[Federal Register Volume 71, Number 134 (Thursday, July 13, 2006)]
[Notices]
[Pages 39672-39673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-6109]


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COMMODITY FUTURES TRADING COMMISSION


Fees for Reviews of the Rule Enforcement Programs of Contract 
Markets and Registered Futures Associations

AGENCY: Commodity Futures Trading Commission.

ACTION: Establishment of the FY 2006 schedule of fees.

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SUMMARY: The Commission charges fees to designated contract markets and 
registered futures associations to recover the costs incurred by the 
Commission in the operation of its program of oversight of self-
regulatory organization (SRO) rule enforcement programs (17 CFR part 1 
Appendix B) (NFA and the contract markets are referred to as SROs). The 
calculation of the fee amounts to be charged for FY 2006 is based upon 
an average of actual program costs incurred during FY 2003, 2004, and 
2005, as explained below. The FY 2006 fee schedule is set forth in the 
SUPPLEMENTARY INFORMATION. Electronic payment of fees is required.

DATES: Effective Dates: The FY 2006 fees for Commission oversight of 
each SRO rule enforcement program must be paid by each of the named 
SROs in the amount specified by no later than September 11, 2006.

FOR FURTHER INFORMATION CONTACT: Stacy Dean Yochum, Counsel to the 
Executive Director, Commodity Futures Trading Commission, (202) 418-
5160, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 
20581. For information on electronic payment, contact Stella Lewis, 
Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581, 
(202) 418-5186.

SUPPLEMENTARY INFORMATION:

I. General

    This notice relates to fees for the Commission's review of the rule 
enforcement programs at the registered futures associations \1\ and 
designated contract markets (DCM), which are referred to as SROs, 
regulated by the Commission.
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    \1\ National Futures Association (NFA) is the only registered 
futures association.
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II. Schedule of Fees

    Fees for the Commission's review of the rule enforcement programs 
at the registered futures associations and DCMs regulated by the 
Commission:

------------------------------------------------------------------------
                        Entity                             Fee amount
------------------------------------------------------------------------
Chicago Board of Trade...............................            $72,286
Chicago Mercantile Exchange..........................            201,763
New York Mercantile Exchange.........................            105,117
Kansas City Board of Trade...........................             10,992
New York Board of Trade..............................             63,561
Minneapolis Grain Exchange...........................             11,108
OneChicago...........................................             18,301
National Futures Association.........................            277,661
                                                      ------------------
    Total............................................            760,789
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III. Background Information

A. General

    The Commission recalculates the fees charged each year with the 
intention of recovering the costs of operating this Commission 
program.\2\ All costs are accounted for by the Commission's Management 
Accounting Structure Codes (MASC) system, which records each employee's 
time for each pay period. The fees are set each year based on direct 
program costs, plus an overhead factor.
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    \2\ See Section 237 of the Futures Trading Act of 1982, 7 U.S.C. 
16a and 31 U.S.C. 9701. For a broader discussion of the history of 
Commission Fees, see 52 FR 46070 (Dec. 4, 1987).
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B. Overhead Rate

    The fees charged by the Commission to the SROs are designed to 
recover program costs, including direct labor costs and overhead. The 
overhead rate is calculated by dividing total Commission-wide overhead 
direct program labor costs into the total amount of the Commission-wide 
overhead pool. For this purpose, direct program labor costs are the 
salary costs of personnel working in all Commission programs. Overhead 
costs consist generally of the following Commission-wide costs: 
Indirect personnel costs (leave and benefits), rent, communications, 
contract services, utilities, equipment, and supplies. This formula has 
resulted in the following overhead rates for the most recent three 
years (rounded to the nearest whole percent): 113 percent for fiscal 
year 2003, 109 percent for fiscal year 2004, and 109 percent for fiscal 
year 2005. These overhead rates are applied to the direct labor costs 
to calculate the costs of oversight of SRO rule enforcement programs.

C. Conduct of SRO Rule Enforcement Reviews

    Under the formula adopted in 1993 (58 FR 42643, Aug. 11, 1993), 
which appears at 17 CFR part 1 Appendix B, the Commission calculates 
the fee to recover the costs of its rule enforcement review and 
examinations, based on the three-year average of the actual cost of 
performing such reviews and examinations at each SRO. The cost of 
operation of the Commission's SRO oversight program varies from SRO to 
SRO, according to the size and complexity of each SRO's program. The 
three-year averaging computation method is intended to smooth out year-
to-year variations in cost. Timing of the Commission's reviews and 
examinations may affect costs--a review or examination may span two 
fiscal years and reviews and examinations are not conducted at each SRO 
each year. Adjustments to actual costs may be made to relieve the 
burden on an SRO with a disproportionately large share of program 
costs.
    The Commission's formula provides for a reduction in the assessed 
fee if an SRO has a smaller percentage of United States industry 
contract volume than its

[[Page 39673]]

percentage of overall Commission oversight program costs. This 
adjustment reduces the costs so that, as a percentage of total 
Commission SRO oversight program costs, they are in line with the pro 
rata percentage for that SRO of United States industry-wide contract 
volume.
    The calculation made is as follows: The fee required to be paid to 
the Commission by each DCM is equal to the lesser of actual costs based 
on the three-year historical average of costs for that DCM or one-half 
of average costs incurred by the Commission for each DCM for the most 
recent three years, plus a pro rata share (based on average trading 
volume for the most recent three years) of the aggregate of average 
annual costs of all DCMs for the most recent three years. The formula 
for calculating the second factor is: 0.5a + 0.5 vt = current fee. In 
this formula, ``a'' equals the average annual costs, ``v'' equals the 
percentage of total volume across DCMs over the last three years, and 
``t'' equals the average annual costs for all DCMs. NFA has no 
contracts traded; hence, its fee is based simply on costs for the most 
recent three fiscal years.
    This table summarizes the data used in the calculations and the 
resulting fee for each entity:

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                                                                  3-year average    3-year % of    Average year
                                                                   actual costs       volume         2006 fee
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Chicago Board of Trade..........................................          72,286         34.4803          72,286
Chicago Mercantile Exchange.....................................         201,763         51.4928         201,763
New York Mercantile Exchange....................................         144,899         10.7381         105,117
Kansas City Board of Trade......................................          16,985          0.8216          10,992
New York Board of Trade.........................................         115,320          1.9397          63,561
Minneapolis Grain Exchange......................................          21,490          0.1193          11,108
OneChicago......................................................          35,695          0.1489          18,301
                                                                 -----------------------------------------------
    Subtotal....................................................         608,438         99.7407         483,128
National Futures Association....................................         277,661             N/A         277,661
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    Total.......................................................         886,099         99.7407         760,789
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    An example of how the fee is calculated for one exchange, the 
Minneapolis Grain Exchange, is set forth here:
    a. Actual three-year average costs equal $21,490.
    b. The alternative computation is: (.5) ($21,490) + (.5) (.001193) 
($608,438) = $11,108.
    c. The fee is the lesser of a or b; in this case $11,108.
    As noted above, the alternative calculation based on contracts 
traded is not applicable to NFA because it is not a DCM and has no 
contracts traded. The Commission's average annual cost for conducting 
oversight review of the NFA rule enforcement program during fiscal 
years 2003 through 2005 was $277,661 (one-third of $832,983). The fee 
to be paid by the NFA for the current fiscal year is $277,661.
Payment Method
    The Debt Collection Improvement Act (DCIA) requires deposits of 
fees owed to the government by electronic transfer of funds (See 31 
U.S.C. 3720). For information about electronic payments, please contact 
Stella Lewis at (202) 418-5186 or [email protected], or see the CFTC Web 
site at http://www.cftc.gov, specifically, http://www.cftc.gov/cftc/cftcelectronicpayments.htm htm.
Regulatory Flexibility Act
    The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., requires 
agencies to consider the impact of rules on small business. The fees 
implemented in this release affect contract markets (also referred to 
as exchanges) and registered futures associations. The Commission has 
previously determined that contract markets and registered futures 
associations are not ``small entities'' for purposes of the Regulatory 
Flexibility Act. Accordingly, the Chairman, on behalf of the 
Commission, certifies pursuant to 5 U.S.C. 605(b) that the fees 
implemented here will not have a significant economic impact on a 
substantial number of small entities.

    Issued in Washington, DC, on July 5, 2006, by the Commission.
Eileen A. Donovan,
Acting Secretary of the Commission.
[FR Doc. 06-6109 Filed 7-12-06; 8:45 am]
BILLING CODE 6351-01-P