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e7-16705

  • FR Doc E7-16705[Federal Register: August 23, 2007 (Volume 72, Number 163)]

    [Notices]

    [Page 48264-48266]

    From the Federal Register Online via GPO Access [wais.access.gpo.gov]

    [DOCID:fr23au07-45]

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    COMMODITY FUTURES TRADING COMMISSION

    Fees for Reviews of the Rule Enforcement Programs of Contract

    Markets and Registered Futures Associations

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Establish the FY 2007 schedule of fees.

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    SUMMARY: The Commission charges fees to designated contract markets and

    registered futures associations to recover the costs incurred by the

    Commission in the operation of its program of oversight of self-

    regulatory organization (SRO) rule enforcement programs (17 CFR part 1

    Appendix B) (National Futures Association (NFA), a registered futures

    association, and the contract markets are referred to as SROs). The

    calculation of the fee amounts to be charged for FY 2007 is based upon

    an average of actual program costs incurred during FY 2004, 2005, and

    2006, as explained below. The FY 2007 fee schedule is set forth in the

    SUPPLEMENTARY INFORMATION. Electronic payment of fees is required.

    DATES: Effective Dates: The FY 2007 fees for Commission oversight of

    each SRO rule enforcement program must be paid by each of the named

    SROs in the amount specified by no later than October 22, 2007.

    FOR FURTHER INFORMATION CONTACT: Stacy Dean Yochum, Counsel to the

    Executive Director, Commodity Futures Trading Commission, (202) 418-

    5160, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC

    20581. For information on electronic payment, contact Adrienne Young-

    Burgess, Three Lafayette Centre, 1155 21st Street, NW., Washington, DC

    20581, (202) 418-5196.

    SUPPLEMENTARY INFORMATION:

    I. General

    This notice relates to fees for the Commission's review of the rule

    enforcement programs at the registered futures associations \1\ and

    designated contract markets (DCM), which are referred to as SROs,

    regulated by the Commission.

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    \1\ NFA is the only registered futures association.

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    II. Schedule of Fees

    Fees for the Commission's review of the rule enforcement programs

    at the registered futures associations and DCMs regulated by the

    Commission:

    ------------------------------------------------------------------------

    Entity Fee amount

    ------------------------------------------------------------------------

    Chicago Board of Trade...................................... $72,547

    Chicago Mercantile Exchange................................. 97,725

    New York Mercantile Exchange................................ 59,604

    Kansas City Board of Trade.................................. 10,799

    New York Board of Trade..................................... 57,273

    Minneapolis Grain Exchange.................................. 10,967

    HedgeStreet................................................. 2,736

    One Chicago................................................. 18,355

    Chicago Climate Futures Exchange............................ 1,731

    EUREX....................................................... 2,523

    National Futures Association................................ 273,854

    -----------

    Total................................................... 608,114

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    III. Background Information

    A. General

    The Commission recalculates the fees charged each year with the

    intention of recovering the costs of operating this Commission

    program.\2\ All costs are accounted for by the Commission's Management

    Accounting Structure Codes (MASC) system, which records each employee's

    time for each pay period. The fees are set each year based

    [[Page 48265]]

    on direct program costs, plus an overhead factor.

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    \2\ See Section 237 of the Futures Trading Act of 1982, 7 U.S.C.

    16a and 31 U.S.C. 9701. For a broader discussion of the history of

    Commission Fees, see 52 FR 46070 (Dec. 4, 1987).

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    B. Overhead Rate

    The fees charged by the Commission to the SROs are designed to

    recover program costs, including direct labor costs and overhead. The

    overhead rate is calculated by dividing total Commission-wide overhead

    direct program labor costs into the total amount of the Commission-wide

    overhead pool. For this purpose, direct program labor costs are the

    salary costs of personnel working in all Commission programs. Overhead

    costs consist generally of the following Commission-wide costs:

    Indirect personnel costs (leave and benefits), rent, communications,

    contract services, utilities, equipment, and supplies. This formula has

    resulted in the following overhead rates for the most recent three

    years (rounded to the nearest whole percent): 109 percent for fiscal

    year 2004, 109 percent for fiscal year 2005, and 109 percent for fiscal

    year 2006. These overhead rates are applied to the direct labor costs

    to calculate the costs of oversight of SRO rule enforcement programs.

    C. Conduct of SRO Rule Enforcement Reviews

    Under the formula adopted in 1993 (58 FR 42643, Aug. 11, 1993),

    which appears at 17 CFR Part 1 Appendix B, the Commission calculates

    the fee to recover the costs of its rule enforcement review and

    examinations, based on the three-year average of the actual cost of

    performing such reviews and examinations at each SRO. The cost of

    operation of the Commission's SRO oversight program varies from SRO to

    SRO, according to the size and complexity of each SRO's program. The

    three-year averaging computation method is intended to smooth out year-

    to-year variations in cost. Timing of the Commission's reviews and

    examinations may affect costs-a review or examination may span two

    fiscal years and reviews and examinations are not conducted at each SRO

    each year. Adjustments to actual costs may be made to relieve the

    burden on an SRO with a disproportionately large share of program

    costs.

    The Commission's formula provides for a reduction in the assessed

    fee if an SRO has a smaller percentage of United States industry

    contract volume than its percentage of overall Commission oversight

    program costs. This adjustment reduces the costs so that, as a

    percentage of total Commission SRO oversight program costs, they are in

    line with the pro rata percentage for that SRO of United States

    industry-wide contract volume.

    The calculation made is as follows: The fee required to be paid to

    the Commission by each DCM is equal to the lesser of actual costs based

    on the three-year historical average of costs for that DCM or one-half

    of average costs incurred by the Commission for each DCM for the most

    recent three years, plus a pro rata share (based on average trading

    volume for the most recent three years) of the aggregate of average

    annual costs of all DCMs for the most recent three years. The formula

    for calculating the second factor is: 0.5a + 0.5 vt = current fee. In

    this formula, ``a'' equals the average annual costs, ``v'' equals the

    percentage of total volume across DCMs over the last three years, and

    ``t'' equals the average annual costs for all DCMs. NFA has no

    contracts traded; hence, its fee is based simply on costs for the most

    recent three fiscal years.

    This table summarizes the data used in the calculations and the

    resulting fee for each entity:

    ----------------------------------------------------------------------------------------------------------------

    3-year average 3-year percent of Calculated 2006

    actual costs volume (percent) fee

    ----------------------------------------------------------------------------------------------------------------

    Chicago Board of Trade.............................. $72,547 34.1011 $72,547

    Chicago Mercantile Exchange......................... 97,725 52.8310 97,725

    New York Mercantile Exchange........................ 73,089 10.4640 59,604

    Kansas City Board of Trade.......................... 20,685 0.2071 10,799

    New York Board of Trade............................. 106,219 1.8893 57,273

    Minneapolis Grain Exchange.......................... 21,490 0.1006 10,967

    HedgeStreet......................................... 5,413 0.0137 2,736

    One Chicago......................................... 35,695 0.2300 18,355

    Chicago Climate Futures Exchange.................... 3,461 0.0002 1,731

    EUREX............................................... 4,403 0.1460 2,523

    Subtotal............................................ 440,729 .................. 334,260

    National Futures Association........................ 273,854 .................. 273,854

    -----------------------------------------------------------

    Total........................................... 706,718 .................. 608,114

    ----------------------------------------------------------------------------------------------------------------

    An example of how the fee is calculated for one exchange, the

    Minneapolis Grain Exchange, is set forth here:

    a. Actual three-year average costs equal $21,490

    b. The alternative computation is:

    (.5) ($21,490) + (.5) (.001006) ($) = $10,967.

    c. The fee is the lesser of a or b; in this case $10,967.

    As noted above, the alternative calculation based on contracts

    traded is not applicable to NFA because it is not a DCM and has no

    contracts traded. The Commission's average annual cost for conducting

    oversight review of the NFA rule enforcement program during fiscal

    years 2004 through 2006 was $273,854 (one-third of $821,561). The fee

    to be paid by the NFA for the current fiscal year is $273,854.

    Payment Method

    The Debt Collection Improvement Act (DCIA) requires deposits of

    fees owed to the government by electronic transfer of funds (see 31

    U.S.C. 3720). For information about electronic payments, please contact

    Adrienne Young-Burgess at (202) 418-5196 or aburgess@cftc.gov, or see

    the CFTC Web site at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.cftc.gov, specifically, http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www

    .cftc.gov/cftc/cftcelectronicpayments.htm.

    Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., requires

    agencies to consider the impact of rules on small business. The fees

    implemented in this release affect contract markets and registered

    futures associations. The Commission has previously determined that

    contract markets and registered futures associations are not ``small

    entities'' for purposes of the Regulatory Flexibility Act. Accordingly,

    the Acting Chairman, on behalf of the Commission, certifies pursuant to

    5 U.S.C. 605(b) that

    [[Page 48266]]

    the fees implemented here will not have a significant economic impact

    on a substantial number of small entities.

    Issued in Washington, DC on August 17, 2007, by the Commission.

    David Stawick,

    Secretary of the Commission.

    [FR Doc. E7-16705 Filed 8-22-07; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: August 23, 2007



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