[Federal Register: November 26, 1999 (Volume 64, Number 227)]
[Proposed Rules]
[Page 66432-66433]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



17 CFR Parts 1, 5 and 31

RIN 3038-ZA00

Fees for Applications for Contract Market Designation

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rulemaking.


SUMMARY: The Commission has established fees for certain program
services, including applications for contract market designation. The
Commission is proposing to eliminate its fees for futures and option
contract market designation applications.

DATES: Comments must be received by December 27, 1999.

ADDRESSES: Comments should be mailed to Jean A. Webb, Secretary,
Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st
Street, NW, Washington, DC 20581; transmitted by facsimile to (202)
418-5521; or transmitted electronically to [secretary@cftc.gov].

Division of Economic Analysis , Commodity Futures Trading Commission,
Three Lafayette Center, 1155 21st Street, NW, Washington, DC 20581.


Background Information

I. Computation of Fees

    The Commission has established fees for certain activities and
functions it performs, including processing applications for contract
market designation for futures and option contracts.\1\ The fees for
contract market designations represent the average of the most recent
three-years' actual costs incurred for each of that activity. The
Commission first established a fee for contract market designations on
August 23, 1983. The fee was based upon a three-year moving average of
the actual costs expended and the number of contracts reviewed by the
Commission during that period of time.

    \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).

    In 1992, the Commission revised its fee structure by establishing
three separate fees--one for futures alone; one for options alone; and
one for combined futures and option contract applications. (57 FR 1372,
(January 14, 1992)).\2\ On June 8, 1999, the Commission further
modified its fee structure for a limited class of designation
applications submitted simultaneously where each proposed contract in
the filing is: (i) Cash settled based on an index of non-tangible
commodities; (ii) the cash-settlement procedure is the same for all
contracts in the filing; and (iii) all other terms and conditions of
the contracts are the same in all respects except in regard to a
specified temporal or spatial pricing characteristic or the multiplier
used to determine the size of each contract. (64 FR 30384, June 8,

    \2\ The combined futures/option designation application fee was
set at a level that is less than the aggregate fee for separate
futures and option applications to reflect the fact that the cost
for review of an option was even lower when submitted simultaneously
with the underlying future and to create an incentive for contract
markets to submit simultaneously applications for futures and
options on that future.
    \3\ The fees for designation applications currently in effect
are as follows:
    <bullet> Futures contracts alone--$6,800
    <bullet> Option contracts alone--$1,200
    <bullet> Futures contracts with options--$7,500
    The reduced fees for simultaneous submission of multiple cash-
settled contracts are as follows:
    <bullet> for filings involving multiple cash-settled futures--
$6,800 for the first contract plus $680 for each additional
    <bullet> for filings involving multiple options on cash-settled
futures -- $1,200 for the first contract plus $120 for each
additional contract; and
    <bullet> for filings involving multiple combined cash-settled
futures and options on those futures--$7,500 for the first futures
and option contract plus $750 for each additional futures and option

II. Recent Revisions to the Designation Process

    In a companion notice published elsewhere in this edition of the
Federal Register, the Commission is adopting a final rule 5.3 that
would permit exchanges to list contracts for trading without Commission
approval. This is in response to continued expressions of industry
concern that the ability to list new contracts for trading without
delay is vital to the exchanges' continued competitiveness.
    As explained in the notice of final rulemaking, boards of trade
will be permitted to list contracts for trading based only upon their
certification that the contract meets the requirements of the Commodity
Exchange Act and the Commission's rules thereunder and that they comply
with the other provisions of the rule. The exchange certification
procedure for listing new contracts is in lieu of the otherwise
required application for contract market designation. Under the rule,
contracts may be listed for trading indefinitely in reliance upon the
exchange's certification.

[[Page 66433]]

III. Proposed Amendments to the Designation Fees

    The Commission is proposing to eliminate fees for contract market
designation applications. Otherwise there would be an economic
disincentive to submit proposed contracts for Commission approval under
the existing designation procedures. As greater experience is gained
with the use of the exchange certification listing procedures of Rule
5.3, the Commission may revisit this issue.

IV. 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 involved 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), and the requirements
of the Regulatory Flexibility Act therefore do not apply. Accordingly,
the Chairman, on behalf of the Commission, certifies that the proposed
rule does not have a significant economic impact on a substantial
number of small entities.

    Issued in Washington, DC on November 17, 1999, by the
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 99-30511 Filed 11-24-99; 8:45 am]

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