[Federal Register: May 14, 1997 (Volume 62, Number 93)]
[Rules and Regulations]
[Page 26384-26386]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14my97-5]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Parts 1, 5 and 31
Fees for Applications for Contract Market Designation, Leverage
Commodity Registration and Registered Futures Association and Exchange
Rule Enforcement and Financial Reviews
AGENCY: Commodity Futures Trading Commission
ACTION: Final schedule of fees.
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SUMMARY: The Commission periodically adjusts fees charged for certain
program services to assure that they accurately reflect current
Commission costs. In this regard, the staff recently reviewed the
Commission's actual costs of processing applications for contract
market designation (17 CFR part 5, appendix B), audits of leverage
transaction merchants (17 CFR part 31, appendix B) and registered
futures association and exchange rule enforcement and financial reviews
(17 CFR part 1, appendix B). The following fee schedule for fiscal year
1997 reflects the average annual actual costs to the Commission of
providing those services during fiscal years 1994, 1995 and 1996.
Accordingly, the Commission will charge the following fees:
Applications for contract market designation for a futures contract
will be maintained at $8,300; contract market designation for an option
contract will be reduced from $1,800 to $1,700; contract markets that
simultaneously submit designation applications for a futures and an
option on that futures contract will be reduced from a combined fee of
$9,200 for both to $9,000 for both; and leverage commodity registration
will be maintained at $4,500. In addition, the Commission is publishing
the schedule of fees for registered futures association and exchange
rule enforcement and financial reviews.
[[Page 26385]]
DATES: Effective: Contract Market Designation and Leverage Commodity
Registration May 14, 1997.
Registered Futures Association and Exchange Rule Enforcement and
Financial Reviews are due July 14, 1997.
FOR FURTHER INFORMATION CONTACT: Gerald P. Smith, SpecialAssistant to
the Executive Director, Office of the ExecutiveDirector, Commodity
Futures Trading Commission, Three LafayetteCentre, 1155 21st Street,
NW., Washington, DC 20581, telephone number 202-418-5160.
SUPPLEMENTARY INFORMATION: The Commission periodically reviews the
actual costs of providing services for which fees are charged and
adjusts these fees accordingly. In connection with its most recent
review, the Commission has determined that fees for contract market
designations should be adjusted. Also, this release announces the
fiscal year 1997 schedule of fees for registered futures association
and exchange rule enforcement and financial reviews and maintains
leverage commodity registration fees.
Background Information
I. Computation of Fees
The Commission has established fees for certain activities and
functions performed by the Commission.\1\ In calculating the actual
cost of processing applications for contract market designation,
registering leverage commodities, and performing registered futures
association and exchange rule enforcement and financial reviews, the
Commission takes into account personnel costs (direct costs), and
benefits and administrative costs (overhead costs).
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\1\ 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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The Commission first determines personnel costs by extracting data
from the agency's Management Accounting Structured Code (MASC) system.
Employees of the Commission record the time spent on each project under
the MASC system. The Commission then adds an overhead factor that is
made up of two components--benefits and general and administrative
costs. Benefits, which include retirement, insurance and leave, are
based on a government-wide standard established by the Office of
Management and Budget in Circular A-76. General and administrative
costs include the Commission's costs for space, equipment, utilities,
etc. These general and administrative costs are derived by computing
the percentage of Commission appropriations spent on these non-
personnel items. The overhead calculations fluctuate slightly due to
changes in government-wide benefits and the percentage of Commission
appropriations applied to non-personnel costs from year to year. The
actual overhead factor for prior fiscal years were 95% in 1994, 92% in
1995 and 98% in 1996.
Once the total personnel costs for each fee item (contract market
designation, rule enforcement review, etc.) have been determined for
each year the overhead factor is applied and the costs for fiscal years
1994, 1995 and 1996 are averaged. This results in a calculation of the
average annual cost over the three-year period.
II. Applications for Contract Market Designation
On August 23, 1983 the Commission established a fee for Contract
Market Designation. 48 FR 38214. This fee was based upon a three-year
moving average of the actual costs expended and the number of contracts
reviewed during that period of time. The fee charged was reviewed again
in fiscal year 1985 and every year thereafter to determine the fee for
the current year. In fiscal year 1985 the overwhelming majority of
designation applications was for futures contracts as opposed to option
contracts. Therefore, the proposed fee covered both futures and option
designation applications. In fiscal 1992 the Commission reviewed its
data on the actual costs for reviewing designation applications for
both futures and option contracts and determined that the cost of
reviewing a futures contract designation application was much higher
than the cost of reviewing an option contract. It also determined that,
when designation applications for both a futures contract and an option
on that futures contract are submitted simultaneously, the cost for
review of the option contract designation application was even lower
than the individual cost of reviewing the futures contract plus the
option contract.
The Commission staff reviewed the actual costs of processing
applications for contract market designation for a futures contract for
fiscal years 1994, 1995 and 1996 and found that the average cost over
the three year period was $8,368. The review of actual cost of
processing applications for contract market designation for an option
contract for fiscal years 1994, 1995 and 1996 revealed that the average
costs over the same three year period was $1,795. Accordingly, the
Commission has determined that the fee for applications for contract
market designation for a futures contract will be maintained at $8,300
and the fee for applications for contract market designation as an
option contract will be reduced to $1,700 in accordance with the
Commission's regulations (17 CFR part 5, appendix B). In addition, the
combined fee for contract markets simultaneously submitting designation
applications for a futures contract and an option contract on that
futures contract will be reduced to $9,000.
On March 7, 1997, the Commission published final rules in the
Federal Register, 62 FR 10434, which revised the procedures for review
and approval of applications for Contract Market Designation. The
effect of these rules on the assessment of fees for designation will be
realized in future years.
III. Leverage Commodity Registration
No new applications for leverage commodity registration were
received by the Commission in fiscal years 1994, 1995 or 1996.
Accordingly, the Commission will maintain the present fee of $4,500 for
leverage commodity registration.
IV. Registered Futures Association and Exchange Rule Enforcement and
Financial Reviews
Under the formula adopted in 1993 (58 FR 42643, August 11, 1993,
which appears in 17 CFR part 1, appendix B), the Commission calculates
the rule enforcement and financial review fees based on its actual
costs, as well as actual exchange trading volume. The formula for
calculating the rule enforcement and financial review fee is 0.5a+0.5vt
= current fee. In the formula, ``a'' equals the average annual costs,
``v'' equals the percentage of total volume across exchanges over the
last three years and ``t'' equals the average annual cost for all
exchanges.
To determine the fee, first the staff calculates actual costs for
the last three fiscal years. The average annual costs for that time
period for rule enforcement reviews and financial reviews for each
exchange are as follows:
------------------------------------------------------------------------
FY 1994-1996
average annual
Exchange costs for review
services
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Chicago Board of Trade................................ $264,818.49
Chicago Mercantile Exchange........................... 230,131.08
New York Mercantile/COMEX Exchange.................... 216,924.81
Coffee, Sugar and Cocoa Exchange...................... 91,248.09
New York Cotton/New York Futures Exchange............. 86,629.94
Kansas City Board of Trade............................ 17,754.39
[[Page 26386]]
Minneapolis Grain Exchange............................ 29,728.52
Philadelphia Board of Trade........................... 2,893.69
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Total............................................. 940,159.01
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Second, the staff calculates the trading volume for the past three
fiscal years to determine the cumulative volume for each exchange and
its percentage of total volume across all exchanges during that same
period. The trading volume figures for that period are as follows:
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Percentage
FY 1994-1996 of total
Exchange cumulative volume
volume (of across all
contracts) exchanges
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Chicago Board of Trade...................... 657,641,820 43.5642
Chicago Mercantile Exchange................. 561,261,279 37.1797
New York Mercantile/COMEX Exchange.......... 228,952,651 15.1665
Coffee, Sugar and Cocoa Exchange............ 35,326,602 2.3401
New York Cotton/New York Futures Exchange... 17,810,325 1.1798
Kansas City Board of Trade.................. 5,665,084 0.3753
Minneapolis Grain Exchange.................. 2,810,771 0.1862
Philadelphia Board of Trade................. 123,281 0.0082
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Total................................... 1,509,591,813 100.00
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Finally, the staff calculates the current fees by applying the
appropriate exchange data to the formula. The following is an example
of how the rule enforcement and financial review fees for exchanges are
calculated.
Example: The Minneapolis Grain Exchange (MGE) average annual
cost is $29,728.52 and its percentage of total volume over the last
three years is 0.1862. The annual average total cost for all
exchanges during that same time period is $940,159.01. As a result,
the MGE fee for fiscal 1997 is:
(.5)($29,728.52)+(.5) (.001862)($940,159.01) = current fee or
$14,864.26+$856.85=$15,721.11
As stated in 1993 when the formula was adopted, if the calculated
fee using this formula is higher than actual costs, the exchange pays
actual costs. If the calculated fee using the formula is less than
actual costs then the exchange pays the calculated fee. No exchange
will pay more than actual costs. Also, if an exchange has no volume
over the three-year period it pays a flat 50% of actual costs.
The National Futures Association (NFA) is a registered futures
association which is responsible for regulating the practices of its
members. In its oversight role, the Commission performs rule
enforcement and financial reviews of the NFA. The Commission's average
annual cost for reviewing the National Futures Association during
fiscal years 1994 through 1996 is $308,107.27. The National Futures
Association will continue to be charged 100% of its actual costs.
Based upon this formula the fees for all of the exchanges and the
NFA for fiscal 1997 are as follows:
------------------------------------------------------------------------
Exchange FY 1997 fee
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Chicago Board of Trade................................ $264,818.49
Chicago Mercantile Exchange........................... 230,161.08
New York Mercantile/COMEX Exchange.................... 178,257.22
Coffee Sugar and Cocoa Exchange....................... 56,393.14
New York Cotton/New York Futures Exchange............. 48,744.34
Kansas City Board of Trade............................ 10,604.16
Minneapolis Grain Exchange............................ 15,721.11
Philadelphia Board of Trade........................... 1,484.42
NFA................................................... 308,107.27
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Total............................................. 1,114,291.23
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V. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601 et seq.,
requires agencies to consider the impact of rules on small businesses.
The fees implemented in this release affect contract markets (also
referred to as ``exchanges'') and registered futures associations. The
Commission has previously determined that contract markets are not
``small entities'' for purposes of the Regulatory Flexibility Act, 5
U.S.C. 601 et seq., 47 FR 18618 (April 30, 1982). Registered futures
associations also are not considered ``small entities'' by the
Commission. Therefore, the requirements of the Regulatory Flexibility
Act do not apply to contract markets or registered futures
associations. Accordingly, the Chairperson, on behalf of the
Commission, certifies that the fees implemented herein do not have a
significant economic impact on a substantial number of small entities.
* * * * *
Issued in Washington, DC on May 8, 1997, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 97-12687 Filed 5-13-97; 8:45 am]
BILLING CODE 6351-01-P
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