[Federal Register Volume 65, Number 111 (Thursday, June 8, 2000)]
[Notices]
[Pages 36416-36417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-14383]


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COMMODITY FUTURES TRADING COMMISSION


Chicago Board of Trade: Proposed Amendments to the Chicago Board 
of Trade: Corn, Corn Yield Insurance (Six Contracts), Oats, Rough Rice, 
Soybeans, Soybean Meal, Soybean Oil, Wheat, Kilo Gold, 100 Ounce Gold, 
1000 Ounce Silver, and 5000 Ounce Silver Futures Contracts, Increasing 
the Contracts, Maximum Daily Price Fluctuation Limits

AGENCY: Commodity Futures Trading Commission.

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

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SUMMARY: The Chicago Board of Trade (CBOT or Exchange) has submitted 
proposed amendments which would increase the maximum daily price 
fluctuation limits for the Exchange's corn, corn yield insurance (six 
contracts), oats, rough rice, soybeans, soybean meal, soybean oil, 
wheat, kilo gold, 100 ounce silver, and 5000 ounce silver futures 
contracts. The CBT's proposals are described below. 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 July 10, 
2000--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 publication of the proposed 
amendments 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 June 23, 2000.

ADDRESSES: Interested persons should submit their views and comments to 
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three 
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 CBOT's maximum daily 
price fluctuation limits.

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: Currently, the CBOT's rules specify maximum 
daily price fluctuation limits for the subject contracts that are 
applicable to trading until the second business day prior to the first 
business day of the expiring delivery month. No daily price limits are 
applicable to trading during the expiring contract month. The 
contracts' existing terms also provide for expansion of the maximum 
daily price fluctuation limits under specified circumstances. The 
existing terms of the option contracts based on the subject futures 
contracts specify that daily fluctuations in option premiums are 
subject to the same limits as are specified for the underlying futures 
contract.
    The CBOT is proposing to increase the maximum daily price 
fluctuation limits for the subject contracts as shown below:

------------------------------------------------------------------------
          Contract               Proposed limit        Existing limit
------------------------------------------------------------------------
Corn........................  $.20 per bushel.....  $.12 per bushel.
Corn Yield Insurance (Iowa,   22.5 bushels per      15 bushels per
 Illinois, Indiana,            harvested acre.       harvested acre.
 Nebraska, Ohio and U.S.).
Kilo gold...................  $75.00 per ounce....  $50.00 per ounce.
100 Ounce Gold..............  $75.00 per ounce....  $50.00 per ounce.
Oats........................  $.20 per bushel.....  $.10 per bushel.
Rough Rice..................  $.50 per              $.30 per
                               hundredweight.        hundredweight.
1000 Ounce Silver...........  $1.50 per ounce.....  $1.00 per ounce.
5000 Ounce Silver...........  $1.50 per ounce.....  $1.00 per ounce.
Soybeans....................  $.50 per bushel.....  $.30 per bushel.
Soybean Meal................  $20.00 per ton......  $10.00 per ton.
Soybean Oil.................  $.020 per pound.....  $.010 per pound.
Wheat.......................  $.30 per bushel.....  $.20 per bushel.
------------------------------------------------------------------------

    The proposed amendments also would delete the contracts' existing 
provisions that provide for expansion of the maximum daily price 
fluctuation limits under specified circumstances. Since the option 
contracts specify that maximum daily premium fluctuation limits are 
subject to the same price limits specified for the underlying futures 
contracts, the proposed amendments also will increase the limits on 
daily premium fluctuations for such option contracts. Under the 
proposed amendments, trading in all contract months listed for 
particular futures or option contract would cease for the rest of the 
trading session when the prices for one or more contract months go to 
the revised limits. The Exchange intends to make the proposed 
amendments effective upon Commission approval for all existing and 
newly listed contract months.
    In support of the proposed amendments, the Exchange said that:

    The CBOT/Eurex Alliance electronic trading system does not have 
the ability to implement daily price limits electronically. 
Therefore, Electronic Trading System (ETS) staff would be required 
to halt trading manually when prices reached specified limits. If 
one futures contract month for a commodity goes to a limit, this 
event would trigger a manual shutdown of all futures contract months 
and the market would remain shut down for the remainder of the 
trading session. Likewise, if one option contract months and strike 
price goes to a limit, trading in all option contract months and 
strike prices would be terminated for the remainder of the session. 
Increasing the limits would reduce the number of occurrences of 
manual trading halts.
    Price limits were established because of a perceived need for a 
``cooling off period'' for futures when a major news release or 
event causes prices to move substantially.

[[Page 36417]]

However, price limits, by their very nature, prevent futures markets 
from discovering the market price at times when market participants 
would most like to have that price information (i.e. after a major 
news release or other event). Widening daily price limits will allow 
the agricultural and metals futures markets to better reflect cash 
price movements and will provide greater access for market users 
during periods of uncertainty.

    The CBOT also said that:

    The proposed increases in price limits will increase the 
probability that the futures markets will continue to trade and 
provide a price discovery function following a major news release or 
unexpected event. This in turn will provide the marketplace with a 
benchmark price from which to base cash prices and production, 
marketing and buying decisions.

    The Commission is requesting comments on the proposed amendments.
    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 Exchange 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 CFR part 145 (1987)), except to the extent they are 
entitled to confidential treatment as set forth in 17 CFR 145.5 and 
145.9. Requests for copies of such material 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 amendments, or with respect to other 
materials submitted by the Exchange, should send such comments to Jean 
A. Webb, Secretary, Commmodity Futures Trading Commission, Three 
Lafayette Centre, 21st Street NW, Washington, DC 20581 by the specified 
date.

    Issued in Washington, DC, on June 2, 2000.
Richard Shilts,
Acting Director.
[FR Doc. 00-14383 Filed 6-07-00; 8:45 am]
BILLING CODE 6351-01-M