[Federal Register Volume 82, Number 13 (Monday, January 23, 2017)]
[Proposed Rules]
[Pages 7738-7751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-01232]


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COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 3 and 9

RIN 3038-AE15


Technical Amendments to Rules on Registration and Review of 
Exchange Disciplinary, Access Denial or Other Adverse Actions

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (``CFTC'' or 
``Commission'') is proposing technical amendments to its regulations 
that govern registration and review of exchange disciplinary, access 
denial or other adverse actions. The amendments would integrate 
existing advisory guidance and the amendments to part 9 would also 
incorporate swap execution facilities (``SEFs'') and update provisions 
currently applicable to designated contract markets (``DCMs''). The 
proposal revises existing rules to delete numerous cross-references to 
previously deleted regulations and adds citations to applicable 
parallel provisions for SEFs and DCMs.

[[Page 7739]]

Additionally, the proposal addresses the publication of final 
disciplinary and access denial actions taken by the SEFs and DCMs on 
their exchange Web sites.

DATES: Comments must be received on or before March 24, 2017.

ADDRESSES: You may submit comments, identified by RIN 3038-AE15, by any 
of the following methods:
     CFTC Web site: https://comments.cftc.gov. Follow the 
instructions for submitting comments through the Comments Online 
process on the Web site.
     Mail: Christopher Kirkpatrick, Secretary of the 
Commission, Commodity Futures Trading Commission, Three Lafayette 
Centre, 1155 21st Street NW., Washington, DC 20581.
     Hand Delivery/Courier: Same as Mail, above.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    Please submit your comments using only one method.
    All comments must be submitted in English, or if not, accompanied 
by an English translation. Comments will be posted as received to 
www.cftc.gov. You should submit only information that you wish to make 
available publicly. If you wish the Commission to consider information 
that you believe is exempt from disclosure under the Freedom of 
Information Act (``FOIA''), a petition for confidential treatment of 
the exempt information may be submitted according to the procedures 
established in Commission regulation 145.9.
    The Commission reserves the right, but shall have no obligation, to 
review, pre-screen, filter, redact, refuse or remove any or all of your 
submission from www.cftc.gov that it may deem to be inappropriate for 
publication, such as obscene language. All submissions that have been 
redacted or removed that contain comments on the merits of the 
rulemaking will be retained in the public comment file and will be 
considered as required under the Administrative Procedure Act and other 
applicable laws, and may be accessible under the FOIA.

FOR FURTHER INFORMATION CONTACT: Rachel Berdansky, Deputy Director, 
Division of Market Oversight, at 202-418-5429 or [email protected]; 
or David Steinberg, Associate Director, Division of Market Oversight, 
at 202-418-5102 or [email protected], in each case, at the Commodity 
Futures Trading Commission, Three Lafayette Centre, 1151 21st Street 
NW., Washington, DC 20581.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
    A. Description of Part 9
    B. DCM Final Rules and Part 8 Removal
    C. SEF Final Rules
II. Proposed Amendments to Regulations
    A. Introduction
    B. Part 9
    1. Commission Regulation 9.1: Scope of Rules
    2. Commission Regulation 9.2: Definitions
    3. Commission Regulation 9.4: Filing and Service; Official 
Docket
    4. Commission Regulation 9.11: Form, Contents and Delivery of 
Notice of Disciplinary or Access Denial Action
    5. Commission Regulation 9.12: Effective Date of Disciplinary or 
Access Denial Action
    6. Commission Regulation 9.13: Publication of Notice
    7. Commission Regulation 9.24: Petition for Stay Pending Review
    8. Commission Regulation 9.31: Commission Review of Disciplinary 
or Access Denial Action on Its Own Motion
    9. Minor Changes to Commission Regulations 9.3, 9.4, 9.8, and 
9.9
    C. Part 3
    1. Commission Regulation 3.31: Deficiencies, Inaccuracies, and 
Changes To Be Reported
III. Related Matters
    A. Regulatory Flexibility Act
    B. Paperwork Reduction Act
    C. Cost-Benefit Considerations
IV. Request for Comments

I. Background

A. Description of Part 9

    On December 20, 1978, the Commission adopted part 9 rules relating 
to the review of exchange disciplinary, access denial, or other adverse 
actions.\1\ The rules govern the process and procedures by which the 
Commission may review exchange disciplinary and access denial actions, 
detailing the appellate process under which such review will be 
instituted and conducted in cases where a person applies to the 
Commission for review. In addition to setting forth procedures and 
standards governing filing and service, motions, and settlement, the 
rules also cover the process by which exchanges must provide notice of 
the final disciplinary action to the subject of the disciplinary action 
and to the Commission, as well as the publication of such notice. As 
discussed below, DCMs and SEFs are already required to comply with the 
part 9 regulations.
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    \1\ 43 FR 59343 (Dec. 20, 1978).
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B. DCM Final Rules and Part 8 Removal

    In June 2012, the Commission implemented Core Principles and Other 
Requirements for Designated Contract Markets (``DCM Final Rules'').\2\ 
Commission regulation 38.2 of the DCM Final Rules provides that DCMs 
shall comply with all applicable regulations under Title 17 of the Code 
of Federal Regulations, except for certain exempt provisions.\3\ Part 9 
is not included in the list of exempt provisions. Furthermore, part 9 
applies to DCMs by defining ``exchange'' in Commission regulation 
9.2(c) for purposes of the rules as any board of trade which has been 
designated as a contract market.\4\
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    \2\ 77 FR 36612 (June 19, 2012).
    \3\ 77 FR 36697 (June 19, 2012); 17 CFR 38.2.
    \4\ 17 CFR 9.2(c).
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    Additionally, in the DCM Final Rules, the Commission adopted 
regulations in ``Subpart N--Disciplinary Procedures'' of part 38 to 
amend the disciplinary procedures applicable to DCMs.\5\ Several of the 
regulations adopted in subpart N of part 38 are similar to the text of 
the disciplinary procedures found in former part 8--exchange procedures 
for disciplinary, summary, and membership denial actions.\6\ In order 
to avoid confusion from the regulations containing two sets of 
disciplinary procedures for DCMs, the Commission removed part 8 from 
the regulations.\7\ As a result of this removal, the current part 9 
rules, which contain cross-references to part 8 throughout, are being 
updated in this rulemaking (``NPRM'' or ``Proposal'') to instead cite 
to parallel provisions now contained in part 37 for SEFs and part 38 
for DCMs.\8\
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    \5\ 17 CFR 38.700 through 38.712.
    \6\ 43 FR 41950 (Sept. 19, 1978); 17 CFR 38.700 through 38.712. 
For example, part 8 contained regulations 8.05 (Enforcement staff); 
8.08 (Disciplinary committee); and 8.20 (Final decision). Subpart N 
of part 38 has corresponding provisions: 38.701 (Enforcement staff); 
38.702 (Disciplinary panels); and 38.709 (Final decisions).
    \7\ Although Commission regulation 38.2 of the DCM Final Rules 
specifies that DCMs are not required to comply with part 8, the 
Commission removed part 8 to avoid any confusion resulting from the 
regulations containing two sets of exchange disciplinary procedures 
as part of the Adaption of Regulations to Incorporate Swaps 
Rulemaking. 17 CFR 38.2; and removal of part 8 at 77 FR 66304 (Nov. 
2, 2012).
    \8\ 17 CFR parts 9, 37, and 38. For example, in Commission 
regulation 9.2(k) the definition of ``summary action'' cites to 
Commission regulations 8.17(b), 8.25, and 8.27 which were removed 
along with the entirety of part 8. Proposed Commission regulation 
9.2(k) will instead cite to part 37, appendix B, Core Principle 2, 
paragraphs (a)(10)(vi), (a)(13), and (a)(14) [for SEFs] and part 38, 
appendix B, Core Principle 13, paragraphs (a)(4), (a)(6), and (a)(7) 
[for DCMs].
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C. SEF Final Rules

    The Dodd-Frank Wall Street Reform and Consumer Protection Act 
(``Dodd-Frank Act'') repealed some sections of the Commodity Exchange 
Act (``CEA'' or ``Act''), amended others, and established new 
categories of Commission

[[Page 7740]]

registrants, including SEFs.\9\ Pursuant to the Dodd-Frank Act, the 
Commission adopted new rules in part 37 Core Principles and Other 
Requirements for Swap Execution Facilities (``SEF Final Rules'').\10\ 
The Commission notes that since the advent of the Dodd-Frank Act's new 
statutory framework for regulating swaps, it adopted a rulemaking 
(Adaptation of Regulations to Incorporate Swaps) implementing 
conforming changes to existing regulations to clarify those pre-Dodd-
Frank provisions, including those applicable to SEFs.\11\ Part 9, 
however, which also applies to SEFs, was not addressed in this 
rulemaking.\12\ As such, in regulation 37.2 of the SEF Final Rules, the 
Commission specified that SEFs shall comply with the requirements of 
part 9.\13\ Accordingly, for clarity purposes, this NPRM amends certain 
part 9 definitions and language which have not yet been addressed, to 
better integrate them into the post-Dodd-Frank regulatory regime.
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    \9\ See generally Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Public Law 111-203, 124 Stat. 1376 (2010) available 
at http://www.cftc.gov/LawRegulation/OTCDERIVATIVES/index.htm; see 
also Dodd-Frank Act section 721(a)(50), adding CEA section 1a(50), 
codified at 7 U.S.C. 1a(50).
    \10\ 78 FR 33476 (June 4, 2013).
    \11\ 77 FR 66288 (Nov. 2, 2012).
    \12\ Id.
    \13\ See 78 FR 33476, 33479 (June 4, 2013); 17 CFR 37.2.
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II. Proposed Amendments to Regulations

A. Introduction

    This Proposal contains amendments of three different types: 
Ministerial, accommodating, and substantive. Most of the proposed 
amendments are purely ministerial--for instance, some of the proposed 
changes would update definitions in Commission regulation 9.2 to 
conform them to the CEA as amended by the Dodd-Frank Act as well as 
other sections of the Commission's regulations. Furthermore, as noted 
above, the citations to part 8 in the current part 9 rules would be 
replaced with the appropriate citations to regulations, guidance, and 
acceptable practices from parts 37 and 38.\14\ In a similar vein, one 
of the proposed amendments to Commission regulation 9.1 would remove 
the reference to section 5a(a)(11) of the CEA, since this section was 
eliminated by the passage of the Commodity Futures Modernization Act of 
2000 (``CFMA'').\15\
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    \14\ 17 CFR parts 37 and 38.
    \15\ Public Law 106-554, 114 Stat. 2763, sec. 110 (2000).
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    The proposed accommodating amendments do not impose any new 
obligations on SEFs; rather they clarify that SEFs, in addition to 
DCMs, must comply with part 9.\16\ This clarification would be 
accomplished by updating part 9's definition of ``exchange'' to include 
SEFs and to add swaps to language discussing the types of transactions 
from which an exchange disciplinary action might arise. These 
amendments are more than ministerial because they require some judgment 
in drafting. Another example of an accommodating amendment is the 
proposed formal codification of the part 3 and part 9 advisories and 
the Commission's delegation to the National Futures Association 
(``NFA'') of the responsibility to receive notice of final exchange 
disciplinary and access denial actions, in which the Commission 
encouraged exchanges to comply with the notice requirements in 
Commission regulation 9.11 (``9.11 notice'') by filing with the 
NFA.\17\ Additionally, the proposed amendment to Commission regulation 
9.11(b)(3)(ii) would codify the clarification contained in the Part 9 
Advisory that an exchange indicate in its notice of disciplinary or 
access denial actions whether the violation underlying the notice 
resulted in financial harm to any customers.\18\
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    \16\ 17 CFR part 9, Sec. Sec.  37.2 and 38.2.
    \17\ 64 FR 39913 (July 23, 1999) (``Part 9 Delegation''); 64 FR 
39912 (July 23, 1999) (``Part 3 Advisory''); 64 FR 39915 (July 23, 
1999) (``Part 9 Advisory''). As discussed more fully below in the 
preamble, the Part 9 Advisory permits exchanges to file 9.11 notices 
of final disciplinary or access denial actions with the Commission 
or with the NFA. The Part 9 Delegation gives the NFA authority to 
receive and process these notices on behalf of the Commission. 
Finally, the Part 3 Advisory relieves registrants and registrant 
applicants from Commission regulation 3.31 Form 3-R reporting 
obligations in instances when the information to be reported is 
solely the result of an exchange disciplinary or access denial 
action.
    \18\ 64 FR 39917 (July 23, 1999).
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    The remaining proposed amendments are generally substantive in that 
they include an additional element required to be included in the 
contents of a 9.11 notice and a material revision to Commission 
regulation 9.13 which currently requires exchanges to post notice of 
final exchange disciplinary action on the exchange's premises.\19\ 
First, as part 9 pertains to both DCMs and SEFs which offer a number of 
varied products for trading, the proposed amendment to Commission 
regulation 9.11 would require exchanges to include the type of product 
(as applicable) involved in the adverse action in the contents of the 
final notice. Second, the proposed amendment to Commission regulation 
9.13 would remove the requirement to post notice on the exchange's 
premises and instead require the exchange to post the notice on the 
exchange's Web site. Finally, as addressed above in the discussion of 
accommodating amendments, the Commission is proposing to codify the 
Part 9 Advisory. By specifying in the rule text that exchanges provide 
notice of final exchange disciplinary and access denial actions 
directly to the NFA, the Commission is eliminating the option for 
exchanges to file notice with the Commission.
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    \19\ 17 CFR 9.11 and 9.13.
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B. Part 9

1. Commission Regulation 9.1: Scope of Rules
    Commission regulation 9.1 governs the review by the Commission, 
pursuant to section 8c of the CEA, of any suspension, expulsion, 
disciplinary or access denial action, or other adverse action by an 
exchange.\20\ As noted above, the Commission is proposing a ministerial 
amendment to regulation 9.1(b)(1) by removing the reference to section 
5a(a)(11) of the CEA, since this section was eliminated by the passage 
of the CFMA.\21\
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    \20\ 7 U.S.C. 12c.
    \21\ Public Law 106-554, 114 Stat. 2763, sec. 110 (2000).
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    Commission regulation 9.1(b)(2) provides an exclusion from the part 
9 regulations with respect to the Commission's review of summary 
actions imposed by an exchange for a minor penalty for the violation of 
exchange rules relating to decorum, attire, or timely submission of 
accurate records required for clearing or verifying each day's 
transactions or similar activities. The Commission proposes to amend 
regulation 9.1(b)(2) by replacing the reference to regulation 8.27 with 
a reference to part 37 guidance pertaining to violations of rules 
regarding timely submission of records and part 38 guidance pertaining 
to summary fines for violations of rules regarding timely submission of 
records, decorum, or other similar activities.\22\
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    \22\ The proposed references would be to (i) part 37 guidance, 
17 CFR part 37, appendix B, Core Principle 2, paragraph (a)(13); and 
(ii) part 38 guidance, 17 CFR part 38, appendix B, Core Principle 
13, paragraph (a)(6).
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    Commission regulation 9.1(b)(3) provides an exclusion from the part 
9 regulations concerning any exchange action arising from a claim, 
grievance, or dispute involving cash market transactions which are not 
a part of, or directly connected with, any transaction for the 
purchase, sale, delivery or exercise of a commodity for future 
delivery, or a commodity option. The Commission proposes to amend 
regulation 9.1(b)(3) by inserting ``swap'' at the end of the paragraph 
to account

[[Page 7741]]

for swap transactions on a DCM or on a SEF as a result of the Dodd-
Frank Act.\23\ As noted above, the addition of ``swap'' language is a 
conforming amendment as it requires some judgment as to its inclusion.
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    \23\ Section 723(a)(3) of the Dodd-Frank Act added section 
2(h)(8) of the CEA to require, among other things, that execution of 
swaps subject to the clearing requirement of section 2(h)(1) of the 
CEA must occur on either a DCM or a SEF.
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    Commission regulation 9.1(c) provides for the applicability of part 
9 rules to matters filed with the Commission after August 6, 1987. In 
1987, the part 9 rules in place at the time were superseded and 
Commission regulation 9.1(c) governed whether an existing matter would 
be subject to the pre- or post-1987 part 9 rules. Such determination is 
no longer necessary because no pre-1987 matters are pending before the 
Commission. As a result, the Proposal seeks to remove text from 
Commission regulation 9.1(c) that governs whether a matter would be 
subject to the pre- or post-1987 part 9 rules.
2. Commission Regulation 9.2: Definitions
    The Commission proposes to revise the definition of four terms in 
regulation 9.2. First, the Commission proposes to revise the definition 
of ``disciplinary action'' in regulation 9.2(b) by deleting the 
reference to regulation 8.03(i). The Commission also proposes to remove 
the reference to ``member of an exchange'' and insert ``person'' in its 
place. The Commission believes it is necessary to expand the 
``disciplinary action'' definition to account for instances where an 
exchange imposes sanctions against a person that is not a member of the 
exchange. The Commission's proposal to include ``person'' in the 
``disciplinary action'' definition is consistent with the statutory 
language found in Core Principle 2 for DCMs and section 8c(b) of the 
CEA, as amended by the Dodd-Frank Act.\24\
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    \24\ Section 735 of the Dodd-Frank Act amends section 5 of the 
CEA, including DCM Core Principle 2. Paragraph (B)--Capacity of 
Contract Market--of Core Principle 2 specifically requires that the 
board of trade shall have the capacity to detect, investigate, and 
apply appropriate sanctions to any person that violates any rule of 
the contract market. Section 8c(b) of the CEA, 7 U.S.C. 12c(b), 
provides that the Commission may, in its discretion and in 
accordance with such standards and procedures as it deems 
appropriate, review any decision by an exchange whereby a person is 
suspended, expelled, disciplined, or denied access to the exchange. 
In addition, section 8c(b) of the CEA provides that the Commission 
may, in its discretion and upon application of any person who is 
adversely affected by any other exchange action, review such action.
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    Second, the Commission proposes to amend the definition of 
``exchange'' in regulation 9.2(c) to include SEFs. This change would 
make clear that the Commission has the discretion to review adverse 
actions imposed by a SEF and clarify that SEFs are subject to all of 
the part 9 requirements.\25\
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    \25\ Id. The Commission notes that regulation 37.2 requires, 
among other things, that a SEF shall comply with the part 9 
regulations. 17 CFR 37.2. Additionally, footnote 40 of the SEF Final 
Rules states ``the term `exchange' used in part 9 of the 
Commission's regulations should be interpreted to include a SEF for 
purposes of applying the requirements of part 9 to a SEF.'' 78 FR 
33476, 33479 (June 4, 2013).
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    Third, the Commission proposes to amend regulation 9.2(f) to expand 
the definition of ``member of an exchange'' to include any person who 
has trading privileges on an exchange. This change is necessary to 
conform the part 9 definition of ``member'' to the meaning set forth in 
section 1a(34) of the CEA and in Sec.  1.3(q) of the Commission's 
regulations.\26\
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    \26\ Section 1a(34) of the CEA provides that the term ``member'' 
means, among other things, an individual, association, partnership, 
corporation, or trust having trading privileges on the registered 
entity. See also 17 CFR 1.3(q). By amending the definition of 
``member of an exchange'' to include all persons with trading 
privileges, the Commission is clarifying that the appellate process 
and Commission review, as defined in part 9, would apply to all 
persons with trading privileges.
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    Fourth, the Commission proposes to amend the definition of 
``summary action'' in regulation 9.2(k) by adding references to part 37 
for SEFs and replacing the part 8 references with the relevant 
provisions from part 38.\27\
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    \27\ Specifically, the proposed definition of ``summary action'' 
means a disciplinary action resulting in the imposition of a penalty 
on a person for violation of rules of the exchange permitted under 
the provisions of part 37, appendix B, Core Principle 2, paragraph 
(a)(10)(vi) or part 38, appendix B, Core Principle 13, paragraph 
(a)(4) (penalty for impeding progress of hearing); part 37, appendix 
B, Core Principle 2, paragraph (a)(14) or part 38, appendix B, Core 
Principle 13, paragraph (a)(7) (emergency disciplinary actions); 
part 37, appendix B, Core Principle 2, paragraph (a)(13) (summary 
fines for violations of rules regarding timely submission of 
records); or part 38, appendix B, Core Principle 13, paragraph 
(a)(6) (summary fines for violations of rules regarding timely 
submission of records, decorum, or other similar activities).
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3. Commission Regulation 9.4: Filing and Service; Official Docket
    Commission regulation 9.4(a) describes the procedures for filing 
any document required by part 9 to be filed with the Commission 
Procedures Clerk, including proof of filing and proof of service. To 
ease the burden on parties, the Commission proposes to amend regulation 
9.4(a) by replacing the requirement of a formal affidavit of service 
with the requirement that parties submit a signed ``statement of 
service'' that: (1) Confirms that service has been made; (2) identifies 
each person served; (3) sets forth the date of service; and (4) recites 
the manner of service. The less formal and less burdensome statement of 
service effectively serves the same purpose as an affidavit of service 
(i.e., promoting and assuring the full exchange of information among 
the parties by requiring service of submissions on all of the parties 
in the proceeding). Additionally, the Commission proposes to amend 
regulation 9.4(b)(1) to reduce the burden on parties by requiring an 
original and one copy (instead of two copies) of all documents filed 
with the Commission.
4. Commission Regulation 9.11: Form, Contents and Delivery of Notice of 
Disciplinary or Access Denial Action
    Commission regulation 9.11(a) requires that whenever an exchange 
makes a decision, pursuant to which disciplinary action or access 
denial to be imposed has become final, the exchange must provide 
written notice of such action to the person against whom the action was 
taken and to the Commission within 30 days thereafter. In 1999, the 
Commission delegated authority to the NFA to receive and process 
exchange disciplinary and access denial information (``Part 9 
Delegation'').\28\ Consequently, the NFA currently serves as the 
official custodian of records for exchange disciplinary filings. The 
Commission intends to again delegate authority to the NFA, via an 
updated order to be published concurrently with the final rule, to 
receive and process exchange disciplinary and access denial 
information. The Commission proposes to issue an updated order that 
includes specific duties delegated to the NFA, such as: (1) To process 
exchange disciplinary information; (2) to provide the Commission with 
access to a report summarizing all recent exchange disciplinary 
information; (3) to assist the Commission in enforcing exchange 
compliance with regulation 9.11 filing requirements; and (4) to serve 
as the official custodian of a database containing records of the 
exchanges' disciplinary and access denial actions.
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    \28\ 64 FR 39913 (July 23, 1999). The NFA created the Background 
Affiliation Status Information Center (``BASIC'') system through 
which the public can access information pertaining to the types of 
violations committed, penalties imposed, the effective date of the 
action, and, in some cases, the text from the exchange's decision.
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    In 1999, concurrent with the Part 9 Delegation, the Commission 
published an advisory permitting exchanges to file 9.11 notices with 
the Commission or the NFA (``Part 9 Advisory'').\29\ While

[[Page 7742]]

permitting filing with the Commission, the Part 9 Advisory encourages 
exchanges to file the required notice with the NFA and to do so 
electronically as the Commission believes such filing to be faster and 
more cost-effective for both the exchanges and the NFA. In an effort to 
codify the Part 9 Advisory and formally replace the regulation 9.11 
requirement that written notice be provided to the Commission, the 
Commission proposes to amend regulation 9.11 to require that notice be 
provided to the NFA via the NFA's BASIC system and eliminate the option 
of filing the notice with the Commission.
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    \29\ 64 FR 39915 (July 23, 1999).
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    Additionally, the Commission proposes to amend regulation 9.11(a) 
by replacing the reference to regulation 8.27 with a reference to part 
38.\30\
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    \30\ Specifically, the reference to Commission regulation 8.27 
would be replaced with a reference to part 38, appendix B, Core 
Principle 13, paragraph (a)(6) (summary fines for violations of 
rules regarding timely submission of records, decorum, or other 
similar activities) for DCMs. Under the current rule and in the 
proposed rule, DCMs would not be required to report summary fines 
with respect to violations related to decorum or attire. Decorum or 
attire violations do not apply to SEFs. Accordingly, SEFs are 
required to report all disciplinary and access denial actions to 
BASIC.
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    Commission regulation 9.11(b) sets forth the content that must be 
included in the disciplinary notice. The Commission proposes 
ministerial and conforming amendments to regulation 9.11(b) by 
inserting references to part 37, replacing the references to part 8 
with references to part 38, codifying the Part 9 Advisory clarification 
that the contents of the notice include whether the violation resulted 
in customer harm, and specifying the content of notices provided to: 
(1) The person against whom the action was taken and (2) the NFA. 
Additionally, for the sake of clarity, the Commission is proposing to 
renumber regulation 9.11(b) by assigning separate paragraphs 9.11(b)(1) 
to specify the notice to be provided by DCMs, 9.11(b)(2) to specify the 
notice to be provided by SEFs, and 9.11(b)(3) to detail the list of 
items to be included in the contents of the notice.
    Furthermore, the Commission is proposing a substantive amendment to 
regulation 9.11(b)(3)(ii) by adding an additional element required to 
be included in the contents of the notice. Because part 9 pertains to 
both DCMs and SEFs, which offer a number of varied products for 
trading, the Commission believes that requiring exchanges to detail the 
type of product (as applicable) involved in the adverse action as part 
of the 9.11 notice will provide the Commission, market participants, 
the public, and other exchanges with greater transparency concerning 
where market abuses originate and whether the abuses are concentrated 
among certain product types.\31\ Specifically, proposed Commission 
regulation 9.11(b) provides that for purposes of part 9, the notice of 
disciplinary action or access denial action provided to the person 
against whom the action was taken may be a copy of a decision which 
accords with part 37 and part 38 regulations and guidance.\32\ 
Alternatively, the notice provided to the person against whom the 
action was taken must include: (i) The name of the individual against 
whom the action was taken; (ii) a statement of the reasons for the 
action, detailing the exchange product which was involved, as 
applicable, and whether the violation that resulted in the action also 
resulted in financial harm to any customers together with a list of any 
rules which the individual was charged with having violated or which 
otherwise serve as the basis of the action; (iii) a statement of the 
exchange's conclusions and findings regarding each violation charged 
or, in the event of a settlement, a statement specifying those rule 
violations which the exchange believes were committed; (iv) the terms 
of the action; (v) the date the action was taken and the date the 
action will become effective; and (vi) a statement informing the party 
subject to the action of the availability of Commission review pursuant 
to section 8c of the CEA. Additionally, the Commission proposes to 
amend regulation 9.11(b) by requiring that notice provided to the NFA 
include items (i)-(v) immediately above.
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    \31\ For example, a product trading on a DCM might be specified 
as a July 2016 Eurodollar future; while a product trading on a SEF 
may be a CDX North American High Yield Series 26 5 year.
    \32\ The notice required by Commission regulation 9.11 may be 
satisfied by providing a copy of the final decision in accordance 
with part 37, appendix B, Core Principle 2, paragraph (a)(9) or part 
38, appendix B, Core Principle 13, paragraph (a)(3) (settlement 
offers); Commission regulations 37.206(d) or 38.708 (decisions); or 
part 37, appendix B, Core Principle 2, paragraph (a)(11)(iv) or part 
38, appendix B, Core Principle 13, paragraph (a)(5)(iv) (appeal 
decisions).
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    Commission regulation 9.11(c) sets forth the delivery process that 
must be followed when providing notice of disciplinary action or access 
denial action to the person who was the subject to the action, and the 
filing process that must be followed when providing notice of the 
action to the Commission. The Commission proposes to amend regulation 
9.11(c) by deleting instructions for filing notice with the Commission 
and replacing them with instructions for filing notice with the NFA. 
Specifically, proposed Commission regulation 9.11(c) provides that 
filing of the notice with the NFA is accomplished when an authorized 
exchange employee verifies the accuracy of the information entered into 
BASIC.
    Commission regulation 9.11(d) sets forth the effect of delivery and 
filing by mail. The Commission proposes to amend regulation 9.11(d) by 
deleting instructions related to filing notices with the Commission by 
mail since proposed regulation 9.11(c) calls for notice filings be made 
to the NFA via BASIC instead of with the Commission by mail.
    Commission regulation 9.11(e) sets forth the procedures for 
certifying the notice provided pursuant to Commission regulation 9.11. 
The Commission proposes to amend regulation 9.11(e) by adding 
instructions for the certification of notice filed with the NFA. 
Specifically, proposed Commission regulation 9.11(e) provides that 
notice filed with the NFA is deemed certified when an authorized 
exchange employee verifies the accuracy of the information entered into 
BASIC.
5. Commission Regulation 9.12: Effective Date of Disciplinary or Access 
Denial Action
    Pursuant to Commission regulation 9.12(a), a disciplinary action or 
access denial imposed by an exchange will not become effective until at 
least 15 days after the written notice prescribed by Commission 
regulation 9.11 is delivered to the person disciplined or denied 
access. However, an exchange may cause a disciplinary action to become 
effective prior to that time under certain circumstances that are 
identified in Commission regulation 9.12(a)(1)-(a)(4). The Commission 
proposes to amend regulation 9.12(a)(1)-(a)(4) by adding references to 
part 37 and replacing references to part 8 with references to part 
38.\33\
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    \33\ Specifically, the Commission proposes to amend regulation 
9.12(a)(1) by adding a reference to part 37, appendix B, Core 
Principle 2, paragraph (a)(14) (emergency disciplinary actions) and 
replacing the reference to regulation 8.25 with a reference to Part 
38, appendix B, Core Principle 13, paragraph (a)(7) (emergency 
disciplinary actions). In regulation 9.12(a)(2), the Commission 
proposes to add a reference to part 37, appendix B, Core Principle 
2, paragraph (a)(10)(vi) (hearings) and replace the reference to 
regulation 8.17(b) with a reference to part 38, appendix B, Core 
Principle 13, paragraph (a)(4) (hearings). The Commission proposes 
to amend regulation 9.12(a)(3) by adding a reference to part 37, 
appendix B, Core Principle 2, paragraph (a)(13) (summary fines for 
violations of rules regarding timely submission of records) and 
replacing the reference to regulation 8.27 with a reference to part 
38, appendix B, Core Principle 13, paragraph (a)(6) (summary fines 
for violations of rules regarding timely submission of records, 
decorum, or other similar activities).

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[[Page 7743]]

    Pursuant to Commission regulation 9.12(b), an exchange that 
determines that a disciplinary action will become effective prior to 
the expiration of 15 days after written notice must notify the person 
disciplined in writing either personally or by telegram or other means 
of written telecommunication. The exchange must also immediately notify 
the Commission by telegram or other means of written telecommunication. 
In order to modernize regulation 9.12(b), the Commission proposes to 
replace references to ``telegram or other means of written 
telecommunication'' with the term ``email'' and provide a Commission 
email address where notice of the early effective date can be sent by 
the exchange.
6. Commission Regulation 9.13: Publication of Notice
    Pursuant to Commission regulation 9.13, whenever an exchange 
suspends, expels or otherwise disciplines, or denies any person access 
to the exchange, it must make public its findings by disclosing at 
least the information contained in the notice required by Commission 
regulation 9.11(b). An exchange also must make such findings public as 
soon as the disciplinary action or access denial action becomes 
effective in accordance with the provisions of Commission regulation 
9.12 by posting a notice in a conspicuous place on its premises to 
which its members and the public regularly have access for a period of 
five consecutive business days. The exchange must also maintain and 
make available for public inspection a record of the information 
contained in the disciplinary or access denial notice.
    The Commission notes that regulation 9.13 was published in 1987, at 
a time when futures trading occurred primarily in person in the 
exchange's trading pits and on exchange premises. Therefore, posting 
notice of disciplinary action or access denial action on exchange 
premises, where it could be readily viewed by market participants, was 
an effective form of publicizing the disciplinary action. Today, most 
trading on DCMs and some of the trading on SEFs occurs by electronic 
execution. While some SEF trading is executed via a voice component, 
both electronic and voice execution occurs between market participants 
that are in geographically distinct locations and generally do not set 
foot on exchange premises. Consequently, posting a notice of 
disciplinary action on the premises of an exchange does little to 
publicize a disciplinary action. In an effort to modernize Commission 
regulation 9.13, and to provide better notice of a disciplinary action 
or an access denial action, the Commission proposes to amend regulation 
9.13 to require such notice be posted on an exchange's Web site to 
which its members, market participants, and the public regularly have 
access.\34\ In addition, to better inform market participants and 
maintain a public record of disciplinary action taken by an exchange, 
the Commission proposes to amend regulation 9.13 to require that such 
notice of a disciplinary action or an access denial action be 
maintained and readily available on an exchange's Web site.\35\ As a 
result, the existing requirement to maintain and make available for 
public inspection a record of the information contained in the 
disciplinary or access denial notice would be eliminated.
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    \34\ The Commission acknowledges that many DCMs have already 
adopted more modern methods to publicize notices of disciplinary 
action. For example, the CME Group DCMs (Chicago Board of Trade 
(``CBOT''), Chicago Mercantile Exchange (``CME''), Commodity 
Exchange, Inc., (``COMEX''), and New York Mercantile Exchange, Inc. 
(``NYMEX'')) and ICE Futures U.S. notify subscribers of exchange 
disciplinary postings via email. The Commission also notes that the 
proposed amendment generally tracks the Securities and Exchange 
Commission's (``SEC'') standards for Release of Disciplinary 
Complaints, Decisions and Other Information in Financial Industry 
Regulatory Authority, Inc. (``FINRA'') Rule 8313, in which FINRA, 
with SEC approval, has established its standard for releasing to the 
public a copy of FINRA issued disciplinary complaints, decisions, 
and other disciplinary information. See FINRA Rule 8313 ``Release of 
Disciplinary Complaints, Decisions and Other Information,'' 
available at http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=3892. See also SEC Release 
No. 34-69825; File No. SR-FINRA-2013-018 (June 21, 2013).
    \35\ Some DCMs currently maintain records of disciplinary action 
on their Web sites. For example, CBOE Futures Exchange, LLC 
maintains a disciplinary decision database on its Web site that 
allows the public to review disciplinary decisions dating back to 
2012. The Commission notes that in the securities industry, the New 
York Stock Exchange maintains disciplinary notices as far back as 
1972.
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    The Commission recognizes that NFA BASIC presently acts as the 
central repository of all disciplinary action taken by DCMs and SEFs. 
However, such disciplinary information cannot be queried by a specific 
exchange. In general, the Commission believes that greater access to 
exchange disciplinary actions provides valuable guidance and 
information to market participants and potential market participants. 
Also, maintaining disciplinary actions on an exchange's public Web site 
can serve to further deter and prevent future misconduct and to improve 
overall compliance among market participants. In addition, market 
participants may use such information to educate themselves as to 
compliance matters, potential violations and related sanctions, as well 
as to revise their own compliance procedures involving similar business 
practices. Further, any market participant facing allegations of rule 
violations may access an exchange's existing disciplinary decisions to 
gain greater insight on related facts and sanctions. Finally, in an 
effort to enhance access to disciplinary information, the Commission 
anticipates that upon the effective date of the final part 9 rules, it 
will include links on its SmartCheck Web site to each exchange's Web 
site for posting notice of disciplinary action or access denial 
action.\36\
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    \36\ In November 2014, the CFTC launched the SmartCheck Web 
site. It connects investors to tools to check the registration, 
license, and disciplinary history of certain financial 
professionals. This collection of tools allows the responsible 
investor to confirm the credentials of investment professionals, 
uncover any past disciplinary history, and stay ahead of scam 
artists with news and alerts.
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7. Commission Regulation 9.24: Petition for Stay Pending Review
    Commission regulation 9.24 provides the procedures that a person 
disciplined or denied access by an exchange must follow in the event 
that a person petitions the Commission to stay a disciplinary or access 
denial action. The Commission proposes to amend regulation 9.24(a)(2) 
by adding a reference to part 37 and replacing the reference to part 8 
with a reference to part 38.\37\ In addition, the Commission proposes 
to remove the reference to regulation 8.26, which provided for 
emergency action hearing procedures, from regulation 9.24(a)(2), as the 
part 37 and 38 emergency disciplinary action guidance (cited above) 
provides for emergency action hearing procedures.
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    \37\ Specifically, the Commission proposes to add a reference to 
part 37, appendix B, Core Principle 2, paragraph (a)(14) (emergency 
disciplinary actions) and replace the reference to regulation 8.25 
with a reference to part 38, appendix B, Core Principle 13, 
paragraph (a)(7) (emergency disciplinary actions).
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8. Commission Regulation 9.31: Commission Review of Disciplinary or 
Access Denial Action on Its Own Motion
    Commission regulation 9.31(a) permits the specified Divisions at 
the Commission to request that an exchange file the record of an 
exchange proceeding and other documents applicable to an exchange 
proceeding with such Divisions, upon review of the

[[Page 7744]]

exchange notice specified in Commission regulation 9.11, in instances 
where the person disciplined or denied access by the exchange has not 
appealed the exchange decision to the Commission. The Commission 
proposes to amend regulation 9.31(a) to delete the reference to the 
Division of Clearing and Risk from the first sentence. This provision 
had previously been amended to replace an earlier reference to the 
Division [of] Clearing and Intermediary Oversight with references to 
the Division of Swap Dealer and Intermediary Oversight and the Division 
of Clearing and Risk, as the successors to the Division of Clearing and 
Intermediary Oversight. Given the current organizational 
responsibilities of the Divisions, it is not necessary to include the 
Division of Clearing and Risk in Commission regulation 9.31(a). The 
Division of Clearing and Risk does not typically review notices of 
exchange disciplinary or access denial actions filed pursuant to 
Commission regulation 9.11 but instead reviews reports regarding rule 
enforcement activities and sanctions imposed against clearing members 
by registered derivatives clearing organizations pursuant to Commission 
regulations 39.17(a)(3) and 39.19(c)(4)(xi). The Commission also 
proposes to amend regulation 9.31(a) by adding language that requires 
the exchange to provide information to the requesting Division in the 
manner requested by the Division and to the person who is the subject 
of the disciplinary or access denial action in the manner prescribed by 
regulation 9.11(c).
    The Commission also proposes to amend regulation 9.31(b) to replace 
reference to the ``Commission'' with ``NFA'' in the second sentence. 
Such replacement is necessary to conform Commission regulation 9.31(b) 
to proposed changes to Commission regulation 9.11 that call for a 
notice of disciplinary or access denial action to be provided to the 
NFA.
9. Minor Changes to Commission Regulations 9.3, 9.4, 9.8, and 9.9
    The Commission proposes to amend regulation 9.3 by correcting the 
referenced title of regulation 12.7 to read ``Ex parte communications 
in reparation proceedings.'' The Commission also proposes to amend 
regulations 9.4(b)(4) and (c)(3), 9.8(1), and 9.9(b)(3) and (4) to make 
them gender neutral.

C. Part 3

1. Commission Regulation 3.31: Deficiencies, Inaccuracies, and Changes 
To Be Reported
    Pursuant to Commission regulation 3.31, an applicant or registrant 
as a futures commission merchant, retail foreign exchange dealer, swap 
dealer, major swap participant, commodity trading advisor, commodity 
pool operator, introducing broker, floor trader that is a non-natural 
person or leverage transaction merchant shall promptly correct any 
deficiency or inaccuracy in Form 7-R or Form 8-R which has rendered the 
information contained therein non-current or inaccurate. These 
corrections must be made on Form 3-R and filed in accordance with the 
form's instructions (such instructions presently require that Form 3-R 
be filed with the NFA).
    In 1999, concurrent with the Part 9 Delegation and Part 9 Advisory, 
the Commission issued an advisory pertaining to part 3 of the 
Commission's regulations (``Part 3 Advisory''). The Part 3 Advisory 
relieves registrants and applicants for registrant status from filing a 
Form 3-R, as required under Commission regulation 3.31, if the 
information to be reported is solely the result of an exchange 
disciplinary or access denial action.\38\ The Part 3 Advisory also 
explains that the Commission has: (1) Permitted exchanges (via the Part 
9 Advisory) to file either electronic or written 9.11 notices with the 
NFA instead of the Commission and (2) delegated to the NFA (via the 
Part 9 Delegation) the duty to receive and process exchange 
disciplinary and access denial action information filed by the 
exchanges in accordance with Commission regulation 9.11. The Commission 
further explained that, as a result of the Part 9 Advisory and Part 9 
Delegation, the NFA possesses the exchange disciplinary and access 
denial action information that registrants and applicants for 
registration status would otherwise be required to include in Form 3-R. 
Therefore, to avoid duplicative reporting, the Part 3 Advisory advises 
all individuals and entities subject to Commission regulation 3.31 that 
they are relieved from Commission regulation 3.31 reporting obligations 
resulting from an exchange disciplinary or access denial action and 
reported by an exchange pursuant to a 9.11 notice.
---------------------------------------------------------------------------

    \38\ 64 FR 39912 (July 23, 1999).
---------------------------------------------------------------------------

    As discussed above, the Commission intends to again delegate 
authority to the NFA to receive and process exchange disciplinary and 
access denial information. Additionally, the Commission seeks to 
replace the Part 9 Advisory by proposing to amend regulation 9.11 to 
require that notice be provided to the NFA via the NFA's BASIC system. 
Similarly, the Commission intends to codify the Part 3 Advisory by 
proposing to amend the end of the first sentence of regulation 
3.31(a)(1) with language that relieves the following applicants or 
registrants from filing a Form 3-R if the information to be reported is 
solely the result of an exchange disciplinary or access denial action: 
Futures commission merchants (``FCMs''), retail foreign exchange 
dealers (``RFEDs''), swap dealers (``SDs''), major swap participants 
(``MSPs''), commodity trading advisors (``CTAs''), commodity pool 
operators (``CPOs''), introducing brokers (``IBs''), floor traders 
(``FTs'') that are non-natural persons or leverage transaction 
merchants (``LTMs'').

III. Related Matters

A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') requires that agencies 
consider whether the regulations they propose will have a significant 
economic impact on a substantial number of small entities and, if so, 
provide a regulatory flexibility analysis respecting the impact.\39\ 
The part 9 rules proposed by the Commission will impact all SEFs and 
DCMs. The Commission has previously established certain definitions of 
``small entities'' to be used by the Commission in evaluating the 
impact of its regulations on small entities in accordance with the 
RFA.\40\ The Commission has also determined that DCMs and SEFs are not 
small entities for the purpose of the RFA.\41\
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    \39\ 5 U.S.C. 601 et seq.
    \40\ See 47 FR 18618 through 18621 (Apr. 30, 1982).
    \41\ See 47 FR 18618, 18619 (Apr. 30, 1982) (DCMs); 78 FR 33548 
(June 4, 2013) (SEFs).
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    The part 3 rules proposed herein would affect certain applicant or 
registrant FCMs, RFEDs, SDs, MSPs, CTAs, CPOs, IBs, FTs who are non-
natural persons, and LTMs who would no longer have to file a Form 3-R 
if the information to be reported is solely the result of an exchange 
disciplinary or access denial action. The Commission has previously 
determined that FCMs, RFEDS, SDs, MSPs, CPOs, and LTMs are not small 
entities for purposes of the RFA.\42\ Therefore, the requirements of

[[Page 7745]]

the RFA do not apply to those entities. With respect to CTAs, FTs, and 
IBs, the Commission has found it appropriate to consider whether such 
registrants should be deemed small entities for purposes of the RFA on 
a case-by-case basis, in the context of the particular Commission 
regulation at issue.\43\ As certain of these registrants may be small 
entities for purposes of the RFA, the Commission has considered whether 
this Proposal would have a significant impact on these registrants.
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    \42\ See Policy Statement and Establishment of Definitions of 
``Small Entities'' for Purposes of the Regulatory Flexibility Act, 
47 FR 18618 (Apr. 30, 1982) (FCMs and CPOs); Leverage Transactions, 
54 FR 41068 (Oct. 5, 1989) (LTMs); Regulation of Off-Exchange Retail 
Foreign Exchange Transactions and Intermediaries, 75 FR 55410, 55416 
(Sept. 10, 2010) (RFEDs); and Registration of Swap Dealers and Major 
Swap Participants, 77 FR 2613, 2620 (Jan. 19, 2012) (SDs and MSPs).
    \43\ See 47 FR 18620 (Apr. 30, 1982) (CTAs); Registration of 
Floor Traders; Mandatory Ethics Training for Registrants; Suspension 
of Registrants Charged With Felonies, 58 FR 19575, 19588 (Apr. 15, 
1993) (FTs); and Introducing Brokers and Associated Persons of 
Introducing Brokers, Commodity Trading Advisors and Commodity Pool 
Operators; Registration and Other Regulatory Requirements, 48 FR 
35248, 35276 (Aug. 3, 1983) (IBs).
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    The proposed amendment to Commission regulation 3.31 is technical 
and not substantive in nature. In 1999, the Commission published the 
Part 3 Advisory which relieved all applicants and registrants from 
filing a Form 3-R, as required under Commission regulation 3.31, if the 
information to be reported is solely the result of an exchange 
disciplinary or access denial action.\44\ As discussed in the preamble, 
the proposed amendment codifies the filing relief set forth in the Part 
3 Advisory and would not impose any new regulatory obligations on any 
registrant, including CTAs, FTs, and IBs. The Commission does not, 
therefore, expect small entities to incur any additional costs as a 
result of this Proposal. Consequently, the Commission finds that no 
significant economic impact on small entities will result from this 
Proposal.
---------------------------------------------------------------------------

    \44\ 64 FR 39912 (July 23, 1999).
---------------------------------------------------------------------------

    Accordingly, the Chairman, on behalf of the Commission pursuant to 
5 U.S.C. 605(b), certifies that the proposed rules will not have a 
significant economic impact on a substantial number of small entities.

B. Paperwork Reduction Act

1. Introduction
    The Paperwork Reduction Act of 1995 (``PRA'') 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.\45\ An agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid control number issued 
by the Office of Management and Budget (``OMB''). This NPRM contains 
recordkeeping and reporting requirements that are collections of 
information within the meaning of the PRA.
---------------------------------------------------------------------------

    \45\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The Proposal contains provisions that would qualify as collections 
of information, for which the Commission has already sought and 
obtained control numbers from the OMB. The titles for these collections 
of information are ``Part 38--Core Principles and Other Requirements 
for Designated Contract Markets'' (OMB Control Number 3038-0052) and 
``Part 37--Core Principles and Other Requirements for Swap Execution 
Facilities'' (OMB Control Number 3038-0074). If adopted, responses to 
these collections of information would be mandatory.
    As discussed below, the Commission is not seeking to amend 
information collections 3038-0052 or 3038-0074 because the Commission 
believes that the rule modifications proposed herein will not impose 
any new information collection requirements that require approval from 
OMB under the PRA. Accordingly, the Commission invites public comment 
on the accuracy of its estimate regarding the impact of proposed 
Commission regulation 9.11 on collections 3038-0052 and 3038-0074 and 
its determination that no additional recordkeeping or information 
collection requirements or changes to existing collection requirements 
would result from the Proposal.\46\
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    \46\ For collection 3038-0052, see OMB Control No. 3038-0052, 
available at http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=3038-0052. For collection 3038-0074, 
see OMB Control No. 3038-0074, available at http://www.reginfo.gov/public/do/PRAOMBHistory?ombControlNumber=3038-0074.
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2. Section 9.11 Amendments

    As discussed above, the proposed Commission regulation 9.11 
amendments are primarily technical and not substantive in nature. 
Commission regulation 9.11 currently requires that whenever an exchange 
makes a decision, pursuant to which disciplinary action or access 
denial to be imposed has become final, the exchange must provide 
written notice of such action to the person against whom the action was 
taken and to the Commission within 30 days thereafter. Among the 
proposed amendments to regulation 9.11, the Commission is clarifying 
the existing rules to formally incorporate SEFs under the requirements 
and therefore include references to the part 37 SEF regulations.\47\
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    \47\ 17 CFR part 37. As explained earlier in the preamble, SEFs 
are already subject to the part 9 reporting requirements under 
regulation 37.2, in which the Commission specified that SEFs shall 
comply with the requirements of part 9.
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    Furthermore, the Commission is proposing to add an additional 
element required to be included in the contents of the notice 
specifying which product type (as applicable) was involved in the 
adverse action. The Commission believes that by adding such additional 
element to the contents of the notice its impact on the burden would be 
de minimis. For example, to describe a product trading on a DCM, the 
notice might include the description, ``July 2016 Eurodollar future;'' 
while a product trading on a SEF may be a ``CDX North American High 
Yield Series 26 5 year.'' Additionally, as a result of the Commission's 
removal of part 8, the Commission is proposing to remove all cross-
references in regulation 9.11 to the part 8 regulations and replace 
these references with applicable regulations, guidance, and acceptable 
practices from parts 37 and 38.\48\ Finally, in 1999, the Commission 
published the Part 9 Advisory permitting exchanges to file 9.11 notices 
with the Commission or with the NFA.\49\ In an effort to codify the 
Part 9 Advisory and formally replace the regulation 9.11 requirement 
that written notice be provided to the Commission, the Commission 
proposes to amend regulation 9.11 to require notice be provided to the 
NFA via the BASIC system.
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    \48\ Removal of part 8 at 77 FR 66288, (Nov. 2, 2012); and 17 
CFR parts 37 and 38.
    \49\ 64 FR 39915 (July 23, 1999).
---------------------------------------------------------------------------

3. Clarification of Collections 3038-0052 and 3038-0074
    The Commission notes that all DCMs and SEFs are already subject to 
the part 9 reporting requirements.\50\ First, part 9 applies to DCMs, 
by explicitly defining ``exchange'' in Commission regulation 9.2(c) for 
purposes of the rules as ``any board of trade which has been designated 
as a contract market.'' \51\ Furthermore, former regulation 38.2, which 
was adopted by the Commission on August 10, 2001, specifically required 
DCMs to comply with part 9 (``2001 DCM Rulemaking'').\52\ In the 2001 
DCM Rulemaking, the Commission requested an OMB control number for part 
38 to account for the reporting

[[Page 7746]]

requirements, including part 9.\53\ The text of Commission regulation 
38.2 that specifically required DCMs to comply with part 9 was amended 
on June 19, 2012, and currently provides that DCMs shall comply with 
all applicable regulations under Title 17 of the Code of Federal 
Regulations, except for certain exempt provisions.\54\ Part 9 is not 
included in the list of exempt provisions. Accordingly, Commission 
regulation 38.2 still requires that DCMs comply with the part 9 rules, 
and therefore, the Commission regulation 9.11 reporting requirements. 
Since the proposed amendments to Commission regulation 9.11 are 
primarily technical, the Commission believes that these amendments 
would not impact the current burden estimates in the DCM 3038-0052 
collection.
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    \50\ 17 CFR part 9 and 38.2 [DCMs]; 17 CFR 37.2 [SEFs].
    \51\ 17 CFR 9.2(c).
    \52\ 66 FR 42277 (August 10, 2001).
    \53\ Id. at 42268.
    \54\ 77 FR 36697 (June 19, 2012); 17 CFR 38.2.
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    As noted above, SEFs are also subject to the part 9 reporting 
requirements.\55\ The pertinent reporting burden of Commission 
regulation 9.11 for SEFs is contained in Commission regulation 37.2, 
which was adopted on June 4, 2013.\56\ Among the applicable provisions 
with which SEFs must comply, Commission regulation 37.2 explicitly 
lists part 9.\57\ Because the proposed amendments to Commission 
regulation 9.11 are primarily technical, the Commission believes these 
amendments would not impact the current burden estimates in the SEF 
3038-0074 collection.\58\
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    \55\ 17 CFR 37.2.
    \56\ 78 FR 33476 (June 4, 2013).
    \57\ 17 CFR 37.2.
    \58\ Supra note 46.
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4. Information Collection Comments
    The Commission invites comment on any aspect of the proposed 
information collection requirements discussed above. Pursuant to 44 
U.S.C. 3506(c)(2)(B), the Commission will consider public comments on 
such proposed requirements in: (1) Evaluating whether the proposed 
collection of information is necessary for the proper performance of 
the functions of the Commission, including whether the information will 
have a practical use; (2) evaluating the accuracy of the Commission's 
estimate of the burden of the proposed collection of information, 
including the validity of the methodology and assumptions used; (3) 
enhancing the quality, utility, and clarity of the information proposed 
to be collected; and (4) minimizing the burden of collection of 
information on those who are to respond, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
information collection techniques.
    Copies of the submission from the Commission to OMB are available 
from the CFTC Clearance Officer, 1155 21st Street NW., Washington, DC 
20581, (202) 418-5160 or from http://RegInfo.gov. Persons desiring to 
submit comments on the proposed information collection requirements 
should send those comments to: The Office of Information and Regulatory 
Affairs, Office of Management and Budget, Room 10235, New Executive 
Office Building, Washington, DC 20503, Attention: Desk Officer of the 
Commodity Futures Trading Commission; (202) 395-6566 (fax); or 
[email protected] (email). Please provide the Commission with 
a copy of submitted comments so that all comments can be summarized and 
addressed in the final rulemaking, and please refer to the ADDRESSES 
section of this rulemaking for instructions on submitting comments to 
the Commission. OMB is required to make a decision concerning the 
proposed information collection requirements between thirty (30) and 
sixty (60) days after publication of the Proposal in the Federal 
Register. Therefore, a comment to OMB is best assured of receiving full 
consideration if OMB (as well as the Commission) receives it within 
thirty (30) days of publication of the Proposal.

C. Cost-Benefit Considerations

1. Introduction
    Section 15(a) of the CEA requires the Commission to consider the 
costs and benefits of its actions before promulgating a regulation 
under the CEA or issuing certain orders.\59\ Section 15(a) further 
specifies that the costs and benefits shall be evaluated in light of 
five broad areas of market and public concern: (1) Protection of market 
participants and the public; (2) efficiency, competitiveness, and 
financial integrity of the markets; (3) price discovery; (4) sound risk 
management practices; and (5) other public interest considerations. The 
Commission considers the costs and benefits resulting from its 
discretionary determinations with respect to the section 15(a) factors.
---------------------------------------------------------------------------

    \59\ 7 U.S.C. 19(a).
---------------------------------------------------------------------------

    The Commission considers the costs and benefits associated with the 
proposed amendments, including updating the pre-existing regulatory 
framework to incorporate SEFs, removing references to part 8 of the 
Commission's regulations, and revising the reporting and notice 
requirements for DCMs and SEFs. The Commission compares the costs and 
benefits of this rulemaking against a baseline of the status quo, the 
current requirements under part 3 and part 9. As discussed more fully 
below, the Commission preliminarily believes that the only new cost 
that would be imposed by the Proposal is the requirement in Commission 
regulation 9.13 for DCMs and SEFs to publish and maintain disciplinary 
notices on their respective Web sites.
2. Part 3 and Part 9 Technical Amendments
    As explained above, the proposed amendments to part 3 and part 9 
are primarily technical in nature. The Commission believes that these 
technical amendments will not impose any new costs on DCMs, SEFs, or 
market participants. For example, among the proposed changes, the 
Commission is clarifying the definition of ``exchange'' to include SEFs 
and updating the references to part 8, which was removed by the 
Commission in 2012, to instead cite to parallel provisions now 
contained in parts 37 and 38.\60\ Furthermore, the proposed revisions 
to Commission regulations 3.31 and 9.11 codify existing reporting 
procedures which were already authorized by the Commission in the Part 
3 Advisory and Part 9 Advisory.\61\ These proposed amendments do not 
substantively change the requirements that the Commission currently 
imposes on DCMs and SEFs.\62\ Rather, instead of providing the 9.11 
notices to the Commission, as required under the current part 9 rules, 
proposed regulation 9.11 will instead instruct exchanges to provide the 
notices to the NFA, as is permitted as an alternative method of 
compliance under the Part 9 Advisory.\63\
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    \60\ Removal of part 8 at 77 FR 66288 (Nov. 2, 2012); and 17 CFR 
parts 37 and 38. See, e.g., 17 CFR part 37 appendix B, Core 
Principle 2, paragraph (a)(13) and part 38, appendix B, Core 
Principle 13, paragraph (a)(6).
    \61\ Part 9 Advisory: 64 FR 39915 (July 23, 1999); Part 3 
Advisory: 64 FR 39912 (July 23, 1999).
    \62\ Supra note 46. As noted above in the PRA, the Commission 
believes the proposed substantive amendment to add an additional 
element required to be included in the contents of a 9.11 notice 
will not materially impact the costs imposed by this NPRM.
    \63\ 17 CFR 9.11.
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    There is also the ministerial benefit to codifying the Part 3 and 
Part 9 Advisories. Advisories are staff action and are not rules that 
have been promulgated by the Commission subject to public notice and 
comment. Thus, this rulemaking will achieve the benefit

[[Page 7747]]

of codifying the Part 3 Advisory and Part 9 Advisory into rules.
3. Summary of Proposed Amendments to Commission Regulation 9.13--
Publication of Notice
    As discussed above, proposed Commission regulation 9.13 would 
require all DCMs and SEFs to maintain and make readily accessible final 
notices of exchange disciplinary and access denial actions on their Web 
sites.\64\ This new requirement would replace the existing requirement 
in Commission regulation 9.13 that exchanges publish the notice in a 
conspicuous place on the exchange's premises.
---------------------------------------------------------------------------

    \64\ 17 CFR 9.13.
---------------------------------------------------------------------------

a. Costs
    The Commission believes that posting final disciplinary and access 
denial notices to exchange Web sites will slightly increase the costs 
for DCMs and SEFs. The Commission notes that the additional costs 
incurred by DCMs and SEFs would be offset in part due to the proposed 
amendment in Commission regulation 9.13 that would remove the 
requirement of posting disciplinary and access denial notices on the 
premises of the respective DCM or SEF. In order to estimate the 
additional costs, the Commission queried the NFA's BASIC to determine 
the total number of disciplinary and access denial actions filed by 
DCMs in 2015. Because SEFs did not post any disciplinary or access 
denial actions to BASIC in 2015, the numbers below reflect the 
disciplinary and access denial actions filed by the 15 DCMs presently 
registered with the Commission and provide the basis for estimating the 
number of disciplinary and access denial actions for SEFs annually.\65\
---------------------------------------------------------------------------

    \65\ As of November 9, 2016, 10 summary fines had been assessed 
by a total of four SEFs. The notices for such summary fines have 
been posted to BASIC. Because the Commission did not have a complete 
year of data for 2016, the Commission used the 2015 numbers of 
disciplinary and access denial actions to calculate the costs.
---------------------------------------------------------------------------

    Total number of reported disciplinary and access denial actions in 
BASIC by all DCMs in 2015: 452.
    In order to estimate the costs for SEFs, the Commission calculated 
the average number of disciplinary and access denial actions filed by 
DCMs, excluding the four DCMs with the largest number of reported 
disciplinary and access denial actions.\66\ The Commission notes that 
SEFs are relatively new entities with significantly less volume and 
fewer participants than the four DCMs that reported the highest number 
of disciplinary and access denial actions.\67\ Therefore, the 
Commission preliminary believes that the average number of disciplinary 
and access denial actions reported by the 11 other DCMs in 2015 provide 
a more appropriate comparison with respect to estimating the number of 
disciplinary and access denial actions for SEFs annually. As the SEFs 
mature, in terms of the number of participants and volume, the 
Commission anticipates that the number of disciplinary and access 
denial actions may increase accordingly.
---------------------------------------------------------------------------

    \66\ The DCMs with largest number of reported disciplinary and 
access denial actions are: ICE Futures U.S., CME, NYMEX, and CBOT.
    \67\ 78 FR 33476 (June 4, 2013). The SEF Final Rules implemented 
the SEF framework enacted by section 733 of the Dodd-Frank Act; 7 
U.S.C. 7b-3.
---------------------------------------------------------------------------

    Total number of reported disciplinary and access denial actions in 
BASIC by DCMs in 2015, excluding the 4 DCMs with the largest number of 
reported actions: 88.
    Average number of reported disciplinary and access denial actions 
in BASIC per DCM in 2015, excluding the 4 DCMs with the largest number 
of reported actions: 8.
    Currently, there are a total of 23 registered SEFs with the 
Commission. The Commission estimates that each SEF would report at 
least eight disciplinary and access denial actions annually in BASIC 
for an aggregate total of 184 disciplinary and access denial actions 
for all SEFs per year (eight actions multiplied by 23 SEFs equals 184 
actions). Thus, the total number of exchange disciplinary and access 
denial actions per year for all DCMs and SEFs is estimated to be 636 
(184 actions for SEFs plus the 452 actions for DCMs equals 636 total 
actions per year). The Commission anticipates each DCM and SEF would 
spend an additional 15 minutes per disciplinary notice to post on the 
exchange's Web site above the current requirement of posting the notice 
on the exchange's premises. Accordingly, the aggregate new burden of 
Commission regulation 9.13 is estimated to be 159 hours per year for 
the 15 DCMs and 23 SEFs (15 minutes multiplied by 636 anticipated 
actions per year equals 159 burden hours).
    The Commission expects that a compliance officer employed by the 
exchange will be posting the disciplinary or access denial action 
notices to the exchange Web site. According to recent Bureau of Labor 
Statistics National Occupational Employment and Wage Estimates, the 
mean hourly wage of an employee under occupation code 13-1041, 
``Compliance Officers,'' that is employed by the ``Securities and 
Commodity Exchanges'' industry is $46.01. Because DCMs and SEFs can be 
large, specialized entities that may engage employees with wages above 
the mean, the Commission has conservatively chosen to use a mean hourly 
wage of $50 per hour.\68\ Accordingly, the burden associated with 
posting the disciplinary notices on exchange Web sites will total 
approximately $7,950 per year for all of the 38 DCMs and SEFs, ($50 
multiplied by the anticipated 159 burden hours equals $7,950 per 
year).\69\
---------------------------------------------------------------------------

    \68\ Bureau of Labor Statistics, Occupational Employment and 
Wages: 13-1041 Compliance Officers, (May 2014), available at http://www.bls.gov/oes/current/oes131041.htm.
    \69\ The Commission acknowledges that requiring exchanges to 
post final notices of disciplinary and access denial actions on 
their Web sites may necessitate additional bandwidth. The Commission 
anticipates that any increased costs due to added bandwidth would be 
insignificant in its calculation of the total annual burden 
associated with this Proposal.
---------------------------------------------------------------------------

b. Benefits
    The Commission preliminarily believes that greater access to 
information regarding exchange disciplinary and access denial actions 
provides valuable guidance and information to exchange members, market 
participants, and the public. Releasing disciplinary information to the 
public can serve to deter and prevent future misconduct and to improve 
overall compliance standards in the futures and swaps industry. It also 
allows customers to consider member firms' and traders' disciplinary 
histories when considering whether to engage in business with them. In 
addition, firms may use such information to educate their traders and 
associated persons as to compliance matters, highlighting potential 
violations and related sanctions. Further, any firm or individual 
facing allegations of rule violations may access existing disciplinary 
decisions to gain greater insight on related facts and sanctions. The 
Commission believes that the added deterrence of publishing the 
disciplinary notices on the exchange Web sites and the enhanced 
investigative and educational benefits of making such information 
public will ultimately decrease the incidents of wrongdoing and market 
abuses which will benefit both market participants and the general 
public.
c. Section 15(a) Factors
    As noted above, section 15(a) of the CEA requires the Commission to 
consider the effects of its actions in light of the following five 
factors:
    (1) Protection of market participants and the public. The 
Commission

[[Page 7748]]

preliminarily believes that market participants and the public will 
benefit from the ministerial and conforming amendments proposed herein 
since they eliminate obsolete, vestigial provisions and references that 
otherwise could be construed to give rise to confusing inconsistencies 
between the Commission's regulations and the provisions of the CEA. 
Furthermore, the Commission preliminarily believes that the proposed 
substantive amendment to regulation 9.13, which would require exchanges 
to publish notice of final disciplinary and access denial actions on 
exchange Web sites, would increase transparency of exchange 
disciplinary actions and serve as a deterrence of future market abuses. 
These enhancements allow for operational efficiencies in oversight, 
increased deterrence from market abuses, and greater transparency of 
the exchange disciplinary process. Therefore, the Commission 
anticipates that the amendment to regulation 9.13 would result in 
improved protection of market participants and the public.
    (2) The efficiency, competitiveness, and financial integrity of the 
markets. The requirement that exchanges publish disciplinary notices 
and access denial actions on their Web site is intended to improve the 
operational efficiency, competitiveness and financial integrity of the 
futures and swaps markets by enabling the public and those who access 
the exchange Web site to be made aware of any disciplinary and access 
denial actions imposed by the exchange. As discussed above, the vast 
majority of trading no longer occurs in person on the exchange's 
premises. The Commission believes that the current requirement in 
regulation 9.13 of posting disciplinary and access denial actions on 
the exchange's premises provides little to no public notice of these 
actions. By publishing the notice on the exchange's Web site, the 
Commission believes that the efficiency, competitiveness and financial 
integrity of the markets would be bolstered by the deterrent effect 
achieved by posting the notice in a publicly accessible medium.
    (3) Price discovery. The Commission has not identified an impact on 
price discovery as a result of the proposed regulations, but seeks 
comment as to any potential impact. Will the proposed regulations 
impact, positively or negatively, the price discovery process?
    (4) Sound risk management practices. The Commission has not 
identified an impact on risk management practices as a result of the 
proposed regulations, but seeks comment as to any potential impact. 
Will the proposed regulations impact, positively or negatively, sound 
risk management practices?
    (5) Other public interest considerations. The Commission has not 
identified any other public interest considerations, but welcomes 
comment on whether this Proposal would promote public confidence in the 
integrity of derivatives markets by making notice of exchange 
disciplinary and access denial actions more readily available to the 
public. Will this Proposal impact, positively or negatively, any 
unidentified matter of interest to the public?
d. Request for Comments
    The Commission seeks additional information regarding the costs and 
benefits of the Proposal. Beyond the specific questions interspersed 
throughout its discussion above, the Commission requests comment on all 
aspects of its consideration of costs and benefits, including: 
Identification and assessment of any costs and benefits not discussed 
therein; data and any other information to assist or otherwise inform 
the Commission's ability to quantify or qualitatively describe the 
benefits and costs of the proposed rules; and substantiating data, 
statistics, and any other information to support positions posited by 
commenters with respect to the Commission's consideration of costs and 
benefits. Commenters also may suggest other alternatives to the 
proposed approach where the commenters believe that the alternatives 
would be appropriate under the CEA and provide a superior cost-benefit 
profile.

IV. Request for Comments

    The Commission requests comment on all aspects of the Proposal. 
Commenters are specifically encouraged to include any considerations 
related to the Commission's proposed notice and order delegating 
regulation 9.11 authority to the NFA.

List of Subjects

17 CFR Part 3

    Administrative practice and procedure, Brokers, Commodity futures, 
Major swap participants, Reporting and recordkeeping requirements, Swap 
dealers.

17 CFR Part 9

    Administrative practice and procedure, Commodity exchanges, 
Commodity futures.

    For the reasons stated in the preamble, the Commodity Futures 
Trading Commission proposes to amend 17 CFR chapter I as follows:

PART 3--REGISTRATION

0
1. The authority citation for part 3 continues to read as follows:

    Authority: 5 U.S.C. 552, 552b; 7 U.S.C. 1a, 2, 6a, 6b, 6b-1, 6c, 
6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 
13b, 13c, 16a, 18, 19, 21, and 23, as amended by Title VII of Pub. 
L. 111-203, 124 Stat. 1376.

0
2. In Sec.  3.31, revise paragraph (a)(1) to read as follows:


Sec.  3.31  Deficiencies, inaccuracies, and changes, to be reported.

    (a)(1) Each applicant or registrant as a futures commission 
merchant, retail foreign exchange dealer, swap dealer, major swap 
participant, commodity trading advisor, commodity pool operator, 
introducing broker, floor trader that is a non-natural person or 
leverage transaction merchant shall, in accordance with the 
instructions thereto, promptly correct any deficiency or inaccuracy in 
Form 7-R or Form 8-R that no longer renders accurate and current the 
information contained therein, with the exception of any change that 
requires withdrawal from registration under Sec.  3.33 or any change 
resulting from an exchange disciplinary or access denial action. Each 
such correction shall be prepared and filed in accordance with the 
instructions thereto to create a Form 3-R record of such change.
* * * * *

PART 9--RULES RELATING TO REVIEW OF EXCHANGE DISCIPLINARY, ACCESS 
DENIAL OR OTHER ADVERSE ACTIONS

0
3. The authority citation for part 9 is revised to read as follows:

    Authority: 7 U.S.C. 1a, 2, 6b-1, 6c, 7, 7a-2, 7b-3, 8, 9, 9a, 
12, 12a, 12c, 13b, 16a, 18, 19, 21.

0
4. In Sec.  9.1, revise paragraphs (b) and (c) to read as follows:


Sec.  9.1  Scope of rules.

* * * * *
    (b) Matters excluded. This part does not apply to and the 
Commission will not accept notices of appeal, or petitions for stay 
pending review, of:
    (1) Any arbitration proceeding, regardless of whether the 
proceeding involved a controversy between members of an exchange;
    (2) Except as provided in Sec. Sec.  9.11(a), 9.11(b)(3)(i) through 
(v), 9.11(c), 9.12(a) and 9.13 (concerning the notice, effective date 
and publication of a disciplinary or access denial action), any summary 
action permitted under the provisions of part 37, appendix B, Core 
Principle 2, paragraph (a)(13) of

[[Page 7749]]

this chapter or part 38, appendix B, Core Principle 13, paragraph 
(a)(6) of this chapter imposing a minor penalty for the violation of 
exchange rules relating to decorum or attire, or relating to the timely 
submission of accurate records required for clearing or verifying each 
day's transactions or other similar activities; and
    (3) Any exchange action arising from a claim, grievance, or dispute 
involving cash market transactions which are not a part of, or directly 
connected with, any transaction for the purchase, sale, delivery or 
exercise of a commodity for future delivery, a commodity option, or a 
swap.
    (4) The Commission will, upon its own motion or upon motion filed 
pursuant to Sec.  9.21(b), promptly notify the appellant and the 
exchange that it will not accept the notice of appeal or petition for 
stay of matters specified in this paragraph. The determination to 
decline to accept a notice of appeal will be without prejudice to the 
appellant's right to seek alternate forms of relief that may be 
available in any other forum.
    (c) Applicability of these part 9 rules. Unless otherwise ordered, 
these rules will apply in their entirety to all appeals, and matters 
relating thereto.
0
5. In Sec.  9.2, revise paragraphs (b), (c), (f), and (k) to read as 
follows:


Sec.  9.2  Definitions.

* * * * *
    (b) Disciplinary action means any suspension, expulsion or other 
penalty imposed on a person by an exchange for violations of rules of 
the exchange, including summary actions.
    (c) Exchange means a swap execution facility or any board of trade 
which has been designated as a contract market.
* * * * *
    (f) Member of an exchange means
    (1) Any person who is admitted to membership or has been granted 
membership privileges on an exchange; any employee, officer, partner, 
director or affiliate of such member or person with membership 
privileges including any associated person; and any other person under 
the supervision or control of such member or person with membership 
privileges; or
    (2) Any person who has trading privileges on an exchange.
* * * * *
    (k) Summary action means a disciplinary action resulting in the 
imposition of a penalty on a person for violation of rules of the 
exchange permitted under the provisions of part 37, appendix B, Core 
Principle 2, paragraph (a)(10)(vi) of this chapteror part 38, appendix 
B, Core Principle 13, paragraph (a)(4) (penalty for impeding progress 
of hearing); part 37, appendix B, Core Principle 2, paragraph (a)(14) 
of this chapter or part 38, appendix B, Core Principle 13, paragraph 
(a)(7) (emergency disciplinary actions) of this chapter; part 37, 
appendix B, Core Principle 2, paragraph (a)(13) (summary fines for 
violations of rules regarding timely submission of records) of this 
chapter; or part 38, appendix B, Core Principle 13, paragraph (a)(6) 
(summary fines for violations of rules regarding timely submission of 
records, decorum, or other similar activities) of this chapter.
0
6. Revise Sec.  9.3 to read as follows:


Sec.  9.3  Provisions referenced.

    Except as otherwise provided in this part, the following provisions 
of the Commission's rules relating to reparations contained in part 12 
of this chapter apply to this part: Sec.  12.3 (Business address; 
hours); Sec.  12.5 (Computation of time); Sec.  12.6 (Extensions of 
time; adjournments; postponements); Sec.  12.7 (Ex parte communications 
in reparation proceedings); and Sec.  12.12 (Signature).
0
7. In Sec.  9.4, revise paragraphs (a), (b), and (c) to read as 
follows:


Sec.  9.4  Filing and service; official docket.

    (a) Filing with the Proceedings Clerk; proof of filing; proof of 
service. Any document that is required by this part to be filed with 
the Proceedings Clerk must be filed by delivering it in person or by 
mail to: Proceedings Clerk, Office of Proceedings, Commodity Futures 
Trading Commission, Three Lafayette Centre, 1155 21st Street NW., 
Washington, DC 20581. To be timely filed under this part, a document 
must be delivered or mailed to the Proceedings Clerk within the time 
prescribed for filing. A party must use a means of filing which is at 
least as expeditious as that used in serving that document upon the 
other parties. Proof of filing must be made by attaching to the 
document for filing a statement of service as provided in Sec.  
10.12(a)(6) of this chapter.
    (b) Formalities of filing--(1) Number of copies. Unless otherwise 
specifically provided, an original and one conformed copy of all 
documents filed with the Commission in accordance with the provisions 
of this part must be filed with the Proceedings Clerk.
    (2) Title page. All documents filed with the Proceedings Clerk must 
include at the head thereof, or on a title page, the name of the 
Commission, the title of the proceeding, the docket number (if one has 
been assigned by the Proceedings Clerk), the subject of the particular 
document and the name of the person on whose behalf the document is 
being filed.
    (3) Paper, spacing, type. All documents filed with the Proceedings 
Clerk must be typewritten, must be on one grade of good white paper no 
less than 8 or more than 8\1/2\ inches wide and no less than 10\1/2\ or 
more than 11\1/2\ inches long, and must be bound on the top only. They 
must be double-spaced, except for long quotations (3 or more lines) and 
footnotes which should be single-spaced.
    (4) Signature. The original copy of all papers must be signed in 
ink by the person filing the same or by his or her duly authorized 
agent or attorney.
    (c) Service--(1) General requirements. All documents filed with the 
Proceedings Clerk must, at or before the time of filing, be served upon 
all parties. A party must use a means of service which is at least as 
expeditious as that used in filing that document with the Proceedings 
Clerk. One copy of all motions, petitions or applications made in the 
course of the proceeding, all notices of appeal, all briefs, and 
letters to the Commission or an employee thereof must be served by a 
party upon all other parties.
    (2) Manner of service. Service may be either personal or by mail. 
Service by mail is complete upon deposit of the document in the mail. 
Where service is effected by mail, the time within which the person 
served may respond thereto will be increased by three days.
    (3) Designation of person to receive service. The first document 
filed in a proceeding by or on behalf of any party must state on the 
first page the name and postal address of the person who is authorized 
to receive service for the party of all documents filed in the 
proceeding. Thereafter, service of documents must be made upon the 
person authorized unless service on a different authorized person or on 
the party himself or herself is ordered by the Commission, or unless 
pursuant to Sec.  9.8 the person authorized is changed by the party 
upon due notice to all other parties. Parties must file and serve 
notification of any changes in the information provided pursuant to 
this subparagraph as soon as practicable after the change occurs.
* * * * *
0
8. In Sec.  9.8, revise paragraph (a)(1) to read as follows:


Sec.  9.8  Practice before the Commission.

    (a) Practice--(1) By non-attorneys. An individual may appear pro se 
(on his or her own behalf); a general partner may represent the 
partnership; a bona fide officer of a corporation, trust or

[[Page 7750]]

association may represent the corporation, trust or association.
* * * * *
0
9. In Sec.  9.9, revise paragraphs (b)(3) and (b)(4) to read as 
follows:


Sec.  9.9  Waiver of rules; delegation of authority.

* * * * *
    (b) * * *
    (3) The General Counsel, or his or her designee, may submit to the 
Commission for its consideration any matter which has been delegated 
pursuant to paragraph (b)(1) of this section.
    (4) Nothing in this section will be deemed to prohibit the 
Commission, at its election, from exercising the authority delegated to 
the General Counsel, or his or her designee, under this section.
0
10. Revise Sec.  9.11 to read as follows:


Sec.  9.11  Form, contents and delivery of notice of disciplinary or 
access denial action.

    (a) When required. Whenever an exchange decision pursuant to which 
a disciplinary action or access denial action is to be imposed has 
become final, the exchange must, within thirty days thereafter, provide 
written notice of such action to the person against whom the action was 
taken and notice to the National Futures Association (``NFA'') through 
the NFA's Background Affiliation Status Information Center (``BASIC'') 
system: Provided, That a designated contract market is not required to 
notify the NFA of any summary action, as permitted under the provisions 
of part 38, appendix B, Core Principle 13, paragraph (a)(6) of this 
chapter, which results in the imposition of minor penalties for the 
violation of exchange rules relating to decorum or attire. No final 
disciplinary or access denial action may be made effective by the 
exchange except as provided in Sec.  9.12.
    (b) Contents of notice. For purposes of this part:
    (1) The written notice of a disciplinary action or access denial 
action provided to the person against whom the action was taken by a 
designated contract market must be a copy of a written decision which 
accords with:
    (i) Part 38, appendix B, Core Principle 13, paragraph (a)(3) of 
this chapter in the case of settlement offers;
    (ii) Section 38.708 of this chapter in the case of decisions; or
    (iii) Part 38, appendix B, Core Principle 13, paragraph (a)(5)(iv) 
of this chapter in the case of appeal decisions of this chapter 
(including copies of any materials incorporated by reference) or other 
written notice which must include items listed in paragraphs (b)(3)(i)-
(vi) of this section.
    (2) The written notice of a disciplinary action or access denial 
action provided to the person against whom the action was taken by a 
swap execution facility must be a copy of a written decision which 
accords with:
    (i) Part 37, appendix B, Core Principle 2, paragraph (a)(9) of this 
chapter in the case of settlement offers;
    (ii) Section 37.206(d) of this chapter in the case of decisions; or
    (iii) Part 37, appendix B, Core Principle 2, paragraph (a)(11)(iv) 
of this chapter in the case of appeal decisions of this chapter 
(including copies of any materials incorporated by reference) or other 
written notice which must include items listed in paragraphs (b)(3)(i) 
through (vi) of this section.
    (3) The notice of a disciplinary action or access denial action 
provided to the NFA must include only the items listed in the following 
paragraphs (i) through (v):
    (i) The name of the person against whom the disciplinary action or 
access denial action was taken;
    (ii) A statement of the reasons for the disciplinary action or 
access denial action, detailing the exchange product which was 
involved, as applicable, and whether the violation that resulted in the 
action also resulted in financial harm to any customers together with a 
listing of any rules which the person who was the subject of the 
disciplinary action or access denial action was charged with having 
violated or which otherwise serve as the basis of the exchange action;
    (iii) A statement of the conclusions and findings made by the 
exchange with regard to each rule violation charged or, in the event of 
settlement, a statement specifying those rule violations which the 
exchange has reason to believe were committed;
    (iv) The terms of the disciplinary action or access denial action;
    (v) The date on which the action was taken and the date the 
exchange intends to make the disciplinary or access denial action 
effective; and
    (vi) Except as otherwise provided in Sec.  9.1(b), a statement 
informing the party subject to the disciplinary action or access denial 
action of the availability of Commission review of the exchange action 
pursuant to section 8c of the Act and this part.
    (c) Delivery and filing of the notice. Delivery of the notice must 
be made either personally to the person who was the subject of the 
disciplinary action or access denial action or by mail to such person 
at that person's last known address. Filing of the notice with the NFA 
is accomplished when an authorized exchange employee verifies the 
accuracy of the information entered into BASIC.
    (d) Effect of delivery by mail. Delivery by mail to the person 
disciplined or denied access will be complete upon deposit in the mail 
of a properly addressed and postpaid document. Where delivery to the 
person disciplined or denied access is effected by such mail, the time 
within which a notice of appeal or petition for stay may be filed will 
be increased by three days.
    (e) Certification. Copies of the notice and the submission of any 
additional information provided pursuant to this section must be 
certified as true and correct by a duly authorized officer, agent or 
employee of the exchange. Notice filed with the NFA is deemed certified 
when an authorized exchange employee verifies the accuracy of the 
information entered into BASIC.
0
11. Revise Sec.  9.12 to read as follows:


Sec.  9.12  Effective date of disciplinary or access denial action.

    (a) Effective date. Any disciplinary or access denial action taken 
by an exchange will not become effective until at least fifteen days 
after the written notice prescribed by Sec.  9.11 is delivered to the 
person disciplined or denied access; Provided, however, That the 
exchange may cause a disciplinary action to become effective prior to 
that time if:
    (1) As permitted by part 37, appendix B, Core Principle 2, 
paragraph (a)(14) of this chapter or part 38, appendix B, Core 
Principle 13, paragraph (a)(7) (emergency disciplinary actions) of this 
chapter, the exchange reasonably believes, and so states in its written 
decision, that immediate action is necessary to protect the best 
interests of the marketplace; or
    (2) As permitted by part 37, appendix B, Core Principle 2, 
paragraph (a)(10)(vi) of the chapter or part 38, appendix B, Core 
Principle 13, paragraph (a)(4) (hearings) of this chapter, the exchange 
determines, and so states in its written decision, that the actions of 
a person who is within the exchange's jurisdiction has impeded the 
progress of a disciplinary hearing; or
    (3) As permitted by part 37, appendix B, Core Principle 2, 
paragraph (a)(13) (summary fines for violations of rules regarding 
timely submission of records) of this chapter or part 38, appendix B, 
Core Principle 13, paragraph (a)(6) (summary fines for violations of 
rules regarding timely submission of records, decorum, or other similar 
activities) of

[[Page 7751]]

this chapter, the exchange determines that a person has violated 
exchange rules relating to decorum or attire, or timely submission of 
accurate records required for clearing or verifying each day's 
transactions or other similar activities; or
    (4) The person against whom the action is taken has consented to 
the penalty to be imposed and to the timing of its effectiveness.
    (b) Notice of early effective date. If the exchange determines in 
accordance with paragraph (a)(1) of this section that a disciplinary 
action will become effective prior to the expiration of fifteen days 
after written notice thereof, it must notify the person disciplined in 
writing, either personally or by email to the person's last known email 
address, stating the reasons for the determination. The exchange must 
also immediately notify the Commission by email to [email protected]. 
Where notice is delivered by email, the time within which the person so 
notified may file a petition for stay pursuant to Sec.  9.24(a)(2) will 
be increased by one day.
0
12. Revise Sec.  9.13 to read as follows:


Sec.  9.13  Publication of notice.

    Whenever an exchange suspends, expels or otherwise disciplines, or 
denies any person access to the exchange, it must make public its 
findings by disclosing at least the information contained in the notice 
required by Sec.  9.11(b). An exchange must make such findings public 
as soon as the disciplinary action or access denial action becomes 
effective in accordance with the provisions of Sec.  9.12 by posting a 
notice on its Web site to which its members and the public regularly 
have access. Such notice must be maintained and readily available on 
the exchange's Web site.
0
13. In Sec.  9.24, revise paragraph (a)(2) to read as follows:


Sec.  9.24  Petition for stay pending review.

    (a) * * *
    (2) Within ten days after a notice of summary action has been 
delivered in accordance with Sec.  9.12(b) to a person who is the 
subject of a summary action permitted by part 37, appendix B, Core 
Principle 2, paragraph (a)(14) or part 38, appendix B, Core Principle 
13, paragraph (a)(7) (emergency disciplinary actions) of this chapter, 
that person may petition the Commission to stay the effectiveness of 
the summary action pending completion of the exchange proceeding.
* * * * *
0
14. Revise Sec.  9.31 to read as follows:


Sec.  9.31  Commission review of disciplinary or access denial action 
on its own motion.

    (a) Request for additional information. Where a person disciplined 
or denied access has not appealed the exchange decision to the 
Commission, upon review of the notice specified in Sec.  9.11, the 
Division of Market Oversight or the Division of Swap Dealer and 
Intermediary Oversight may request that the exchange file with the 
Division the record of the exchange proceeding, or designated portions 
of the record, a brief statement of the evidence and testimony adduced 
to support the exchange's findings that a rule or rules of the exchange 
were violated and such recordings, transcripts and other documents 
applicable to the particular exchange proceeding as the Division may 
specify. The exchange must promptly advise the person who is the 
subject of the disciplinary or access denial action of the Division's 
request. Within thirty days after service of the Division's request, 
the exchange must file the information requested with the Division in 
the manner requested by the Division and, upon request, deliver that 
information to the person who is the subject of the disciplinary or 
access denial action. Delivery to the person who is the subject of the 
disciplinary or access denial action must be in the manner prescribed 
by Sec.  9.11(c). A person subject to the disciplinary action or access 
denial action requesting a copy of the information furnished to the 
Division must, if the exchange rules so provide, agree to pay the 
exchange reasonable fees for printing the copy.
    (b) Review on motion of the Commission. The Commission may 
institute review of an exchange disciplinary or access denial action on 
its own motion. Other than in extraordinary circumstances, such review 
will be initiated within 180 days after the NFA has received the notice 
of exchange action provided for in Sec.  9.11. If the Commission should 
institute review on its own motion, it will issue an order permitting 
the person who is the subject of the disciplinary or access denial 
action an opportunity to file an appropriate submission, and the 
exchange an opportunity to file a reply thereto.

    Issued in Washington, DC, on January 13, 2017, by the 
Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix to Amendments to Parts 3 and 9 of the Commodity Futures 
Trading Commission's Rules--Commission Voting Summary

    On this matter, Chairman Massad and Commissioners Bowen and 
Giancarlo voted in the affirmative. No Commissioner voted in the 
negative.

[FR Doc. 2017-01232 Filed 1-19-17; 8:45 am]
BILLING CODE 6351-01-P