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e7-12045

  • [Federal Register: June 22, 2007 (Volume 72, Number 120)]

    [Proposed Rules]

    [Page 34413-34416]

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

    [DOCID:fr22jn07-18]

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    Proposed Rules

    Federal Register

    ________________________________________________________________________

    This section of the FEDERAL REGISTER contains notices to the public of

    the proposed issuance of rules and regulations. The purpose of these

    notices is to give interested persons an opportunity to participate in

    the rule making prior to the adoption of the final rules.

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    [[Page 34413]]

    COMMODITY FUTURES TRADING COMMISSION

    17 CFR Part 18

    RIN 3038-AC22

    Maintenance of Books, Records and Reports by Traders

    AGENCY: Commodity Futures Trading Commission.

    ACTION: Proposed rules.

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    SUMMARY: Commission Regulation 18.05 requires that a person holding or

    controlling a futures or option position in a commodity above a certain

    level (reportable position) on a designated contract market or

    registered derivatives transaction execution facility (reporting

    markets) must retain books and records and make available to the

    Commission upon request any pertinent information with respect to other

    positions, transactions or activities in the commodity in which the

    trader has a reportable position. The Commission is proposing to amend

    Regulation 18.05 in two respects: To make it explicit that persons

    holding or controlling reportable positions on a reporting market must

    retain books and records and make available to the Commission upon

    request any pertinent information with respect to all other positions

    and transactions in the commodity in which the trader has a reportable

    position, including positions held or controlled or transactions

    executed over-the-counter and/or pursuant to Sections 2(d), 2(g) or

    2(h)(1)-(2) of the Commodity Exchange Act (Act) or Part 35 of the

    Commission's regulations, on exempt commercial markets operating

    pursuant to Sections 2(h)(3)-(5) of the Act, on exempt boards of trade

    operating pursuant to Section 5d of the Act, and on foreign boards of

    trade (hereinafter referred to collectively as non-reporting

    transactions); and to make the regulation clearer and more complete

    with respect to hedging activity. The purpose of the amendments is to

    enhance the Commission's ability to deter and prevent price

    manipulation or any other disruptions to the integrity of the regulated

    futures markets, to ensure the avoidance of systemic risk, and to

    clarify the meaning of the regulation.

    DATES: Comments must be received by July 23, 2007.

    ADDRESSES: Comments should be sent to the Commodity Futures Trading

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

    DC 20581, attention: Office of the Secretariat. Comments may be sent by

    facsimile to 202-418-5521, or by e-mail to secretary@cftc.gov.

    Reference should be made to ``Regulation 18.05.'' Comments may also be

    submitted to the Federal eRulemaking Portal: http://www.regulations.gov

    .

    FOR FURTHER INFORMATION CONTACT: Duane C. Andresen, Special Counsel,

    Division of Market Oversight, Three Lafayette Centre, 1155 21st Street,

    NW., Washington, DC 20581. Telephone 202-418-5492; e-mail dandresen@cftc.gov. This document is also available at

    http://www.regulations.gov.

    SUPPLEMENTARY INFORMATION:

    I. Purpose of Regulation 18.05 and Statutory Basis

    Section 3(b) of the Commodity Exchange Act (Act) \1\ declares that

    the purpose of the Act is to, among other things, deter and prevent

    price manipulation or any other disruptions to market integrity and to

    ensure the financial integrity of all transactions subject to the Act

    and the avoidance of systemic risk.\2\ Section 4i of the Act \3\

    requires persons holding futures or option positions at designated

    contract markets (DCM) or registered derivatives transaction execution

    facilities (DTEF) at or above certain levels to keep books and records

    of all:

    (1) Transactions and positions in the exchange-traded commodity,

    (2) transactions and positions in any such commodity traded on or

    subject to the rules of any other board of trade, and

    (3) cash or spot transactions in, and inventories and purchase and

    sale commitments of such commodity.

    Such books and records must be open at all times for inspection by

    any representative of the Commission or the Department of Justice.

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    \1\ 7 U.S.C. 5(b) (2006).

    \2\ Section 3(b) of the Act provides in full that it is the

    purpose of this chapter to serve the public interests described in

    subsection (a) of this section through a system of effective self-

    regulation of trading facilities, clearing systems, market

    participants and market professionals under the oversight of the

    Commission. To foster these public interests, it is further the

    purpose of this chapter to deter and prevent price manipulation or

    any other disruptions to market integrity; to ensure the financial

    integrity of all transactions subject to this chapter and the

    avoidance of systemic risk; to protect all market participants from

    fraudulent or other abusive sales practices and misuses of customer

    assets; and to promote responsible innovation and fair competition

    among boards of trade, other markets and market participants.

    \3\ 7 U.S.C. 6i (2006). Section 4i of the Act provides that it

    shall be unlawful for any person to make any contract for the

    purchase or sale of any commodity for future delivery on or subject

    to the rules of any contract market or derivatives transaction

    execution facility if such person shall directly or indirectly make

    such contracts with respect to any commodity or any future of such

    commodity during any one day in an amount equal to or in excess of

    such amount as shall be fixed from time to time by the Commission,

    and if such person shall directly or indirectly have or obtain a

    long or short position in any commodity or any future of such

    commodity equal to or in excess of such amount as shall be fixed

    from time to time by the Commission, unless such person files or

    causes to be filed with the properly designated officer of the

    Commission such reports regarding any transactions or positions

    described in clauses (1) and (2) hereof as the Commission may by

    rule or regulation require and unless, in accordance with rules and

    regulations of the Commission, such person shall keep books and

    records of all such transactions and positions and transactions and

    positions in any such commodity traded on or subject to the rules of

    any other board of trade, and of cash or spot transactions in, and

    inventories and purchase and sale commitments of such commodity.

    Such books and records shall show complete details concerning all

    such transactions, positions, inventories, and commitments,

    including the names and addresses of all persons having any interest

    therein, and shall be open at all times to inspection by any

    representative of the Commission or the Department of Justice. For

    the purposes of this section, the futures and cash or spot

    transactions and positions of any person shall include such

    transactions and positions of any persons directly or indirectly

    controlled by such person.

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    Section 8a(5) of the Act \4\ provides explicit authority to the

    Commission to make and promulgate such rules and regulations as, in the

    judgment of the Commission, are reasonably necessary to effectuate any

    of the provisions or to accomplish any of the purposes of the Act. In

    order to accomplish the purposes of Sections 3(b) and 4i set forth

    above, the Commission has promulgated regulations creating market and

    large trader reporting

    [[Page 34414]]

    requirements.\5\ Included among these regulations is a requirement that

    persons holding futures or option positions at DCMs or DTEFs (reporting

    markets) \6\ at or above reportable levels (reportable positions) \7\

    are identified to the Commission under the large trader reporting

    system (LTRS).

    The LTRS, which requires that clearing members, futures commission

    merchants (FCM) and foreign brokers file daily reports with the

    Commission, enables the Commission to assess an individual trader's

    activities and potential market power and to enforce the Commission or

    DCM-set limits on speculative positions.\8\ Once a trader holds a

    reportable position, the trader is subject to Commission Regulation

    18.05,\9\ which requires that the trader keep books and records showing

    all details concerning:

    (1) All positions and transactions for future delivery in the

    commodity on all reporting markets;

    (2) all positions and transactions in the commodity option;

    (3) all positions and transactions in the cash commodity, its

    products and byproducts; and

    (4) commercial activities that the trader hedges in the commodity

    underlying the futures contract in which the trader is reportable.\10\

    A reportable trader is required to furnish to the Commission, upon

    request, any pertinent information concerning these positions,

    transactions or activities.\11\ Traders who do not hold reportable

    positions do not have obligations under Regulation 18.05.

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    \4\ 7 U.S.C. 12a(5) (2006).

    \5\ The Commission's market and large trader reporting rules are

    contained in Parts 15 through 21 of the Commission's regulations.

    \6\ Pursuant to Commission Regulation 15.00(m), a reporting

    market means a designated contract market and, unless determined

    otherwise by the Commission with respect to the facility or a

    specific contract listed by the facility, a registered derivatives

    transaction execution facility.

    \7\ Pursuant to Commission Regulation 15.00(l), reportable

    position means: for reports specified in parts 17, 18 and Sec.

    19.00(a)(2) and (a)(3) of this chapter any open contract position

    that at the close of the market on any business day equals or

    exceeds the quantity specified in Sec. 15.03 of this part in

    either: any one future of any commodity on any one reporting market,

    excluding future contracts against which notices of delivery have

    been stopped by a trader or issued by the clearing organization of a

    reporting market; or long or short put or call options that exercise

    into the same future of any commodity, or long or short put or call

    options for options on physicals that have identical expirations and

    exercise into the same physical, on any one reporting market. For

    the purposes of reports specified in Sec. 19.00(a)(1) of this

    chapter, any combined futures and futures-equivalent option open

    contract position as defined in part 150 of this chapter in any one

    month or in all months combined, either net long or net short in any

    commodity on any one reporting market, excluding futures positions

    against which notices of delivery have been stopped by a trader or

    issued by the clearing organization of a reporting market, which at

    the close of the market on the last business day of the week exceeds

    the net quantity limit in spot, single or in all-months fixed in

    Sec. 150.2 of this chapter for the particular commodity and

    reporting market.

    \8\ The Commission also uses large-trader reporting information

    as a means to ensure the avoidance of systemic risk in that such

    information enables Commission staff to determine which FCMs

    carrying accounts might have exposure in particular markets.

    \9\ Regulation 18.05 states in full that every trader who holds

    or controls a reportable futures or option position shall keep books

    and records showing all details concerning all positions and

    transactions for future delivery in the commodity on all reporting

    markets, all positions and transactions in the commodity option, and

    all positions and transactions in the cash commodity, its products

    and byproducts and, in addition, commercial activities that the

    trader hedges in the commodity underlying the futures contract in

    which the trader is reportable, and shall upon request furnish to

    the Commission any pertinent information concerning such positions,

    transactions or activities.

    \10\ In describing the requirements of Regulation 18.05 in 1981,

    the Commission stated that the regulation requires reportable

    traders to maintain books and records of futures positions and

    transactions in the commodity in which they are reportable and all

    positions and transactions in the cash commodity and its products

    and byproducts.* * * [T]he Commission wishes to underscore its view

    that the book and recordkeeping requirements and inspection

    provision contained therein are essential to accomplish the purposes

    of the Act and within the Commission's authority to adopt pursuant

    to section[s] 4i and 8a(5) of the Act. These requirements have

    always applied to the traders who hold or control a reportable

    position, and have not been restricted in any way. ``Reporting

    Requirements for Contract Markets, Futures Commission Merchants,

    Members of Exchanges and Large Traders,'' 46 FR 59,960, 59,963

    (December 8, 1981) (footnote omitted).

    \11\ The Commission currently requests such information an

    average of three times per year.

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    II. Proposed Amendments

    A. Introduction

    In order to enhance its ability to detect and prevent manipulation

    of regulated markets and products and to ensure the avoidance of

    systemic risk, as well as to clarify the meaning of the regulation and

    bring it up to date, the Commission proposes, for the reasons discussed

    below, to amend Regulation 18.05 in the following respects:

    1. To make it explicit that persons holding or controlling

    reportable positions on a reporting market must retain books and

    records and make available to the Commission upon request pertinent

    information with respect to all non-reporting transactions, i.e., all

    positions and transactions in the commodity in which the trader is

    reportable, including transactions executed over-the-counter and/or

    pursuant to Sections 2(d), 2(g) or 2(h)(1)-(2) of the Act or Part 35 of

    the Commission's regulations, on exempt commercial markets operating

    pursuant to Sections 2(h)(3)-(5) of the Act (ECM), on exempt boards of

    trade operating pursuant to Section 5d of the Act (EBOT), and on

    foreign boards of trade (FBOT); and

    2. to make the regulation clearer and more complete with respect to

    hedging activity.

    B. Amendments Related to Recordkeeping and Reporting

    There is a close relationship among transactions conducted on

    reporting markets and non-reporting transactions. In view of this, it

    is sometimes necessary to determine all transactions and positions with

    respect to the commodity in which the trader is reportable in order to

    more effectively detect and prevent manipulation of regulated markets

    and products and to ensure the avoidance of systemic risk.\12\ Just as

    it is critical that the LTRS permits staff to aggregate related

    accounts to assess an individual trader's activities and potential

    power in a market, so is it critical that staff be able to assess the

    reportable trader's overall position in the same commodity in non-

    reporting transactions in order to see the complete picture of the

    reportable trader's positions in the commodity. This is particularly

    important in light of the growing volume of trading on, and

    participation in, the non-reporting markets, the close relationship

    among the various products and markets, the increasing globalization of

    the futures markets, and the growth of trading on electronic exchanges

    and on foreign boards of trade.\13\

    Regulation 18.05 explicitly requires that a trader that is

    reportable because of futures or option positions in a futures or

    option contract traded on a DCM or DTEF keep books and records and

    provide to the Commission, upon request, pertinent information with

    respect to positions and transactions in the underlying commodity. For

    example, a reportable trader in the Natural Gas futures contract on the

    New York Mercantile Exchange, Inc., (NYMEX) must keep books and records

    and provide to the Commission, upon request, pertinent information with

    respect to positions and transactions in

    [[Page 34415]]

    Natural Gas on all DCMs and DTEFs, in the commodity option, in the cash

    commodity, its products and byproducts, and commercial activities that

    the trader hedges in the commodity underlying the Natural Gas futures

    contract. Information with respect to positions and transactions in the

    virtually identical Natural Gas contracts on the

    IntercontinentalExchange (ICE), an ECM, also is important to the

    Commission's ability to conduct effective market surveillance of the

    NYMEX Natural Gas contracts and to determine the degree of a trader's

    exposure in both the NYMEX and ICE natural gas markets. Similarly, if a

    trader is reportable because of futures or option positions in the

    Light Sweet Crude Oil contract on the NYMEX, the trader's books and

    records with respect to non-reporting positions and transactions in the

    West Texas Intermediate (WTI) Light Sweet Crude Oil futures or option

    contracts on ICE Futures,\14\ a foreign board of trade,\15\ are

    relevant to effective surveillance and supervision of the reporting

    NYMEX market.

    The Act provides ample authority to require keeping books and

    records and providing pertinent information with respect to non-

    reporting transactions. Section 4i explicitly encompasses non-reporting

    transactions on ``any other board of trade'' (such as FBOTs, ECMs

    operating pursuant to Sections 2(h)(3)-(5) of the Act, and EBOTs

    operating pursuant to Section 5d of the Act) and in the form of cash or

    spot transactions, inventories, and purchase and sale commitments.

    Further, Section 3(b) of the Act declares that the purpose of the Act

    is to, among other things, deter and prevent price manipulation or any

    other disruptions to market integrity and to ensure the avoidance of

    systemic risk. Section 8a(5) of the Act authorizes the Commission to

    promulgate such regulations as, in its judgment, are reasonably

    necessary to accomplish any of the purposes of the Act. Making it

    explicit that Regulation 18.05 requires the reportable trader to keep

    books and records showing all details concerning non-reporting

    transactions in the reportable commodity is reasonably necessary to

    accomplish the purposes of Section 3(b) of the Act.

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    \12\ Sections 6(c), 6c, 6(d) and 9(a)(2) of the Act authorize

    the Commission to bring enforcement actions against any person who

    is manipulating or attempting to manipulate or has manipulated or

    attempted to manipulate the market price of any commodity, in

    interstate commerce, or for future delivery on or subject to the

    rules of any registered entity.

    \13\ For instance, since 1999, Commission staff, through foreign

    terminal no-action letters, has allowed 18 FBOTs to make their

    trading systems available by direct access to members and other

    participants in the U.S. without requiring the FBOTs to register as

    DCMs or DTEFs.

    \14\ ICE Futures is a UK registered investment exchange which

    permits direct access to its trading system from the U.S. pursuant

    to a foreign terminal no-action letter issued by Commission staff.

    CFTC Staff Letter No. 99-69 (November 12, 1999), as amended,

    originally issued to the International Petroleum Exchange (IPE).

    \15\ Section 1a of the Act defines the term board of trade as

    any organized exchange or other trading facility without regard to

    location.

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

    Although non-reporting transactions themselves generally are not

    subject to most regulatory provisions of the Act, the futures or option

    transactions executed and maintained on a DCM or DTEF that result in a

    reportable position are subject to such provisions and, pursuant to

    Section 3(a) of the Act, are affected with a national public interest.

    It is the purpose of the Act pursuant to Section 3(b) that the

    Commission prevent price manipulation of all commodities traded on

    these regulated markets. To accomplish this purpose, it is necessary

    that the Commission have the ability to review all activities in

    commodities traded on these markets, regardless of where the

    transactions are executed. By taking a position on a regulated market,

    a trader agrees to abide by the rules of the market and the Commission,

    including prohibitions against manipulation. To enhance its ability to

    detect and deter manipulation and other threats to market integrity,

    the Commission requires persons holding reportable positions to

    maintain books and records of transactions that could impact the

    regulated market and related cash market, including non-reporting

    transactions.\16\

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    \16\ As previously stated, traders who do not hold reportable

    positions on reporting markets do not have obligations under

    Regulation 18.05's recordkeeping and reporting requirements.

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

    Commission staff has interpreted Regulation 18.05 to include

    position and transaction data for non-reporting transactions and has

    received such information in response to requests made pursuant to the

    Regulation. Consistent with the Act and Commission practice, the

    Commission is proposing to amend Regulation 18.05 to make explicit that

    a trader with a reportable position must keep books and records showing

    all details concerning all non-reporting transactions in the same

    commodity and provide pertinent information to the Commission upon

    request.

    C. Amendments Related to Clarity and Completeness

    The Commission notes two issues that arise in connection with the

    Regulation 18.05 requirement that traders keep books and records

    showing all details concerning ``commercial activities that the trader

    hedges in the commodity underlying the futures contract in which the

    trader is reportable.'' First, the phrase has led to some confusion.

    Originally inserted into the paragraph as ``commercial activities that

    the trader hedges in the futures commodity in which the trader is

    reportable,'' its purpose was to require that, ``in addition to books

    and records of positions or transactions in a cash commodity, a

    reportable trader must also maintain records of commercial activities

    which the trader hedges.'' \17\ Second, reportable positions can be

    option positions, as well as futures positions, but it is not clear

    that the current language also addresses commercial activities that the

    trader hedges in the commodity underlying any option contract in which

    the trader is reportable.

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    \17\ 46 FR 42463, 42466 (August 21, 1981).

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

    The Commission proposes to amend the regulation to revert to the

    original approach and include hedges in the option contract in which

    the trader is reportable. By modifying the phrase to read ``commercial

    activities that the trader hedges in the futures or option contract in

    which the trader is reportable,'' Regulation 18.05 would capture

    information with respect to hedges in other than the cash commodity,

    its products or byproducts (i.e., a trader with a reportable position

    in gold futures that is a hedge of a cash position in silver would be

    required to comply with the Regulation 18.05 requirements with respect

    to the silver position).

    III. Related Matters

    A. Cost Benefit Analysis

    Section 15(a) of the Act requires the Commission to consider the

    costs and benefits of its action before issuing a new regulation or

    order under the Act. By its terms, Section 15(a) does not require the

    Commission to quantify the costs and benefits of a new regulation or to

    determine whether the benefits of the proposed regulation outweigh its

    costs. Rather, Section 15(a) simply requires the Commission to

    ``consider the costs and benefits'' of its action.

    Section 15(a) further specifies that the costs and benefits of the

    proposed rule or order 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 may, in its discretion, give greater weight to any one

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

    determine that, notwithstanding its costs, a particular rule or order

    is necessary or appropriate to protect the public interest or to

    effectuate any of the

    [[Page 34416]]

    provisions or to accomplish any of the purposes of the Act.

    The proposed amendments would make it explicit that persons holding

    or controlling reportable positions on a reporting market must also

    retain books and records and make available to the Commission upon

    request any pertinent information with respect to non-reporting

    transactions in the commodity in which the trader is reportable, and

    make the regulation clearer and more complete with respect to hedging

    activity. These amendments would enable the Commission to better carry

    out its responsibilities under Section 3(b) of the Act by enhancing the

    Commission's ability to deter and prevent price manipulation or any

    other disruptions to the integrity of the regulated futures markets and

    help to ensure the avoidance of systemic risk.

    The Commission believes that the proposed amendments would address

    the Section 15(a) enumerated areas of market and public concern in that

    they would further protect market participants and the public, enhance

    the financial integrity of futures markets, and promote sound risk

    management practices. The Commission believes that the costs arising

    from the proposed amendments would be of little or no consequence for

    three reasons: (1) The amendments to Regulation 18.05 make explicit

    existing Commission practice; (2) it is likely that the traders that

    would be affected by the proposed amendments' requirements (traders who

    have reportable positions) already keep books and records showing all

    details concerning their non-reporting transactions as demonstrated by

    the fact that Commission staff has received such information in

    response to requests made pursuant to the Regulation; and (3) the

    Commission anticipates that special calls for pertinent information

    relating to non-reporting transactions would continue to be made on an

    infrequent basis.

    After considering these factors, the Commission has determined to

    propose the revisions to Regulation 18.05 as discussed above and set

    forth below. The Commission specifically invites public comment on its

    application of the criteria contained in Section 15(a) of the Act.

    Commenters are also invited to submit any quantifiable data that they

    may have concerning the costs and benefits of the proposed rule with

    their comment letters.

    B. The Regulatory Flexibility Act

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

    requires federal agencies, in proposing rules, to consider the impact

    of those rules on small businesses. The Commission has previously

    determined that exchanges, futures commission merchants and large

    traders are not ``small entities'' for the purposes of the RFA.\18\ The

    requirements related to the proposed amendments fall on large traders.

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

    certifies, pursuant to 5 U.S.C. 605(b), that the actions proposed to be

    taken herein will not have a significant economic impact on a

    substantial number of small entities.

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

    \18\ 47 FR 18618, 18618-21 (April 30, 1982).

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

    C. The Paperwork Reduction Act

    When publishing proposed rules, the Paperwork Reduction Act (PRA)

    \19\ imposes certain requirements on Federal agencies, including the

    Commission, in connection with conducting or sponsoring any collection

    of information as defined by the PRA. In compliance with the PRA, the

    Commission through these proposed rule amendments solicits comments to:

    (1) Evaluate whether the proposed collection of information is

    necessary for the proper performance of the functions of the agency,

    including the validity of the methodology and assumptions used; (2)

    evaluate the accuracy of the agency's estimate of the burden of the

    proposed collection of information including the validity of the

    methodology and assumptions used; (3) enhance the quality, utility, and

    clarity of the information to be collected; and (4) minimize the burden

    of the collection on those who are to respond, including through the

    use of appropriate automated, electronic, mechanical, or other

    technological collection techniques or other forms of information

    technology. The Commission has submitted the proposed rule amendments

    and its associated information collection requirements to the Office of

    Management and Budget (OMB). The proposed rule amendments are a part of

    an approved collection of information. The estimated burden associated

    with and reporting obligations for traders with reportable positions

    (OMB Control No. 3038-0009) is as follows:

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

    \19\ Public Law 104-13 (May 13, 1995).

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

    Average Burden Hour Per Response: 1.5.

    Number of Respondents: 6.

    Frequency of Response: Upon special call.

    Persons wishing to comment on the information which would be

    required by the proposed rule amendments should contact the Desk

    Officer, CFTC, Office of Management and Budget, Room 10202, NEOB,

    Washington, DC 20503, 202.395.7340. Copies of the information

    collection submission to OMB are available from the CFTC Clearance

    Officer, 1155 21st Street, NW., Washington, DC 20581, 202.418.5160.

    Copies of the OMB-approved information collection package associated

    with the rulemaking may be obtained from the Desk Officer, Commodity

    Futures Trading Commission, Office of Management and Budget, Room

    10202, NEOB, Washington, DC 20503, 202.395.7340.

    List of Subjects in 17 CFR Part 18

    Commodity futures, Reporting and recordkeeping requirements.

    In consideration of the foregoing, and pursuant to the authority

    contained in the Act, and, in particular, sections 3, 4, 4a, 4c, 4g,

    4i, 5, 5a and 8a of the Act, the Commission hereby proposes to amend

    Chapter I of Title 17 of the Code of Federal Regulations as follows:

    PART 18--REPORTS BY TRADERS

    1. The authority citation for part 18 is revised to read as

    follows:

    Authority: 7 U.S.C. 2, 4, 5, 6a, 6c, 6f, 6g, 6i, 6k, 6m, 6n, 12a

    and 19; 5 U.S.C. 552 and 552(b), unless otherwise noted.

    2. Revise Sec. 18.05 to read as follows:

    Sec. 18.05 Maintenance of books and records.

    Every trader who holds or controls a reportable futures or option

    position shall keep books and records showing all details concerning

    all positions and transactions in the commodity on all reporting

    markets, over the counter and/or pursuant to Sections 2(d), 2(g) or

    2(h)(1)-(2) of the Act or Part 35 of this chapter, on exempt commercial

    markets operating pursuant to Sections 2(h)(3)-(5) of the Act, on

    exempt boards of trade operating pursuant to Section 5d of the Act, and

    on foreign boards of trade. Every such trader shall also keep books and

    records showing all details concerning all positions and transactions

    in the cash commodity, its products and byproducts, and all commercial

    activities that the trader hedges in the futures or option contract in

    which the trader is reportable. The trader shall upon request furnish

    to the Commission any pertinent information concerning such positions,

    transactions or activities in a form acceptable to the Commission.

    Issued in Washington, DC, this 18th day of June, 2007, by the

    Commission.

    Eileen A. Donovan,

    Acting Secretary of the Commission. 1

    [FR Doc. E7-12045 Filed 6-21-07; 8:45 am]

    BILLING CODE 6351-01-P

    Last Updated: June 27, 2007



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