For Release: August 4, 2000
Commodity Futures Trading Commission Issues Amendments to Regulation 1.59 Regarding Trading Prohibitions Imposed on Certain Persons Affiliated with Self-Regulatory Organizations
Washington, D.C. The Commodity Futures Trading Commission (Commission) announced today final amendments to provisions regulating the use of material, non-public information by governing board members, committee members, and employees of self-regulatory organizations (SROs), found in Commission regulation 1.59. Regulation 1.59 generally establishes safeguards with respect to the use of material, non-public information gained by SRO-affiliated individuals in their official capacity. It applies a strict trading and disclosure prohibition to employees, while simply limiting other exchange officials to the use of such information in their official capacities.
The Commission has reviewed regulation 1.59 to accommodate new industry practices, while continuing to balance the need to protect sensitive information with the desire to not create potential disincentives to serve on SRO boards and committees. Towards that end, the amendments clarify that salaried governing board and committee members of SROs are not considered "employees" for purposes of regulation 1.59. Moreover, individuals serving as the "functional equivalent" of governing board members or committee members, i.e., paid and unpaid advisors to SRO governing boards or committees, have been included in new definitions of "governing board member" and "committee member," in order to exclude such persons from the definition of "employee." These changes were supported by the futures industry in its comments on the proposed rulemaking.
The Commission has also determined to exclude consultants from the definition of "employee," instead requiring them to comply with the restriction applicable to governing board members and committee members. This treatment recognizes the increased and more varied use of consultants since regulation 1.59 was last amended. Finally, the rulemaking also included several technical amendments to regulation 1.59, clarifying the scope of the SRO employee trading prohibition.
These amendments were published in the Federal Register on August 4, 2000, and will become effective on December 4, 2000. Copies may be obtained by contacting the Commission's Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100, or by accessing the Commission's website, http://www.cftc.gov/foia/fedreg00/foi000804a.htm