[Federal Register: March 4, 1998 (Volume 63, Number 42)]


[Page 10595-10596]

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





Notice of Establishment of the Commodity Futures Trading

Commission Global Markets Advisory Committee

SUMMARY: The Commodity Futures Trading Commission has determined to

establish the "Commodity Futures Trading Commission Global Markets

Advisory Committee." As required by Section 9(a)(2) of the Federal

Advisory Committee Act, 5 U.S.C. App. 2, 9(a)(2) and 41 CFR 101-6.1007,

the Commission has consulted with the Committee Management Secretariat

of the General Services Administration. The Commission certifies that

the creation of this advisory committee is necessary and in the public

interest in connection with the performance of duties imposed on the

Commission by the Commodity Exchange Act, 7 U.S.C. 1 et seq., as

amended. This notice is published pursuant to Section 9(a)(2) of the

Advisory Committee Act, 5 U.S.C. App. 2, 9(a)(2) and 41 CFR 101-6.1015.


De'Ana Dow, Legal Counsel to Commissioner Barbara P. Holum (Tel. (202)

418-5070), or Helen G. Blechman, Assistant General Counsel (202) 418-

5116, Commodity Futures Trading Commission, Three Lafayette Centre,

1155 21st Street, N.W., Washington, D.C. 20581.

SUPPLEMENTARY INFORMATION: The globalization of futures markets has

been a principal development of the 1980's and 1990's. Such global

expansion is characterized by:

    <bullet> The increasing number of futures markets being established


    <bullet> The increasingly multinational nature of regulated U.S.


    <bullet> The international linking of markets,

    <bullet> Concerns about international market risk, and

    <bullet> The increased demand for global brokerage services by U.S.

market users.

    The recent volatility that has shaken world equity and currency

markets has demonstrated more vividly than ever before that the markets

are inextricably linked through common products and related market

participants. Therefore, events that occur in one market can and

frequently do cause global regulatory and business concerns. The shocks

to the world financial system caused by the collapse of Barings Plc. in

1995 and the significant losses incurred by the Sumitomo Corporation in

1996 also dramatically illustrate that this is true.

    Increasingly sophisticated and low-cost communication technology

such as the Internet has expanded access to markets and to market

users. Currently, the Commission, as well as other U.S. and foreign

regulators, are considering appropriate regulation of the use of such

electronic cross-border vehicles for trading. Moreover U.S. firms face

an array of disparate regulatory policies as they conduct business in

numerous countries.

    These trends raise complex and novel issues that could profoundly

affect the integrity and competitiveness of U.S. markets and U.S. firms

engaged in providing financial services globally. The Commission wishes

to establish a forum in which it can discuss such issues with U.S.

markets and firms to assist it in designing its regulations and

updating its procedures in response to these profound changes. These

issues would include:

    (1) Avoiding unnecessary regulatory or operational impediments

faced by those doing global business, such as:

    (a) Differing and/or duplicative regulatory frameworks,

    (b) Lack of transparency of rules and regulations, and

    (c) Barriers to market access,

while preserving core protections for markets and customers.

    (2) Setting appropriate international standards for regulation of

futures and derivatives markets and intermediaries;

    (3) Assessing the impact on U.S. markets and firms of the


[[Page 10596]]

international efforts and the initiatives of foreign regulators and

market authorities;

    (4) Achieving continued global competitiveness of U.S. markets and

firms; and

    (5) Identifying methods to improve domestic and international

regulatory structures.

    The Commission has taken an active role in working with foreign

regulators to address global market issues. Recent global initiatives

have been designed: (1) to enhance international supervisory

cooperation and emergency procedures; (2) to establish concrete

standards of best practices that set international benchmarks for

regulation of futures and derivatives markets; (3) to encourage

improved transparency in those markets; (4) to improve the quality and

timeliness of international information sharing; (5) and to encourage

jurisdictions around the world to remove legal or practical obstacles

to achieving these goals.

    The Commission anticipates that the advisory committee will provide

an extremely valuable forum for information exchange and advice on

these matters. The reports, recommendations and general advice from

this committee will enable the Commission to assess more effectively

the need for possible statutory, regulatory or policy alternatives to

address the challenges posed by the globalization of our markets.

    Commissioner Barbara P. Holum will serve as Chairman and Designated

Federal Official of this Advisory Committee. The members of the

Committee will include those U.S. markets, firms and market users most

directly involved in and affected by global operations and will be

balanced in terms of points of view represented. Specifically, the

Commission is considering for membership a broad cross-section of

persons representing U.S. exchanges, regulators and self-regulators,

financial intermediaries, end-users, traders and academics.

    The Commission has found that the committee would not duplicate the

functions of the Commission, another existing advisory committee or

other means such as public hearings. It has further found that advice

on such specialized matters is best obtained through the advisory

committee framework rather than through other more costly, less

flexible and less efficient means of assembling persons from all

sectors of the financial industry. The Commission, therefore, has

concluded that the creation of a Global Markets Advisory Committee is

essential to the conduct of the Commission's business and is in the

public interest.

    Issued in Washington, D.C., on February 25, 1998, by the


Jean A. Webb,

Secretary of the Commission, Commodity Futures Trading Commission.

[FR Doc. 98-5506 Filed 3-3-98; 8:45 am]


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