereby certifies, pursuant to 5 U.S.C. 605(b), that the action taken 
herein will not have a significant economic impact on a substantial 
number of small entities.

B. Paperwork Reduction Act

    Guideline No. 1 (17 CFR Part 5 Appendix A), which sets forth the 
requirements for applications for contract designation, contains 
information collection requirements. As required by the PRA of 1995 
(Pub. L. 104-13 (May 13, 1996)), the Commission submitted a copy of the 
proposed rule to the Office of Management and Budget (OMB) for its 
review (44 U.S.C. 3504(h)) and indicated that there was no implication

[[Page 66380]]

for the paperwork burden. Based on the comments the Commission received 
in response to the proposed rulemaking, the Commission is revising the 
paperwork burden associated with the new rule as reflected below.
    OMB previously approved the collection of information related to 
this rule as information collection 3038-0022, Regulations Pertaining 
to the Responsibilities of Contract Markets and Their Members. The 
final rule adopted by the Commission, which has been submitted to OMB 
for approval, has the following paperwork burden:
    Number of respondents: 11.
    Estimated average hours per response: 29.
    Frequency of response: On occasion.
    Number of responses per year: 11.
    Annual reporting burden: 319.
    This represents a reduction of 1073 burden hours based on the 
Commission's estimation of the number of contract market designation 
applications that would no longer be submitted under regular or fast-
track procedures. Persons wishing to comment on the paperwork burden 
contained in the final rules may contact the Desk Officer, CFTC, Office 
of Management and Budget, Room 10202, NEOB, Washington, DC 20503, (202) 
395-7340. Copies of the information collection submission to OMB are 
available from the CFTC Clearance Officer, 1155 21st Street, NW, 
Washington, DC 20581, (202) 418-5160.

List of Subjects in 17 CFR Part 5

    Commodity futures, Contract markets, Designation application, 
Reporting and recordkeeping requirements.
    In consideration of the foregoing, and pursuant to the authority 
contained in the Commodity Exchange Act and, in particular, sections 4, 
4c, 5, 5a, 6 and 8a thereof, 7 U.S.C. 6, 6c, 7, 7a, 8, and 12a, the 
Commission hereby amends Chapter I of Title 17 of the Code of Federal 
Regulations as follows:

PART 5--CONTRACT MARKET COMPLIANCE

    1. The authority citation for Part 5 is revised to read as follows:

    Authority: 7 U.S.C. 6(c), 6c, 7, 7a, 8 and 12a.

    2. Part 5 is amended by adding a new Sec. 5.3 to read as follows:


Sec. 5.3  Listing contracts for trading by exchange certification.

    (a) Notwithstanding the provisions of section 4(a)(1) of the Act or 
Sec. 33.2 of this chapter, a board of trade may list for trading 
contracts of sale of a commodity for future delivery or commodity 
option contracts, if the board of trade:
    (1) Is designated under sections 4c, 5, 5a(a) and 6 of the Act as a 
contract market in at least one commodity which is not dormant within 
the meaning of Sec. 5.2 of this part;
    (2) In connection with the trading of the contract complies with 
all requirements of the Act and Commission regulations thereunder 
applicable to designated contract markets, except for the requirement 
under section 5a(a)(12) of the Act and Sec. 1.41(b) of this chapter 
that the terms and conditions of the contract be approved by the 
Commission;
    (3) Files with the Commission at its Washington, D.C., headquarters 
and the regional office having jurisdiction over it a copy of the 
contract's initial terms and conditions and a certification by the 
board of trade that the contract's initial terms and conditions neither 
violate nor are inconsistent with any provision of the Commodity 
Exchange Act or of the rules thereunder, and the filing is received no 
later than the close of business of the business day preceding the 
contract's initial listing;
    (4) Files with the Commission at its Washington, D.C., headquarters 
and the regional office having jurisdiction over it the text of each 
amendment to the contract terms and conditions (with deletions in 
brackets and additions underscored), a brief explanation of the 
amendment including a description of any substantive opposing views by 
members of the board of trade or others and a certification by the 
board of trade that the amendment neither violates nor is inconsistent 
with any provision of the Commodity Exchange Act or of the rules 
thereunder, and the filing is received no later than the close of 
business of the business day preceding the amendment's implementation;
    (5) Implements amendments to the contract terms and conditions only 
in trading months having no open interest at the time of 
implementation; and
    (6) Identifies the contract in its rules as listed for trading 
pursuant to exchange certification.
    (b) The board of trade must enforce each bylaw, rule, regulation 
and resolution that relates to the terms or conditions of a contract 
listed for trading under this section.
    (c) Contracts listed for trading pursuant to this section shall not 
be void or voidable as a result of:
    (1) A violation by the board of trade of the provisions of this 
section; or
    (2) Any Commission proceeding to disapprove designation under 
section 6 of the Act, to disapprove a term or condition under section 
5a(a)(12) of the Act, to alter or supplement a term or condition under 
section 8a(7) of the Act, to amend the contract's terms or conditions 
under section 5a(a)(10) of the Act, to declare an emergency under 
section 8a(9) of the Act, or any other proceeding the effect of which 
is to disapprove, alter, supplement, or require a contract market to 
adopt a specific term or condition, trading rule or procedure, or to 
take or refrain from taking a specific action.
    (d) Except as specified in paragraph (a) of this section and unless 
the context otherwise requires, the board of trade listing contracts, 
and the contracts listed, for trading under this section shall be 
subject to all of the provisions of the Act and Commission regulations 
thereunder which are applicable to a ``board of trade,'' ``board of 
trade licensed by the Commission,'' ``exchange,'' ``contract market,'' 
``designated contract market,'' or ``contract market designated by the 
Commission'' as though those provisions were set forth in this section 
and included specific reference to contracts listed for trading 
pursuant to this section.
    (e) The provisions of this section shall not apply to :
    (1) A contract subject to the provisions of section 2(a)(1)(B) of 
the Act;
    (2) A contract to be listed initially for trading that is the same 
or substantially the same as one for which an application for contract 
market designation under sections 4c, 5, 5a and 6 of the Act or 
Sec. 5.1 of this part already was filed for Commission approval by 
another board of trade while the application is pending before the 
Commission;
    (3) A contract to be listed initially for trading that is the same 
or substantially the same as one which is the subject of a pending 
Commission proceeding to disapprove designation under section 6 of the 
Act, to disapprove a term or condition under section 5a(a)(12) of the 
Act, to alter or supplement a term or condition under section 8a(7) of 
the Act, to amend terms or conditions under section 5a(a)(10) of the 
Act, to declare an emergency under section 8a(9) of the Act, or to any 
other proceeding the effect of which is to disapprove, alter, 
supplement, or require a contract market to adopt a specific term or 
condition, trading rule or procedure, or to take or refrain from taking 
a specific action.


[[Page 66381]]


    Issued in Washington, DC, this 17th day of November, 1999, by 
the Commodity Futures Trading Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 99-30510 Filed 11-24-99; 8:45 am]
BILLING CODE 6351-01-P