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2010-29780

  • FR Doc 2010-29780[Federal Register: November 26, 2010 (Volume 75, Number 227)]

    [Notices]

    [Page 72816-72818]

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

    [DOCID:fr26no10-60]

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    COMMODITY FUTURES TRADING COMMISSION

    Public Input for the Study Regarding the Oversight of Existing

    and Prospective Carbon Markets

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Notice and request for comment.

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    SUMMARY: Section 750 of the Dodd-Frank Wall Street Reform and Consumer

    Protection Act (the ``Dodd-Frank Act'' or ``Act'') establishes an

    interagency working group (``interagency group''), headed by the

    Commodity Futures Trading Commission (the ``CFTC''), to conduct a study

    on the oversight of existing and prospective carbon markets to ensure

    an efficient, secure, and transparent carbon market, including

    oversight of spot markets and derivative markets. The members of the

    interagency group are the Chairman of the CFTC, the Secretary of

    Agriculture, the Secretary of the Treasury, the Chairman of the

    Securities and Exchange Commission, the Administrator of the

    Environmental Protection Agency, the Chairman of the Federal Energy

    Regulatory Commission, the Chairman of the Federal Trade Commission and

    the Administrator of the Energy Information Administration, or their

    designees. In conducting the study, the Dodd-Frank Act directs the

    interagency group to consult, as appropriate, with representatives of

    exchanges, clearing houses, self-regulatory bodies, major carbon market

    participants, consumers, and the general public. To assist the

    interagency group in conducting the study and formulating

    recommendations for the oversight of existing and prospective carbon

    markets, the CFTC is issuing this request for information through

    public comment.

    DATES: Comments must be received on or before December 17, 2010.

    ADDRESSES: You may submit comments by any of the following methods:

    Agency Web site, via its Comments Online process: http://

    comments.cftc.gov. Follow the instructions for submitting comments

    through the Web site.

    Mail: David A. Stawick, Secretary of the Commission,

    Commodity Futures

    [[Page 72817]]

    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.

    All comments must be submitted in English, or if not, accompanied

    by an English translation. Comments will be posted as received to

    http://www.cftc.gov. You should submit only information that you wish

    to make available publicly. If you wish the Commission to consider

    information that is exempt from disclosure under the Freedom of

    Information Act, a petition for confidential treatment of the exempt

    information may be submitted according to the procedure established in

    CFTC regulation 145.9 (17 CFR 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 substance of the request for comments will

    be retained in the public comment file.

    FOR FURTHER INFORMATION CONTACT: Gregory Kuserk, Chief, Market Analysis

    and Strategic Review Branch, Division of Market Oversight, 202-418-

    5286, Irina Leonova, Financial Analyst, Division of Market Oversight,

    202-418-5646, or Nela Richardson, Research Economist, Office of the

    Chief Economist, 202-418-5592, Commodity Futures Trading Commission,

    Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581.

    SUPPLEMENTARY INFORMATION:

    I. Background

    Recently a number of legislative proposals have been introduced in

    Congress setting out various approaches to reducing carbon emissions.

    Some of the proposals contain a market-based policy instrument. Various

    forms of carbon markets have also been established internationally as

    well as domestically. Some of the examples of those markets are the

    European Union Emission Trading Scheme, the Clean Development

    Mechanism, and the Regional Greenhouse Gas Initiative. In addition,

    markets exist in the U.S. for the trading of sulfur dioxide allowances

    under the EPA Acid Rain program and nitrogen oxide under the EPA

    NOX Trading program. The CFTC also oversees the derivative

    trading of a number of environmental instruments on the Chicago Climate

    Futures Exchange and the Green Exchange.\1\ Under the various bills,

    different proposals have been set forth with respect to the oversight

    of a carbon market that would be established in those bills.

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    \1\ The CFTC designated the Green Exchange as a contract market

    on July 22, 2010; however, the exchange is not yet operational.

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    On July 21, 2010 the Dodd-Frank Act was enacted.\2\ Section 750 of

    the Act establishes an interagency working group to study the oversight

    of existing and prospective carbon markets. The interagency group is

    composed of the following members or designees: The Chairman of the

    Commodity Futures Trading Commission, who shall serve as the Chairman

    of the interagency group, the Secretary of Agriculture, the Secretary

    of the Treasury, the Chairman of the Securities and Exchange

    Commission, the Administrator of the Environmental Protection Agency,

    the Chairman of the Federal Energy Regulatory Commission, the Chairman

    of the Federal Trade Commission \3\ and the Administrator of the Energy

    Information Administration.

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    \2\ Dodd-Frank Wall Street Reform and Consumer Protection Act,

    Public Law 111-203, 124 Stat. 1376 (2010).

    \3\ The CFTC notes that the text of Section 750(a)(7) of the Act

    references the ``Commissioner of the Federal Trade Commission'' as a

    member of the interagency group, and the CFTC interprets this text

    as a reference to the Chairman of the Federal Trade Commission.

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    The Dodd-Frank Act directs the interagency group to ``conduct a

    study on the oversight of existing and prospective carbon markets to

    ensure an efficient, secure, and transparent carbon market, including

    oversight of spot markets and derivative markets.'' In carrying out

    this study, the Act also directs the interagency group to consult with

    representatives of exchanges, clearinghouses, self-regulatory bodies,

    major carbon market participants, consumers and the general public, as

    the interagency group determines is appropriate. Finally, the Act

    requires the interagency group to submit to Congress a report, no later

    than 180 days after the date of enactment of the Act, on the results of

    the study, including recommendations regarding such oversight.

    II. Solicitation for Comments on the Study on Oversight of Carbon

    Markets

    To assist the interagency group in conducting the study on

    oversight of a carbon market, the CFTC seeks public comment on the

    following topics and questions:

    1. Section 750 of the Dodd-Frank indicates that the goals of

    regulatory oversight should be to ensure that carbon markets are

    efficient, secure and transparent. What other regulatory objectives, if

    any, should guide the oversight of such markets?

    2. What are the basic economic features that might be incorporated

    in a carbon market that would have an effect on market oversight

    provisions--e.g., the basic characteristics of allowances, frequency of

    allocations and compliance obligations, banking of allowances,

    borrowing of allowances, cost containment mechanisms, etc.?

    3. Do the regulatory objectives differ with respect to the

    oversight of spot market trading of carbon allowances compared to the

    oversight of derivatives market trading in these instruments? If so,

    explain further.

    4. Are additional statutory provisions necessary to achieve the

    desired regulatory objectives for carbon markets beyond those provided

    in the Commodity Exchange Act, as amended by the Dodd-Frank Act, or

    other federal acts that may be applicable to the trading of carbon

    allowances?

    5. What regulatory methods or tools would be appropriate to achieve

    the desired regulatory objectives?

    6. What types of data or information should be required of market

    participants in order to allow adequate oversight of a carbon market?

    Should reporting requirements differ for separate types of market

    participants?

    7. To what extent is it desirable or not desirable to have a

    unified regulatory oversight program that would oversee activity in

    both the secondary carbon market and in the derivatives markets?

    8. To what extent, if any, and how should a U.S. regulatory program

    interact with the regulatory programs of carbon markets in foreign

    jurisdictions?

    9. What has been the experience of state regulators in overseeing

    trading in the regional carbon markets and how would that instruct the

    design of a federal oversight program?

    10. Based on trading experiences in SO2 and

    NOX emission allowances what regulatory oversight would

    market participants and market operators, respectively, recommend?

    11. Who are the primary participants in the current primary

    environmental markets? Who are the primary participants in the current

    secondary allowance and derivatives environmental markets?

    III. Paperwork Reduction Act

    Pursuant to the Office of Management and Budget (``OMB'')

    Regulation 5 CFR 1320.3(h)(4), this Notice and request for comment

    published in the Federal Register, which requests general public

    [[Page 72818]]

    comment, does not include a collection of information that would

    require OMB approval. Accordingly, the Paperwork Reduction Act does not

    apply.

    Issued in Washington, DC, on November 19, 2010 by the

    Commission.

    Sauntia S. Warfield,

    Assistant Secretary of the Commission.

    [FR Doc. 2010-29780 Filed 11-24-10; 8:45 am]

    BILLING CODE P

    Last Updated: November 26, 2010



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