[Federal Register Volume 73, Number 132 (Wednesday, July 9, 2008)]
[Rules and Regulations]
[Pages 39226-39227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-15606]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 30


Limited Marketing Activities From a United States Location by 
Certain Firms and Their Employees or Other Representatives Exempted 
Under Commodity Futures Trading Commission Regulation 30.10

AGENCY: Commodity Futures Trading Commission.

ACTION: Order.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is 
confirming that designated members of the Taiwan Futures Exchange 
(``TAIFEX'') may engage in limited marketing conduct with respect to 
foreign futures or options contracts within the U.S. through their 
employees or representatives consistent with prior Commission orders. 
This order is issued pursuant to Commission Regulation 30.10, which 
permits persons to file a petition with the Commission for exemption 
from the application of certain of the Regulations set forth in Part 30 
and authorizes the Commission to grant such an exemption if such action 
would not be otherwise contrary to the public interest or to the 
purposes of the provision from which exemption is sought.

DATES: Effective Date: July 9, 2008.

FOR FURTHER INFORMATION CONTACT: Andrew Chapin, Special Counsel, 
Division of Clearing and Intermediary Oversight, at (202) 418-5430 
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st 
Street, NW., Washington, DC 20581. Electronic mail: [email protected].

SUPPLEMENTARY INFORMATION: The Commission has issued the following 
Order:

Order Issued Pursuant to Regulation 30.10 Confirming That Designated 
Members of TAIFEX May Engage in Limited Marketing Conduct With Respect 
to Foreign Futures and Options Contracts Within the United States 
Through Their Employees or Other Representatives.

    Commission regulations governing the offer and sale of commodity 
futures and option contracts traded on or subject to the regulations of 
a foreign board of trade to customers located in the U.S. are contained 
in Part 30 of the Commission's regulations.\1\ These regulations 
include requirements for intermediaries with respect to registration, 
disclosure, capital adequacy, protection of customer funds, 
recordkeeping and reporting, and sales practice and compliance 
procedures that are generally comparable to those applicable to 
transactions on U.S. markets.
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    \1\ Commission regulations referred to herein are found at 17 
CFR Ch. I (2007). Appendix A to Part 30, ``Interpretative Statement 
With Respect to the Commission's Exemptive Authority Under Sec.  
30.10 of Its Rules'' generally sets forth the elements the 
Commission will evaluate in determining whether a particular 
regulatory program may be found to be comparable for purposes of 
exemptive relief pursuant to Regulation 30.10. 52 FR 28990, 29001 
(Aug. 5, 1987).
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    In formulating a regulatory program to govern the offer and sale of 
foreign futures and option products to customers located in the U.S., 
the Commission, among other things, considered the desirability of 
ameliorating the potential extraterritorial impact of such a program 
and avoiding duplicative regulation of firms engaged in international 
business. Based upon these considerations, the Commission determined to 
permit persons located outside the U.S. and subject to a comparable 
regulatory structure in the jurisdiction in which they were located to 
seek an exemption from certain of the requirements under Part 30 of the 
Commission's regulations based upon substituted compliance with the 
regulatory requirements of the foreign jurisdiction (``Regulation 30.10 
relief'').
    On October 28, 1992, the Commission issued an order to permit firms 
that have obtained confirmation of Regulation 30.10 relief to engage in 
limited marketing conduct with respect to foreign futures or options 
contracts within the U.S. through their employees or representatives 
without prior notification to the Commission.\2\ The Commission stated 
that
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    \2\ 57 FR 49644 (Nov. 3, 1992).

    the success of the [Regulation] 30.10 program as well as the 
existence of working relationships established under that program 
with foreign regulatory and self-regulatory authorities provide 
assurances that the conduct of [Regulation] 30.10 exempted firms 
through their employees or other representatives located in the 
United States, if of a limited duration and subject to proper 
supervisory controls, will not be inconsistent with the Commission's 
obligations under the [Commodity Exchange Act] to ensure appropriate 
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customer protection.


[[Page 39227]]


To provide the appropriate level of customer protection, the relief was 
limited to conduct directed towards certain institutions and 
governmental entities as described in Regulation 4.7.\3\ In addition, 
the Commission stated that any person who established a fixed location 
in the U.S. for the solicitation or acceptance of business, or whose 
marketing activities involved long or repeated periods within the U.S. 
that can be characterized as a de facto fixed presence, would be 
disqualified from Regulation 30.10 relief and would be required to 
register with the Commission. On August 4, 1994, the Commission issued 
an order expanding the category of persons to whom designated firms may 
direct limited marketing conduct to include all ``accredited 
investors,'' as that term is defined in section 230.501(a) of 
Securities and Exchange Commission Regulation D issued pursuant to the 
Securities Act of 1933.\4\ The orders issued by the Commission in 1992 
and 1994 are collectively known as the Limited Marketing Orders.
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    \3\ The order limited the relief to marketing conduct directed 
towards persons whose description in terms of sophistication and 
assets was derived generally from the definition of ``qualified 
eligible participant'' (``QEP''), as defined in Regulation 
4.7(a)(1)(ii). In 2000, the Commission streamlined Regulation 4.7 by 
combining into a single definition those persons formerly defined as 
QEPs and ``qualified eligible clients'' (``QECs''). As a result of 
the revision, both QEPs and QECs are termed ``qualified eligible 
persons.'' 65 FR 47848, 47849-50 (Aug. 4, 2000).
    \4\ 59 FR 42156 (Aug. 17, 1994).
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    Pursuant to the terms set forth therein, a foreign regulatory or 
self-regulatory organization must obtain a written confirmation from 
the Commission that the Limited Marketing Orders apply to firms in its 
jurisdiction with confirmed Regulation 30.10 relief. On March 23, 2007, 
the Commission issued an order granting relief under Regulation 30.10 
authorizing designated members of TAIFEX to solicit and accept orders 
from customers located in the U.S. for otherwise permitted transactions 
on TAIFEX.\5\ By letter dated April 16, 2008, counsel for TAIFEX 
petitioned the Commission to confirm that designated TAIFEX members may 
engage in limited marketing conduct with respect to foreign futures or 
options contracts within the U.S. through their employees or other 
representatives, as set forth in the Limited Marketing Orders.
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    \5\ 72 FR 14413 (Mar. 28, 2007) (``TAIFEX Order'').
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    As previously stated, the Commission believes that certain contacts 
between firms with confirmed Regulation 30.10 relief and certain 
sophisticated customers located in the U.S., who have a high degree of 
sophistication and financial resources, would not be contrary to the 
public interest. Accordingly, the Commission has determined to issue 
this order permitting designated TAIFEX members to engage in limited 
marketing conduct with respect to foreign futures or option contracts 
within the U.S. through their employees or other representatives, as 
set forth in the Limited Marketing Orders.
    Prior to engaging in any marketing activity in the U.S., a TAIFEX 
member must obtain confirmation of Regulation 30.10 relief from the 
National Futures Association (``NFA'').\6\ Any TAIFEX member operating 
pursuant to this order will remain subject to all of the terms and 
conditions set forth in the Limited Marketing Orders and the TAIFEX 
Order. In particular, the Commission notes that every order granting 
Regulation 30.10 relief has required a firm seeking relief under such 
an order to consent to jurisdiction in the U.S. under the Commodity 
Exchange Act and file with NFA a valid and binding appointment of an 
agent in the U.S. for service of process.
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    \6\ The Commission has delegated to NFA certain 
responsibilities, including the responsibility to receive requests 
for confirmation of Regulation 30.10 relief on behalf of particular 
firms, to verify such firms' fitness and compliance with the 
conditions of the appropriate Regulation 30.10 Order and to grant 
exemptive relief from registration to qualifying firms. 62 FR 47792, 
47793 (Sept. 11, 1997).

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    Dated: July 3, 2008.

    By the Commission
David Stawick,
Secretary of the Commission.
[FR Doc. E8-15606 Filed 7-8-08; 8:45 am]
BILLING CODE 6351-01-P