[The Regulatory Plan and Unified Agenda of Federal Regulatory and Deregulatory Actions]
[Commodity Futures Trading Commission Regulatory Plan]
[From the U.S. Government Printing Office, www.gpo.gov]

Federal Register / Vol. 61, No. 231 / Friday, November 29, 1996 / The
                            Regulatory Plan

[[Page 62199]]

COMMODITY FUTURES TRADING COMMISSION (CFTC)
Statement of Regulatory Priorities
The regulatory objectives of the Commodity Futures Trading Commission 
are to ensure that the commodity futures and option markets remain 
competitive and respond to underlying supply and demand factors by 
detecting and preventing threats of price manipulation, abusive trading 
practices, fraud, and other market disruptions, safeguarding the 
financial soundness of those markets, and providing for appropriate 
customer protection of those who trade on those markets. Futures 
markets that are free of manipulation and other anticompetitive forces 
can most effectively perform their vital economic functions of price 
discovery and risk transfer. To these ends, the Commission's objectives 
include protection of customer funds, ensuring the financial integrity 
of regulated intermediaries, and protection of customers from abusive 
trade practices.
_______________________________________________________________________
CFTC

                              -----------

                          PROPOSED RULE STAGE

                              -----------

157.  USE OF ELECTRONIC MEDIA BY COMMODITY POOL OPERATORS AND 
COMMODITY TRADING ADVISORS
Priority:


Other Significant


Legal Authority:


 7 USC 2; 7 USC 6b; 7 USC 6c; 7 USC 6l; 7 USC 6m; 7 USC 6n; 7 USC 6o; 7 
USC 12g


CFR Citation:


 17 CFR 4.1; 17 CFR 4.2; 17 CFR 4.21; 17 CFR 4.26; 17 CFR 4.31; 17 CFR 
4.36


Legal Deadline:


None


Abstract:


The CFTC is proposing certain technical changes to its rules governing 
filing and distribution of Disclosure Documents by commodity pool 
operators (CPOs) and commodity trading advisors (CTAs). These proposed 
rule amendments are intended to clarify certain rules that are premised 
upon the filing and distribution of paper documents, in light of the 
views set forth in the Commissions's recent interpretative release 
concerning the use of electronic media by CPOs and CTAs.


Statement of Need:


These rule amendments are intended to obviate any potential for 
uncertainty when CPOs and CTAs elect to use electronic media to 
communicate or to distribute Disclosure Documents pursuant to the 
requirements of CFTC rules that were adopted with paper-based documents 
in mind. These rule amendments should facilitate the use of electronic 
media by CPOs and CTAs in a manner consistent with the purposes of 
existing disclosure requirements.


Alternatives:


The proposed revisions apply only in the event that a CPO or CTA elects 
to use electronic media, and they do not apply where a registrant 
elects to use traditional paper-based means to deliver a Disclosure 
Document or otherwise to communicate.


Anticipated Costs and Benefits:


These proposed rule amendments should facilitate the use of electronic 
media, on a voluntary basis, by CPOs and CTAs and this should promote 
efficiency and reduce costs.


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM            61 FR 44009                                    08/27/96
NPRM Comment Period End                                        10/28/96
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Christopher W. Cummings
Attorney Advisor
Division of Trading and Markets
Commodity Futures Trading Commission
1155 21st Street NW.
Washington, DC 20581
Phone: 202 418-5445
RIN: 3038-AB17
_______________________________________________________________________
CFTC

                              -----------

                            FINAL RULE STAGE

                              -----------

158. RISK ASSESSMENT FOR HOLDING COMPANY SYSTEMS
Priority:


Other Significant


Legal Authority:


 7 USC 6f(c)


CFR Citation:


 17 CFR 1.14; 17 CFR 1.15


Legal Deadline:


None


Abstract:


On December 21, 1994, the Commission adopted, as phase 1 of the risk 
assessment rulemaking, final rules with respect to maintenance and 
filing of organizational charts, risk management policies, procedures 
and systems, and consolidated and consolidating financial statements. 
It also proposed ``trigger'' event reporting in the event of a 20 
percent decline in a futures commission merchant's (FCM's) adjusted net 
capital. The Commission deferred action on the balance of the proposed 
rules, which related to reporting of position data and other data 
concerning FCM affiliates. With respect to the second phase of the 
rulemaking process, the Commission's staff will continue to work with 
other financial regulators, particularly the Securities and Exchange 
Commission, to design a reporting framework that is harmonized across 
regulatory structures and, to the extent possible, reflective of a 
consensus as to which data are most meaningful to regulators and can be 
provided without undue burden.


Statement of Need:


These rules, authorized by Congress in section 229 of the Futures 
Trading Practices Act of 1992, Public Law 102-546, 106 Stat. 3590 
(1992), are intended to enhance the Commission's financial surveillance 
program by providing the Commission with access to information 
concerning the activities of affiliates of registered FCMs whose 
activities are reasonably likely to have a material impact on the 
financial or operational condition of the FCM. These adopted rules 
require registered FCMs to maintain certain records concerning the 
financial activities of such material affiliates, to file certain 
information with the Commission on an annual basis, and to provide 
additional information to the Commission upon the occurrence of 
specified events. The records required to be maintained and the 
information required to be filed routinely include an organizational 
chart, risk management policies, and consolidated and consolidating 
financial statements. In addition, notice of a 20 percent decline in an 
FCMs adjusted net capital is required. Proposals related to securities 
and

[[Page 62200]]

commodity position data, financial instrument holdings, information 
regarding positions of affiliates carried by FCM's, as well as certain 
other ``trigger'' events for reporting purposes have been deferred.
The Commission views these rules as necessary to fulfill its objectives 
of protecting customer funds and ensuring the financial integrity of 
regulated intermediaries. The rules are intended to enhance the 
safeguards of customer funds by providing the Commission with increased 
access to material information concerning the operations of affiliates 
of the FCM whose activities may expose the FCM to financial or 
operational risks. The new statutory authority under which these rules 
were adopted recognizes that, as illustrated by the experience of the 
CFTC and other regulators with several recent failures of regulated 
brokerage firms, the operations of regulated FCMs may be materially 
affected by, and only understood in conjunction with, the activities of 
affiliated entities, many of which may be unregulated. Concomitantly, 
the effectiveness of ongoing financial oversight programs may depend 
upon access to information concerning risks to the FCM created by 
affiliate activity, and the efficacy of regulatory responses to 
financial problems at the regulated entity may be enhanced by access to 
information concerning relevant affiliate activity.


Alternatives:


The proposals provide alternative filing options for an FCM that is 
also a securities broker-dealer, or that is part of a holding company 
with affiliates subject to the oversight of a Federal banking agency, 
State insurance commission, or a foreign regulator with which the 
Commission has an information-sharing agreement to avoid duplicative 
reporting burdens. The staff has also consulted extensively with other 
financial regulators, and continues to do so, to explore the extent to 
which they may share with the Commission on a confidential basis 
relevant risk assessment information concerning entities subject to 
their supervision so as to reduce duplicative requirements.


Anticipated Costs and Benefits:


As a financial regulator, the Commission is acutely aware of the costs 
of regulation. Throughout its history, the Commission has taken into 
account the costs of its proposed regulations in order to ensure that 
the benefits of its regulations outweigh the costs. To date, we know of 
no Commission regulation that adversely affected small entities as 
defined under the Regulatory Flexibility Act, 5 USC 601-611 (1988).


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM            59 FR 9689                                     03/01/94
NPRM Comment Period End                                        07/01/94
Phase I Risk Ass59 FR 66674 Holding Company Systems            12/28/94
Final Action                                                   09/00/97
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Lawrence T. Eckert
Attorney Advisor
Division of Trading and Markets
Commodity Futures Trading Commission
1155 21st Street NW.
Washington, DC 20581
Phone: 202 418-5449
RIN: 3038-AB01
_______________________________________________________________________
CFTC
159. PROHIBITION ON VOTING BY INTERESTED MEMBERS
Priority:


Other Significant


Legal Authority:


 7 USC 7a(a)(17)


CFR Citation:


 17 CFR 1.67; 17 CFR 1.69


Legal Deadline:


None


Abstract:


The regulation will implement the provisions of section 217 of the 
Futures Trading Practices Act of 1992, which require contract markets 
to adopt rules to avoid conflicts of interest in deliberations and 
voting by members of the governing board and disciplinary and other 
oversight committees. The rulemaking will define the relationships 
between a named party in interest and a member of the governing board 
or committee that would require abstention from deliberations and 
voting. The rulemaking will also provide guidelines on situations that 
would require a member to abstain from voting on a significant action 
because of a substantial financial interest in the outcome of the vote, 
based on positions held personally or at an affiliated firm, as well as 
on other matters addressed by the statute. The action potentially 
impacts the selection and composition of contract market governing 
boards and committees.


Statement of Need:


This rulemaking will further the regulatory objective of oversight of 
contract markets so as to assure that the markets remain open, 
competitive, and efficient.


Alternatives:


These rules are required by statutory mandate set forth in the Futures 
Trading Practices Act of 1992. The Commission intends to pursue this 
rulemaking to achieve rules that will fulfill this statutory mandate in 
a cost-effective manner.


Anticipated Costs and Benefits:


As a financial regulator, the Commission is acutely aware of the costs 
of regulation. Throughout its history, the Commission has taken into 
account the costs of its proposed regulations in order to ensure that 
the benefits of its regulations outweigh the costs. To date, we know of 
no Commission regulation that adversely affected small entities as 
defined under the Regulatory Flexibility Act, 5 U.S.C. 601-611 (1988).


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM            61 FR 19869                                    05/03/96
NPRM Comment Period End                                        07/02/96
Final Action                                                   10/00/96
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
David P. Van Wagner
Special Counsel
Division of Trading and Markets
Commodity Futures Trading Commission
1155 21st Street NW.
Washington, DC 20581
Phone: 202 418-5481
RIN: 3038-AB03

[[Page 62201]]

_______________________________________________________________________
CFTC
160. FINANCIAL REPORTING AND DEBT-EQUITY RATIO REQUIREMENTS FOR FUTURES 
COMMISSION MERCHANTS AND INTRODUCING BROKERS
Priority:


Other Significant


Legal Authority:


 17 USC 6f; 17 USC 6g; 17 USC 12a


CFR Citation:


 17 CFR 1.10; 17 CFR 1.12; 17 CFR 1.17; 17 CFR 1.18; 17 CFR 1.52; 17 
CFR 3.33; 17 CFR 145.5; 17 CFR 147.3


Legal Deadline:


None


Abstract:


The CFTC is proposing: (1) to amend its financial reporting cycle such 
that, among other things, FCMs and IBs would be required to submit 
unaudited financial reports within 17 business days, and certified 
year-end financial reports within 60 calendar days, of the ``as of'' 
date of the report (currently 45 calendar days and 90 calendar days are 
permitted, respectively); and (2) to amend its debt-equity ratio rule 
such that the 30 percent minimum equity requirement would apply to all 
of a firm's capital, rather than only to that portion of a firm's 
capital necessary to meet the minimum financial requirement. The 
proposals follow discussions at a capital roundtable held in September 
1995 where it was suggested that the CFTC explore ways to further 
harmonize its financial rules with those of the Securities and Exchange 
Commission. These proposals would achieve that objective and the CFTC 
also believes that it is appropriate to propose these amendments given 
the speed and complex nature of today's financial markets.


Statement of Need:


The rule proposals are intended to further harmonize the Commission's 
financial rules with those of the Securities and Exchange Commission. 
Many firms are dually registered with the CFTC and the SEC so the 
change in reporting cycles should not require a change in operations. 
The Commission also believes that more prompt reporting by all firms is 
appropriate in today's financial environment.


Alternatives:


The proposals were published for comment and the Commission will 
carefully consider the comments of interested parties.


Anticipated Costs and Benefits:


As a financial regulator, the CFTC is acutely aware of the costs of 
regulation. Throughout its history, the Commission has taken into 
account the costs of its proposed regulations in order to ensure that 
the benefits of its regulations outweigh the costs. To date, we know of 
no Commission regulation that adversely affected small entities as 
defined under the Regulatory Flexibility Act, 5 U.S.C. 601-611 (1988).


Timetable:
_______________________________________________________________________
Action                                 DFR Cite

_______________________________________________________________________
NPRM            61 FR 7080                                     02/26/96
NPRM Comment Period End                                        03/27/96
Final Action                                                   03/00/97
Small Entities Affected:


None


Government Levels Affected:


None


Agency Contact:
Lawrence B. Patent
Associate Chief Counsel
Division of Trading and Markets
Commodity Futures Trading Commission
1155 21st Street NW.
Washington, DC 20581
Phone: 202 418-5439
RIN: 3038-AB13
BILLING CODE 6351-01-F