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e7-17195

  • [Federal Register: September 4, 2007 (Volume 72, Number 170)]

    [Rules and Regulations]

    [Page 50645-50647]

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

    [DOCID:fr04se07-3]

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    COMMODITY FUTURES TRADING COMMISSION

    17 CFR Part 30

    Foreign Futures and Options Transactions

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Amended Supplemental Order for Expanded Relief.

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    SUMMARY: The Commodity Futures Trading Commission (``Commission'') is

    issuing an Amended Supplemental Order authorizing members of Singapore

    Derivatives Trading Ltd (``SGX''), formerly known as Singapore

    International Monetary Exchange Ltd (``SIMEX''), to solicit and accept

    orders from U.S. customers for otherwise permitted transactions on all

    non-U.S. exchanges where such members are authorized by the laws of

    Singapore to conduct futures business for customers. The Amended

    Supplemental Order is issued pursuant to Commission Regulation 30.10,

    which permits the Commission to grant an exemption from certain

    provisions of Part 30 of the Commission's regulations, and supersedes

    the Commission's prior Supplemental Order dated September 9, 1999.

    EFFECTIVE DATE: September 4, 2007.

    FOR FURTHER INFORMATION CONTACT: Lawrence B. Patent, Deputy Director,

    or Andrew Chapin, Special Counsel, Division of Clearing and

    Intermediary Oversight, at (202) 418-5430, Commodity Futures Trading

    Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington,

    DC 20581. Electronic mail: lpatent@cftc.gov or achapin@cftc.gov.

    SUPPLEMENTARY INFORMATION: The Commission has issued the following

    Order:

    Amended Supplemental Order Granting Expanded Relief Pursuant to

    Commission Regulation 30.10 for Otherwise Permitted Transactions on All

    Non-U.S. Exchanges Where Firms Designated by the Singapore Derivatives

    Trading Ltd Are Authorized by Exchange Regulations To Conduct Futures

    Business for Customers, Subject to Certain Conditions

    On December 30, 1988, the Commission issued an Order granting

    relief under Regulation 30.10 authorizing designated members of SGX to

    solicit and accept orders from customers located in the U.S. for

    otherwise permitted transactions on the Exchange.\1\ On September 9,

    1999, the Commission issued a Supplemental Order expanding the relief

    to include otherwise permitted transactions on Eurex Deutschland.\2\ By

    letter dated November 30, 2006, SEL petitioned the Commission on behalf

    of SGX to amend the Supplemental Order to permit members designated by

    SGX to solicit and accept orders from foreign futures and options

    customers \3\ for otherwise permitted transactions on all non-U.S.

    exchanges \4\ where Exchange Members are authorized by Singapore law to

    conduct futures and options business for customers, subject to SGX and

    SGX Members' continued compliance with the terms of the Original Order

    and with certain specified conditions.\5\

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    \1\ 54 FR 806 (January 10, 1989) (``Original Order'').

    \2\ 64 FR 50248 (September 16, 1999) (``Supplemental Order'').

    In December 1999, SIMEX merged with the Stock Exchange of Singapore

    to form a holding company named the Singapore Exchange Limited

    (``SEL''). SIMEX was renamed SGX and currently operates two

    exchanges as a wholly-owned subsidiary of SEL. The first market,

    called SGX-DT, is dedicated to trading financial futures and option

    contracts. The second market, called JADE, is the result of a joint

    venture with the Chicago Board of Trade, Inc., to trade commodity

    futures and option contracts.

    \3\ The term ``foreign futures or foreign options customer''

    means any person located in the U.S., its territories or

    possessions, who trades in foreign futures or foreign options.

    \4\ The term ``non-U.S. exchange'' refers to a foreign board of

    trade which is defined in Commission Regulation 1.3(ss), 17 CFR

    1.3(ss) as: Any board of trade, exchange or market located outside

    the United States, its territories or possessions, whether

    incorporated or unincorporated, where foreign futures or foreign

    options transactions are entered into. Thus, contracts that are

    traded on a market that has been designated as a contract market

    pursuant to section 5 of the Commodity Exchange Act (``Act'') are

    not within the scope of this Order.

    \5\ Letter dated November 30, 2006, from Arul Ramiah, Head,

    Regulatory Policy for SEL, to Ananda K. Radhakrishnan, Director,

    Division of Clearing and Intermediary Oversight.

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    On occasion, the Commission has issued Regulation 30.10 orders and/

    or supplemental orders that permitted members of an exchange with

    confirmation of Regulation 30.10 relief to trade on behalf of U.S.

    customers on other authorized or designated exchanges outside the

    jurisdiction of the Regulation 30.10 recipient.\6\ To ensure that U.S.

    customers receive adequate protection for transactions intermediated by

    non-U.S. persons on or subject to the rules of a foreign exchange

    located outside the jurisdiction of a Regulation 30.10 recipient, the

    Commission requires the jurisdiction to which the Regulation 30.10

    order is directed to demonstrate that such transactions will be

    regulated as if they were executed on an exchange located within the

    recipient's jurisdiction.\7\ To make this demonstration, the Regulation

    30.10 recipient must: (1) Prohibit its regulatees or members from

    intermediating otherwise permitted transactions for U.S. customers on

    unapproved foreign exchanges as set

    [[Page 50646]]

    forth under local law, and must specify which exchanges are authorized

    by local law; (2) represent that regulatees or member firms with U.S.

    customers will comply with all the terms and conditions of the original

    Regulation 30.10 Order with respect to transactions entered into on or

    subject to the rules of a foreign exchange located outside its

    jurisdiction; and (3) confirm that it has the authority and the ability

    to enforce its laws, rules and/or regulations with respect to those

    transactions to the same extent that it conducts such activities on an

    exchange located within its jurisdiction. The Regulation 30.10

    recipient also should specify in its application if there does not

    exist a specific statute or regulation setting forth a list of

    authorized or recognized exchanges.\8\

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    \6\ See, e.g., 71 FR 40395 (July 17, 2006) (authorizing members

    of the Sydney Futures Exchange (``SFE'') to solicit and accept

    orders from U.S. customers for otherwise permitted transactions on

    all non-U.S. and non-Australian exchanges where such members are

    authorized by the regulations of the SFE to conduct futures business

    for customers).

    \7\ 64 FR at 50251.

    \8\ Id. at n.20. See, e.g., 67 FR 30785 (May 8, 2002)

    (authorizing members of Eurex Deutschland (``Eurex'') to solicit and

    accept orders from U.S. customers for otherwise permitted

    transactions on all non-U.S. exchanges where such members are

    authorized by Eurex regulations and German law to conduct futures

    business for customers).

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    Upon due consideration, the Commission has determined to issue this

    Amended Supplemental Order permitting SGX Members to which Regulation

    30.10 relief has been confirmed by the Commission or by the National

    Futures Association (``NFA'') to solicit and to accept orders from U.S.

    customers for otherwise permitted transactions in commodity futures and

    commodity options (including options on futures) on or subject to the

    rules of any non-U.S. exchange where such members are authorized by the

    laws of Singapore to conduct futures business for customers.

    The expanded Regulation 30.10 relief provided under this Amended

    Supplemental Order, however, is contingent on the SGX members'

    continued compliance with the Original Order, and the SGX's and SGX

    Members' compliance with the following conditions:

    (1) SGX will carry out its compliance, surveillance and rule

    enforcement activities with respect to solicitations and acceptance

    of orders by designated Exchange Members of U.S. customers for

    futures and options business on all non-U.S. exchanges where such

    members are authorized by the laws of Singapore to conduct futures

    business for customers to the same extent that it conducts such

    activities in regard to SGX business;

    (2) SGX will cooperate with the Commission with respect to any

    inquiries concerning any activity which is the subject of this

    Amended Supplemental Order, including sharing the information

    specified in Appendix A to the Part 30 regulations, 17 CFR Part 30,

    on an ``as needed basis,'' on the same basis as set forth in the

    Original Order;

    (3) Each SGX Member firm confirmed for relief under the Original

    Order seeking to engage in activities that are the subject of this

    Amended Supplemental Order must agree to provide the books and

    records related to such activities required to be maintained under

    the applicable SGX rules and laws in effect in Singapore on the same

    basis as set forth in the Original Order;

    (4) SGX members who apply for confirmation of Regulation 30.10

    relief with the National Futures Association must provide and

    maintain a list of the foreign exchanges where they intend to engage

    in transactions on behalf of U.S. customers pursuant to relief

    granted by this Amended Supplemental Order and must agree to abide

    by the terms and conditions of the Original Order; and

    (5) SGX will continue to comply with the terms of the Original

    Order with respect to transactions effected for U.S. customers on

    SGX.

    As set forth in the Commission's September 11, 1997 Order

    delegating to NFA certain responsibilities, the written representations

    set forth above shall be filed with NFA.\9\ Specifically, SGX Members

    applying for confirmation of Regulation 30.10 relief subsequent to the

    issuance of this Amended Supplementary Order must submit

    representations to NFA consistent with condition (3) of this Order, and

    the list of foreign exchanges required by condition (4), as well as

    representations required by the Original Order. SGX Member firms that

    currently operate under the Original Order will be deemed to have

    consented to condition (3) by effecting transactions pursuant to this

    Amended Supplemental Order. Each firm seeking relief hereunder has an

    ongoing obligation to notify NFA should there be a material change to

    any of the representations required in the firm's application for

    relief, including any change in the list of foreign exchanges referred

    to in condition (4).

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    \9\ 62 FR 47792, 47793 (September 11, 1997).

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    The expanded Regulation 30.10 relief provided by this Amended

    Supplemental Order remains subject to the existing product restrictions

    under the Act and Commission regulations thereunder including those

    related to stock indices, foreign government debt and foreign security

    futures products.\10\ The expanded Regulation 30.10 relief provided

    under this Amended Supplemental Order also is contingent upon the

    continued compliance by the Monetary Authority of Singapore (``MAS'')

    with the terms and conditions of the information sharing arrangement

    with the Commission regarding the Regulation 30.10 activities of the

    SGX members.\11\

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    \10\ See, e.g., Sections 2(a)(1)(C), (D) and (E) of the Act.

    \11\ Letter from Neo Boon Sim, Head, Market and Clearing Houses

    Division, MAS, to Ananda K. Radhakrishnan, Director, Division of

    Clearing and Intermediary Oversight, dated June 11, 2007. The

    Commission signed a bilateral Memorandum of Understanding (``MOU'')

    with MAS on May 16, 2000 concerning Consultation, Co-operation and

    the Exchange of Information (concluded jointly with the U.S.

    Securities and Exchange Commission). In addition, MAS also is a

    signatory to the IOSCO Multilateral MOU.

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    This Amended Supplemental Order is issued based on the information

    provided to the Commission and its staff. Any changes or material

    omissions may require the Commission to reconsider the authorization

    granted in this Amended Supplemental Order.

    List of Subjects in 17 CFR Part 30

    Commodity Futures, Commodity Options, Foreign Futures and Options.

    0

    Accordingly, 17 CFR part 30 is amended as set forth below:

    PART 30--FOREIGN FUTURES AND FOREIGN OPTIONS TRANSACTIONS

    0

    1. The authority citation for part 30 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 4, 6, 6c and 12a, unless otherwise

    noted.

    Appendix C to Part 30--Foreign Petitioners Granted Relief From the

    Application of Certain of the Part 30 Rules Pursuant to Sec. 30.10

    * * * * *

    0

    2. The citation ``Firms designated by the Singapore International

    Monetary Exchange Limited'' is to be revised as follows:

    Firms designated by the Singapore Derivatives Trading Limited.

    * * * * *

    FR date and citation: [insert date of this release], 72 FR

    [insert number of page on which this release begins].

    * * * * *

    0

    3. The following citations are to be added:

    Firms designated by the Taiwan Futures Exchange.

    FR date and citation: March 28, 2007, 72 FR 14413.

    Firms designated by the Tokyo Commodity Exchange.

    FR date and citation: February 9, 2006, 71 FR 6759.

    Firms designated by the Bolsa de Mercadorias & Futuros.

    FR date and citation: July 8, 2002, 67 FR 45056.

    Firms designated by Eurex Deutschland.

    FR date and citation: May 8, 2002, 67 FR 30785.

    [[Page 50647]]

    Issued in Washington, DC on August 24, 2007.

    David Stawick,

    Secretary of the Commission.

    [FR Doc. E7-17195 Filed 8-31-07; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: September 4, 2007



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