[Federal Register: October 12, 2000 (Volume 65, Number 198)]
[Page 60619-60621]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Chicago Board of Trade: Proposed Amendments to the Chicago Board
of Trade Corn and Soybeans Futures Contracts, Increasing the Maximum
Daily Premium Charge, Decreasing the Maximum Number of Shipping
Certificates Issuable, and Modifying Certain Loading Requirements

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of availability of proposed amendments to contract terms
and conditions.


SUMMARY: The Chicago Board of Trade (CBOT or Exchange) has submitted
proposed amendments to its corn and soybeans futures contracts which
would increase the maximum daily premium charge, decrease the maximum
number of shipping certificates issuable, and modify certain loading
requirements. The CBT's proposals are described in detail below. The
proposed amendments were submitted under the

[[Page 60620]]

Commission's 45-day Fast Track procedures which provide that, absent
any contrary action by the Commission, the proposed amendments may be
deemed approved on November 20--45 days after the Commission's receipt
of the proposals. The Acting Director of the Division of Economic
Analysis (Division) of the Commission, acting pursuant to the authority
delegated by Commission Regulation 140.96, has determined that
publication of the proposed amendments is in the public interest and
will assist the Commission in considering the views of interested

DATES: Comments must be received on or before November 13, 2000.

ADDRESSES: Interested persons should submit their views and comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 21st Street, NW, Washington, DC 20581. In addition,
comments may be sent by facsimile transmission to facsimile number
(202) 418-5521, or by electronic mail to secretary@cftc.gov. Reference
should be made to the proposed amendments to the CBOT's maximum
permissible premium charge, maximum number of shipping certificates
issuable, and certain loading requirements.

FOR FURTHER INFORMATION CONTACT: Please contact Martin Murray of the
Division of Economic Analysis, Commodity Futures Trading Commission,
Three Lafayette Centre, 21st Street NW, Washington, DC 20581, telephone
(202) 418-5276. Facsimile number: (202) 418-5527. Electronic mail:

SUPPLEMENTARY INFORMATION: The CBT's proposed amendments are summarized
in the table below.

              Item                   Current terms      Proposed terms
1. Increase the daily premium     12/100 cent/bu/day  15/100 cent/bu/day
 charge on outstanding shipping    at Chicago, 10/     at all locations
 certificates.                     100 cent/bu/day     on all
                                   at all other        outstanding
                                   locations.          shipping
                                                       November 1, 2001.
2. Decrease the maximum number    Maximum             Maximum
 of shipping certificates          certificates        certificates
 operators of delivery             issuable limited    issuable limited
 facilities are allowed to issue.  to the storage      to the storage
                                   capacity of         capacity in
                                   delivery            Chicago, and 20
                                   facilities in       times the
                                   Chicago, and 30     delivery
                                   times the           facility's
                                   delivery            registered daily
                                   facility's          rate of loading
                                   registered daily    at facilities on
                                   rate of loading     the Illinois
                                   at facilities on    Waterway and St.
                                   the Illinois        Louis.
                                   Waterway and St.
3. Rescind the cessation of       Premium charges     Premium charges
 premium charges while             stop 10 days        stop after load-
 transportation is                 after               out is completed.
 constructively placed.            transportation is
                                   placed, or load-
                                   out is completed,
                                   whichever is
4. Include the stevedoring costs  Certificate owner   Certificate issuer
 in barge load-out charge.         pays for            pays for
                                   stevedoring costs   stevedoring costs
                                   for barge load-     for barge load-
                                   out.                out.
5. Extend the responsibility of   Certificate owner   Certificate owner
 the certificate owner to          must reimburse      must reimburse
 reimburse the certificate         certificate         certificate
 issuer's expense for making       issuer if owner     issuer if owner
 grain available at the delivery   fails to place      fails to place
 location.                         barge within 10     barge within 10
                                   days of scheduled   days of scheduled
                                   loading date.       loading date or
                                                       cancels loading
                                                       orders and
                                                       requires shipping
                                                       certificates to
                                                       be reissued.
6. Eliminate the requirement      Delivery            Delivery
 that shipping certificates be     facilities on the   facilities on the
 delivered in multiples of         Illinois Waterway   Illinois Waterway
 55,000 bushels.                   must make initial   must make initial
                                   deliveries in       deliveries in
                                   multiples of        multiples of
                                   55,000 bushels.     5,000 bushels.
7. Improve merchantability of      (No current provision.) In the event
 shipping certificates at                less than eleven shipping
 shipping stations with less         certificates are outstanding at a
 than eleven outstanding at a       delivery facility, the owner of all
 delivery facility, the owner of         such outstanding shipping
 all such outstanding shipping      certificates may cancel the shipping
 certificates.                         certificates and obligate the
                                      certificate issuer to provide a
                                   market value at which the issuer will
                                      either buy back all the canceled
                                     shipping certificates or sell the
                                     balance needed to complete a barge
                                    loading of at least 55,000 bushels,
                                            taker's preference.

    The Exchange intends to make the proposed amendments effective on
November 1, 2001, for all existing and newly listed contract months
beginning with the November 2001 contract month. The proposed changes
will apply to all shipping certificates that are outstanding on the
effective date. Shipping certificates issued prior to November 1, 2001
or shipping certificates that are returned to the shipper, or his
agent, for reissuance prior to November 1, 2000 may indicate two
premium charges, one for the period through October 31, 2001 and other
commencing on November 1, 2001.
    In support of the proposed amendments, the Exchange provides the
following justification:
     Increase in the maximum premium charge. The CBT indicates
that the proposed charge better reflects commercial charges in the
delivery territory during periods of high crop surplus, such as
currently exist. Thus, the CBT believes that the proposal will improve
convergence between cash and futures prices.
     Reduction in the maximum number of shipping certificates
issuable to 20 times the daily rate of load-out. The CBT believes that
the proposal will provide more timely load-out to receivers by reducing
the potential delivery lineup to 20 business days from 30. The Exchange
further notes that ``only about 20 percent of the [current] maximum
number of shipping certificates have been registered at one time.''
Consequently, it believes that this proposal would not reduce
substantively ``the effective deliverable supply.''
     Receiver must pay premium charges through completion of
loading, rather than through the earlier of ten business days following
constructive placement of barges or completion of loading. The CBT
indicates that the proposal ``would compensate the maker for securing
grain in preparation for load-out.'' The Exchange also notes that the
receiver is protected from unnecessary delays in loading (and
consequent increased premium charges) by the contracts' existing
preferential treatment of shipping certificate holders over all other
receivers, as well as the proposed reduction in the potential delivery
line-up to 20 days, as indicated above.
     Stevedoring fees for loading grain into barges are to be
paid by the certificate issuer. The CBT indicates that this reflects
customary cash market practice, and ``will standardize the load-out
charges at all shipping stations for barges.''
     Clarification that receiver must compensate deliverer for
costs incurred when loading orders are canceled. The CBT notes that the
proposal merely

[[Page 60621]]

``clarifies that the taker must reimburse the maker for expenses for
making the grain available for load-out when loading and shipping
instructions are canceled prior to load-out.''
     Permit delivery in minimum increments of 5,000 bushels,
rather than 55,000 bushels. The CBT states that, ``If the taker can
issue shipping certificates in any multiple of 5,000 bushels and not be
restricted to making initial deliveries in multiples of 55,000 bushels,
the delivery process will be simplified and made more flexible.''
Furthermore, the ``concern that less than barge load quantities would
be left outstanding is minimized'' by the proposed requirement that a
shipper with fewer than a barge-load quantity of certificates
outstanding must quote a market rate for buying back the certificates
or selling a sufficient quantity of certificates to make up a barge
     New requirement that shippers provide a market quote for
buying or selling shipping certificates should the number of shipping
certificates at the shipping station fall below eleven certificates
(55,000 bushels or one barge load). The CBT states that the proposal
``increases merchandising opportunities of outstanding shipping
certificates for the taker.'' The CBT also notes that, ``if the shipper
does not wish to be obligated to buy back shipping certificates or
provide the balance for loadout, he may decide to maintain at least
eleven shipping certificates outstanding at a shipping station.''
    The Commission is requesting comments on the proposed amendments.
In particular, the Commission requests that commenters address the
extent to which the proposals reflect commercial practices, and their
potential impact on deliverable supplies for the corn and soybeans
futures contracts.
    Copies of the proposed amendments will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 21st Street NW, Washington, DC 20581. Copies of
the proposed amendments can be obtained through the Office of the
Secretariat by mail at the above address, by phone at (202) 418-5100,
or via the Internet at secretary@cftc.gov.
    Other materials submitted by the Exchange in support of the
proposal may be available upon request pursuant to the Freedom of
Information Act (5 U.S.C. 552) and the Commission's regulations
thereunder (17 CFR part 145 (1987)), except to the extent they are
entitled to confidential treatment as set forth in 17 CFR 145.5 and
145.9. Requests for copies of such materials should be made to the FOI,
Privacy and Sunshine Act Compliance Staff of the Office of Secretariat
at the Commission's headquarters in accordance with 17 CFR 145.7 and
    Any person interested in submitting written data, views, or
arguments on the proposed amendments, or with respect to other
materials submitted by the Exchange, should send such comments to Jean
A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 21st Street NW, Washington, DC 20581 by the specified

    Issued in Washington, DC, on October 6, 2000.
Richard Shilts,
Acting Director.
[FR Doc. 00-26221 Filed 10-11-00; 8:45 am]

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