[Federal Register Volume 68, Number 51 (Monday, March 17, 2003)]
[Rules and Regulations]
[Pages 12583-12584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-6179]


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

COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 4


Commodity Pool Operators

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rules.

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

SUMMARY: The Commodity Futures Trading Commission (the ``Commission'' 
or ``CFTC'') has adopted amendments to part 4 of its rules, which 
governs Commodity Pool Operators (``CPOs'') and Commodity Trading 
Advisors (``CTAs''). These amendments make clear that certain 
Disclosure Documents need only be filed with the National Futures 
Association (``NFA'') and need not also be filed with the Commission. 
The Commission, in a separate Notice and Order published elsewhere in 
the Federal Register, has authorized NFA to receive and review these 
documents.

EFFECTIVE DATE: March 17, 2003.

FOR FURTHER INFORMATION CONTACT: Kevin P. Walek, Assistant Director, 
Audit and Financial Review Section, or Michael A. Piracci, Attorney 
Advisor, Compliance and Registration Section, Division of Clearing and 
Intermediary Oversight, Commodity Futures Trading Commission, Three 
Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581. 
Telephone: (202) 418-5430.

SUPPLEMENTARY INFORMATION: 

I. Background

    In 1997, the Commission authorized NFA to review Disclosure 
Documents that CPOs are required to file, pursuant to Commission rule 
4.26(d), with regard to those Disclosure Documents filed for 
``privately offered'' pools.\1\ In December 2002, the Commission 
amended part 4 of its rules, including rule 4.26(d), to make clear 
that, as a result of the Commission order issued in 1997, as well as a 
Commission order issued in December 2002 that authorized NFA to receive 
and review various documents required to be filed with the 
Commission,\2\ it was no longer necessary for the Commission to receive 
copies of these documents.\3\ Accordingly, the Commission amended the 
subject rules to make clear that the required documents need only be 
filed with NFA and need not also be filed with the Commission.\4\ As 
the Commission would continue to receive and review Disclosure 
Documents for publicly-offered pools, rule 4.26(d) was amended by 
adding paragraph (d)(3) to make clear that Disclosure Documents for 
publicly-offered pools, as well as any subsequent amendments to such 
Disclosure Documents, must be filed with the Commission.\5\
---------------------------------------------------------------------------

    \1\ See 62 FR 52088 (Oct. 6, 1997). Pursuant to Commission rule 
4.24(d)(3)(i), ``privately offered'' commodity pools are those 
offered pursuant to section 4(2) of the Securities Act of 1933, as 
amended (15 U.S.C. 77d(2)), or pursuant to Regulation D thereunder 
(17 CFR 230.501 et seq.). As discussed herein, ``publicly-offered'' 
commodity pools are pools not offered pursuant to section 4(2) of 
the Securities Act of 1933 or pursuant to Regulation D.
    \2\ See 67 FR 77470 (Dec. 18, 2002).
    \3\ See 67 FR 77409 (Dec. 18, 2002).
    \4\ See 67 FR at 77410-11. The Commission rules amended were: 
(1) 4.5; (2) 4.7; (3) 4.12; (4) 4.13; (5) 4.14; (6) 4.22; (7) 4.26; 
and (8) 4.36.
    \5\ See 67 FR at 77411.
---------------------------------------------------------------------------

II. Rule Amendments

    In a separate notice published elsewhere today in the Federal 
Register, the Commission is authorizing NFA to receive and review 
Disclosure Documents required to be filed by CPOs, pursuant to 
Commission rule 4.26(d), with regard to publicly-offered commodity 
pools. Accordingly, as the Commission noted regarding Disclosure 
Documents filed by CPOs with regard to privately offered pools, it is 
not necessary for the Commission to impose upon the persons filing 
these documents the burden and cost of having to file the documents 
with both NFA and the Commission. The Commission is, therefore, 
amending rule 4.26(d) to make clear that the required documents need 
only be filed with NFA and need not also be filed with the Commission.

III. Related Matters

A. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (``PRA'') \6\ imposes certain 
requirements on federal agencies (including the Commission) in 
connection with their conducting or sponsoring any collection of 
information as defined by the PRA. The rule amendment does not require 
a new collection of information on the part of any entities subject to 
the proposed rule amendments. Accordingly, for purposes of the PRA, the 
Commission certifies that this rule amendment will not impose any new 
reporting or recordkeeping requirements.
---------------------------------------------------------------------------

    \6\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

B. Cost-Benefit Analysis

    Section 15(a) of the Act requires the Commission to consider the 
costs and benefits of its action before issuing a new regulation under 
the Act. By its terms, section 15(a) does not require the Commission to 
quantify the costs and benefits of a new regulation or to determine 
whether the benefits of the proposed regulation outweigh its costs. 
Rather, section 15(a) simply requires the Commission to ``consider the 
costs and benefits'' of its action.
    Section 15(a) further specifies that costs and benefits shall be 
evaluated in light of five broad areas of market and public concern: 
Protection of market participants and the public; efficiency, 
competitiveness, and financial integrity of futures markets; price 
discovery; sound risk management practices; and other public interest 
considerations. Accordingly, the Commission could in its discretion 
give greater weight to any one of the five enumerated areas and could 
in its discretion determine that, notwithstanding its costs, a 
particular rule was necessary or appropriate to protect the public 
interest or to effectuate any of the provisions or to accomplish any of 
the purposes of the Act.
    The amendment herein is intended to minimize the filing burdens 
imposed upon CPOs by making clear that the subject documents need only 
be filed with NFA and not also the Commission. The Commission is 
considering the costs and benefits of this rule in light of the 
specific provisions of section 15(a) of the Act:
    1. Protection of market participants and the public. While the 
amendment is expected to lessen the filing burdens imposed upon CPOs, 
it does not reduce the type of information and documents that must be 
provided to customers of CPOs. Moreover, these documents will

[[Page 12584]]

continue to be reviewed for compliance with the Act and Commission 
rules. Accordingly, the amendment being adopted herein should have no 
effect on the Commission's ability to protect market participants and 
the public.
    2. Efficiency and competition. The amendment, by requiring that the 
subject documents need only be filed with NFA and not also the 
Commission, should increase the efficiency with which CPOs comply with 
rule 4.26(d).
    3. Financial integrity of futures markets and price discovery. The 
amendment should have no effect, from the standpoint of imposing costs 
or creating benefits, on the financial integrity or price discovery 
function of the futures and options markets.
    4. Sound risk management practices. The amendment being adopted 
herein should have no effect on the risk management practices of the 
futures and options industry.
    5. Other public interest considerations. The amendment should make 
compliance with the Commission rule 4.26(d) more efficient without 
imposing any costs to the regulatory oversight of commodity 
registrants.
    After considering these factors, the Commission has determined to 
adopt the amendment discussed above.

C. Administrative Procedure Act

    The Commission has determined that the amendment discussed herein 
relates solely to agency organization, procedure, and practice. 
Accordingly, the provisions of the Administrative Procedure Act that 
generally require notice of proposed rulemaking and that provide other 
opportunities for public participation are not applicable.\7\ The 
Commission further finds that, because the amendment relieves a 
restriction as to the required filing of documents and the amendment 
has no adverse effect upon a member of the public, there is good cause 
to make it effective less than thirty days after publication in the 
Federal Register.\8\
---------------------------------------------------------------------------

    \7\ 5 U.S.C. 553(b)(3)(A) (1994).
    \8\ See 5 U.S.C. 553(d) (1994).
---------------------------------------------------------------------------

List of Subjects in 17 CFR Part 4

    Advertising, Customer protection, and Reporting and recordkeeping 
requirements.


    For the reasons discussed in the foregoing, the Commission hereby 
amends chapter I of title 17 of the Code of Federal Regulations as 
follows:

PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS

    1. The authority citation for part 4 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 6b, 6c, 6(c), 6l, 6m, 6n, 6o, 12a, 
and 23.


    2. Section 4.26 is amended as follows:
    a. By amending the introductory text of paragraph (d) by removing 
``and paragraph (d)(3) of this section''; and
    b. By removing paragraph (d)(3).

    Issued in Washington, DC on March 10, 2003, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 03-6179 Filed 3-14-03; 8:45 am]
BILLING CODE 6351-01-P