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  • Commodity Futures Trading Commission 17 CFR Part 171 Rules Relating To Review of National Futures Association Decisions in Disciplinary, Membership Denial, Registration and Member Responsibility Actions[Federal Register: August 2, 2007 (Volume 72, Number 148)]

    [Rules and Regulations]

    [Page 42276-42277]

    From the Federal Register Online via GPO Access []





    17 CFR Part 171

    RIN 3038-AC43

    Rules Relating To Review of National Futures Association

    Decisions in Disciplinary, Membership Denial, Registration and Member

    Responsibility Actions

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Final Rule.


    SUMMARY: The Commodity Futures Trading Commission (``Commission'' or

    ``CFTC'') hereby amends 17 CFR Part 171, by adding language to

    Commission Rule Sec. 171.9(b) (manner of service), allowing for

    service by facsimile (``fax'') or by electronic means (``e-mail''),

    making either means of service effective upon receipt. The amendment

    will also indicate that parties who consent to accepting service of

    documents by electronic means or fax in the underlying NFA action also

    consent to accepting service by the same means in proceedings under

    Part 171.

    DATES: August 2, 2007.

    FOR FURTHER INFORMATION CONTACT: Thuy Dinh, Office of the General

    Counsel, Commodity Futures Trading Commission, Three Lafayette Centre,

    1155 21st Street, NW., Washington, DC 20581. Telephone: (202) 418-5128.

    SUPPLEMENTARY INFORMATION: On October 9, 1990, the Commission adopted

    Part 171 to establish standards and procedures for its review of

    decisions of registered futures associations such as the National

    Futures Association (``NFA'') in disciplinary actions, membership

    denial actions, registration actions and member responsibility actions.

    55 FR 41061. From the time Part 171 was promulgated until now,

    Commission Rule 171.9(b) provides only for service by personal delivery

    (effective upon receipt) or service by mail (effective upon deposit).

    On May 22, 2007, the NFA asked the Commission to amend language to Rule

    171.9(b), to allow service by fax and e-mail. In proposing the

    amendment, NFA cited three supporting arguments: (1) To avoid undue

    delay (due to cautionary procedures adopted in the post-September 11

    climate, postal mail to U.S. government agencies is often delayed and

    thus is not as effective as it used to be prior to September 11); (2)

    to take advantage of technological means of service, which will be

    faster and less costly than the mails; (3) to

    [[Page 42277]]

    streamline procedures. NFA cites Commission Rules under 17 CFR Part 10,

    which allows for service of documents by fax in enforcement

    proceedings. In addition, it cites its own rules governing arbitration,

    compliance and disciplinary cases as allowing service by both fax and

    e-mail. Thus, NFA asserts, to allow service by fax and e-mail in Part

    171 would make the process more efficient.

    After reviewing NFA's proposed amended language and its

    justifications for the proposal, the Commission has decided to adopt

    NFA's request in its entirety. Amending the 17 CFR 171.9(b) to allow

    for service by fax and e-mail will(a) enhance the efficiency of

    proceedings under Part 171; and (b) comport with the various

    capabilities of today's changing world.

    Related Matters

    A. No Notice Is Required Under 5 U.S.C. 553

    The Commission has determined that this amendment to Part 171 is

    exempt from the provisions of the Administrative Procedure Act, 5

    U.S.C. 553, which generally require notice of proposed rulemaking and

    provide other opportunities for public participation. However, 5 U.S.C.

    553 gives an agency discretion not to provide notice for ``rules of

    agency organization, procedure, or practice.'' Notice and public

    procedure are unnecessary in this case. The proposed amendment, if made

    effective immediately, will actually promote efficiency and facilitate

    the Commission's core mission. For the above reasons, the notice

    requirements under 5 U.S.C. 553 are inapplicable.

    B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq.,

    requires agencies with rulemaking authority to consider the impact

    those rules will have on small businesses. With respect to persons

    seeking Commission reviews of NFA adjudicatory decisions, the

    amendments will impose no additional regulatory burden. Commission

    review of NFA disciplinary and membership denial actions has been

    carried out pursuant to 17 CFR Part 171 since 1990. These amendments to

    17 CFR 171.9(b) do not present any significant changes and will in fact

    ease the regulatory burden by providing more options, greater certainty

    and predictability concerning manners of service under Part 171.

    Accordingly, the Acting Chairman, on behalf of the Commission, hereby

    certifies, pursuant to 5 U.S.C. 605(b), that the amendments will not

    have a significant economic impact on a substantial number of small


    C. Paperwork Reduction Act

    The amendments to Part 171 rules do not impose a burden within the

    meaning and intent of the Paperwork Reduction Act of 1980, 44 U.S.C.

    3501, et seq.

    D. Cost-Benefit Analysis

    Section 15(a) of the Commodity Exchange Act, 7 U.S.C. 19(a),

    requires the Commission to consider the costs and benefits of its

    action before issuing a new regulation. Section 15(a) further specifies

    that 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

    futures markets; (3) price discovery; (4) sound risk management

    practices; and (5) other public interest considerations. Accordingly,

    the Commission can, in its discretion, give greater weight to any one

    of the five enumerated areas of concern and can, in its discretion,

    determine that notwithstanding its costs, a particular rule is

    necessary or appropriate to protect the public interest or to

    effectuate any of the provisions, or accomplish any of the purposes, of

    the Commodity Exchange Act.

    The amendments to Part 171 will not create any significant change

    in the Commission's appellate process or impose new burdens or costs

    thereon. In fact, the amendments should enhance the protection of

    market participants and the public by making service more certain,

    faster and cheaper.

    After considering these above factors, the Commission has

    determined to amend Part 171, as set forth below.

    List of Subjects in 17 CFR Part 171

    Administrative practice and procedure, Commodity exchanges,

    Commodity futures.


    In consideration of the following, and pursuant to authority contained

    in the Commodity Exchange Act, the Commission hereby amends chapter I

    of title 17 of the Code of Federal Regulations to read as follows:





    1. The authority citation for Part 171 continues to read as follows:

    Authority: 7 U.S.C. 4a, 12a, and 21.


    2. Section 171.9 is amended by revising paragraph (b) to read as


    Sec. 171.9 Service

    * * * * *

    (b) Manner of Service: Service may be made by personal delivery

    (effective upon receipt), mail (effective upon deposit), facsimile

    (effective upon receipt) or electronic mail (effective upon receipt).

    When service is effected by mail, the time within which the person

    served may respond thereto shall be increased by five days. Parties who

    consent to accepting service of documents by electronic means in the

    underlying NFA action also consent to accepting service by the same

    means in proceedings under this Part 171.

    * * * * *

    Issued in Washington, DC on the 26th of July 2007, by the


    Eileen A. Donovan,

    Acting Secretary of the Commission.

    [FR Doc. E7-14922 Filed 8-1-07; 8:45 am]

    BILLING CODE 6351-01-P

    Updated August 02, 2007

    Last Updated: August 4, 2007