[Federal Register: December 20, 1999 (Volume 64, Number 243)]
[Notices]
[Page 71122-71123]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de99-60]
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COMMODITY FUTURES TRADING COMMISSION
Proposed Amendments to the Chicago Mercantile Exchange Oriented
Strand Board Futures Contract
agency: Commodity Futures Trading Commission.
action: Notice of availability of proposed amendments to contract terms
and conditions.
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summary: The Chicago Mercantile (CME or Exchange) has proposed
amendments to its oriented strand board (OSB) futures contract. The
primary proposed amendments would allow delivery of OSB from storage
facilities and allow shipments via truck. The proposal was submitted
under the Commission's 45-day Fast Track procedures. 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 proposals for
comment is in the public interest, will assist the Commission in
considering the views of interested persons, and is consistent with the
purpose of the Commodity Exchange Act.
dates: Comment must be received on or before January 4, 2000.
addresses: Interested persons should submit their views and comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 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 [email protected].
Reference should be made to the CME oriented strand board futures
contract rule amendments.
for further information contact: Please contact John Forkkio of the
Division of Economic Analysis, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581,
telephone (202) 418-5281. Facsimile number: (202) 418-5527. Electronic
mail: [email protected].
supplementary information: The proposed amendments include two
substantive revisions to the delivery procedures as well as several
minor revisions.
One substantive change is to allow delivery from a storage
facility. The amended rules would provide that a delivery unit must be
delivered from a single mill or storage facility and must be produced
by only one manufacturer. According to the CME, ``this is a normal cash
market practice that gives some assurance of product integrity and
uniformity to the buyer.
Another significant proposed change is to allow delivery via truck.
According to the Exchange.
Truck shipment is possible by mutual agreement between buyer and
seller. Although the buyer is responsible for arranging shipment,
the seller may provide the trucks under terms acceptable to the
buyer. These terms would include a shipping schedule. If the buyer
provides the trucks, however, a shipping interval must be specified
by the seller using the dates required by the futures contract. A
delivery unit of panels would consist of 3 truckloads. The seller
must pick an interval of 4 consecutive business days that may start
as soon as the fifth day, and must start no later than the eighth
day, after delivery instructions have been received from the buyer.
In addition, the CME is proposing to add the phrase ``wood-based
structural-use'' to the commodity specifications for futures contract
deliveries. This would clarify the type of panel allowed in deliveries
on the futures contract. According to the CME, ``[t]he phrase matches
the title of U.S. Department of Commerce product standard PS2-92 that
governs the performance standards of OSB panels, as noted in current
Rule 7304.A.1.
The Exchange also is proposing to require the buyer who chooses
rail shipment to provide a routing to destination that is acceptable to
the originating carrier. The CME stated that ``[t]his is necessary to
ensure that rail shipment is possible along the entire route chosen by
the buyer and matches a provision of the delivery procedures in the
current Random Length Lumber futures contract. In the absence of
instructions from the buyer, delivery will be made via rail to
Chicago.''
The CME stated that current contract calls for the seller to prepay
rail freight from the mill to the buyer's destination and then bill the
buyer for any excess charges over the freight cost incurred if the
shipment were to have been made from the mill to Chicago, using the
lowest published freight rate. The CME indicated that, since this
language is hard to follow, it proposes to amend the rules to add
``explicit language to detail how the calculation of any excess charges
is to be made.''
Another proposed amendment provides that shipping the charges are
to be based on the rate for 52-foot 8-inch boxcars. The CME stated that
``this provision means only that the rate charged to the buyer must be
for that size boxcar; however, any size boxcar can be used to actually
ship the panels.'' According to the Exchange, in cash market
transactions, this size of boxcar is commonly used for shipping panels
of the amounts, thickness and dimension specified by the OSB futures
contract.
The CME also proposes to require that deliverable OSB panels may
not be older than 18 months, dated from the transfer of title.
According to the Exchange, ``an 18-month span was considered by
industry representatives to be long enough to allow for storage
programs to be meaningful yet short enough so that panels would retain
their fresh appearance and condition.''
Finally, rule 7305 is proposed to be amended by adding a clause
allowing
[[Page 71123]]
reinspection requests to be made regardless of when the panels were
first received. The CME stated that this provision reflects a normal
cash market practice ``under PS2-92 for reinspection requests to be
honored free of charge by the grading agency if they are made within 6
months of first receipt of the panels.''
The proposed amendments were submitted pursuant to the Commission's
Fast Track procedures for streamlining the review of futures contract
rule amendments and new contract approvals (62 FR 10434). Under those
procedures, the proposals, absent any contrary action by the
Commission, may be deemed approved at the close of business on January
21, 2000, 45 days after receipt of the proposals. In view of the
limited review period under the Fast Track procedures, the Commission
has determined to publish for public comment notice of the availability
of the terms and conditions for 15 days, rather than 30 days as
provided for proposals submitted under the regular review procedures.
Copies of the proposed amendments will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 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.
Other materials submitted by the CME in support of the proposed
amendments 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 (1997)), 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 FOL,
Privacy and Sunshine Act Compliance Staff of the Office of Secretariat
at the Commission's headquarters in accordance with 17 CFR 145.7 and
145.8.
Any person interested in submitting written data, views, or
arguments on the proposed amendments, or with respect to other
materials submitted by the CME, 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 date.
Issued in Washington, DC, on December 14, 1999.
John R. Mielke,
Acting Director.
[FR Doc. 99-32839 Filed 12-17-99; 8:45 am]
BILLING CODE 6351-01-M
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