e7-21077

[Federal Register: October 26, 2007 (Volume 72, Number 207)]

[Rules and Regulations]

[Page 60767-60771]

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

[DOCID:fr26oc07-7]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 18

RIN 3038-AC22

Maintenance of Books, Records and Reports by Traders

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rule.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is

amending Commission Regulation 18.05 in two respects: to make it

explicit that persons holding or controlling reportable positions on a

designated contract market (DCM) or derivatives transaction execution

facility (DTEF) must retain books and records and make available to the

Commission upon request any pertinent information with respect to all

other positions and transactions in the commodity in which the trader

has a reportable position, including positions held or controlled or

transactions executed on all reporting markets, over-the-counter (OTC)

and/or pursuant to Sections 2(d), 2(g) or 2(h)(1)-(2) of the Commodity

Exchange Act (Act) or Part 35 of the Commission's regulations, on

exempt commercial markets operating pursuant to Sections 2(h)(3)-(5) of

the Act (ECMs), on exempt boards of trade operating pursuant to Section

5d of the Act (EBOTs), and on foreign boards of trade (FBOTs); and to

make the regulation clearer and more complete with respect to hedging

activity. The amendments will enhance the Commission's ability to deter

and prevent price manipulation or any other disruptions to the

integrity of the regulated futures markets, help to ensure the

avoidance of systemic risk, and clarify the meaning of the regulation.

DATES: Effective Date: November 26, 2007.

FOR FURTHER INFORMATION CONTACT: Duane C. Andresen, Special Counsel,

Division of Market Oversight, Commodity Futures Trading Commission,

Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581.

Telephone 202-418-5492; e-mail [email protected]

SUPPLEMENTARY INFORMATION:

I. Purpose of Regulation 18.05 and Statutory Basis

Section 3(b) of the Act \1\ declares that the purpose of the Act is

to, among

[[Page 60768]]

other things, deter and prevent price manipulation or any other

disruptions to market integrity and to ensure the financial integrity

of all transactions subject to the Act and the avoidance of systemic

risk. Section 4i of the Act \2\ requires persons holding futures or

option positions at DCMs or DTEFs at or above certain levels to keep

books and records of all:

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\1\ 7 U.S.C. Sec. 5(b) (2007). Sec. 3(b) of the Act provides

in full:

It is the purpose of this chapter to serve the public interests

described in subsection (a) of this section through a system of

effective self-regulation of trading facilities, clearing systems,

market participants and market professionals under the oversight of

the Commission. To foster these public interests, it is further the

purpose of this chapter to deter and prevent price manipulation or

any other disruptions to market integrity; to ensure the financial

integrity of all transactions subject to this chapter and the

avoidance of systemic risk; to protect all market participants from

fraudulent or other abusive sales practices and misuses of customer

assets; and to promote responsible innovation and fair competition

among boards of trade, other markets and market participants.

\2\ 7 U.S.C.Sec. 6i (2007). Sec. 4i of the Act provides:

It shall be unlawful for any person to make any contract for the

purchase or sale of any commodity for future delivery on or subject

to the rules of any contract market or derivatives transaction

execution facility--

(1) if such person shall directly or indirectly make such

contracts with respect to any commodity or any future of such

commodity during any one day in an amount equal to or in excess of

such amount as shall be fixed from time to time by the Commission,

and

(2) if such person shall directly or indirectly have or obtain a

long or short position in any commodity or any future of such

commodity equal to or in excess of such amount as shall be fixed

from time to time by the Commission, unless such person files or

causes to be filed with the properly designated officer of the

Commission such reports regarding any transactions or positions

described in clauses (1) and (2) hereof as the Commission may by

rule or regulation require and unless, in accordance with rules and

regulations of the Commission, such person shall keep books and

records of all such transactions and positions and transactions and

positions in any such commodity traded on or subject to the rules of

any other board of trade, and of cash or spot transactions in, and

inventories and purchase and sale commitments of such commodity.

Such books and records shall show complete details concerning all

such transactions, positions, inventories, and commitments,

including the names and addresses of all persons having any interest

therein, and shall be open at all times to inspection by any

representative of the Commission or the Department of Justice. For

the purposes of this section, the futures and cash or spot

transactions and positions of any person shall include such

transactions and positions of any persons directly or indirectly

controlled by such person.

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(1) Transactions and positions in the exchange-traded commodity;

(2) Transactions and positions in any such commodity traded on or

subject to the rules of any other board of trade; and

(3) Cash or spot transactions in, and inventories and purchase and

sale commitments of such commodity.

Such books and records must be open at all times for inspection by

any representative of the Commission or the Department of Justice.

Section 8a(5) of the Act \3\ provides explicit authority to the

Commission to make and promulgate such rules and regulations as, in the

judgment of the Commission, are reasonably necessary to effectuate any

of the provisions or to accomplish any of the purposes of the Act. In

order to accomplish the purposes of Sections 3(b) and 4i set forth

above, the Commission has promulgated regulations creating market and

large trader reporting requirements.\4\ Included among these

regulations is a requirement that persons holding futures or option

positions at DCMs or DTEFs (reporting markets) \5\ at or above

reportable levels (reportable positions) \6\ be identified to the

Commission through the large trader reporting system (LTRS).

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\3\ 7 U.S.C. 12a(5) (2007).

\4\ The Commission's market and large trader reporting rules are

contained in Parts 15 through 21 of the Commission's regulations.

\5\ Pursuant to Commission Regulation 15.00(m), a reporting

market means a DCM and, unless determined otherwise by the

Commission with respect to the facility or a specific contract

listed by the facility, a DTEF.

\6\ Pursuant to Commission Regulation 15.00(l), reportable

position means:

(1) For reports specified in parts 17, 18 and Sec. 19.00(a)(2)

and (a)(3) of this chapter any open contract position that at the

close of the market on any business day equals or exceeds the

quantity specified in Sec. 15.03 of this part in either:

(i) Any one future of any commodity on any one reporting market,

excluding future contracts against which notices of delivery have

been stopped by a trader or issued by the clearing organization of a

reporting market; or

(ii) Long or short put or call options that exercise into the

same future of any commodity, or long or short put or call options

for options on physicals that have identical expirations and

exercise into the same physical, on any one reporting market.

(2) For the purposes of reports specified in Sec. 19.00(a)(1)

of this chapter, any combined futures and futures-equivalent option

open contract position as defined in part 150 of this chapter in any

one month or in all months combined, either net long or net short in

any commodity on any one reporting market, excluding futures

positions against which notices of delivery have been stopped by a

trader or issued by the clearing organization of a reporting market,

which at the close of the market on the last business day of the

week exceeds the net quantity limit in spot, single or in all-months

fixed in Sec. 150.2 of this chapter for the particular commodity

and reporting market.

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The LTRS, which requires that clearing members, futures commission

merchants (FCM) and foreign brokers file daily reports with the

Commission, enables the Commission to assess an individual trader's

activities and potential market power and to enforce the Commission or

DCM-set limits on speculative positions.\7\ Once a trader holds a

reportable position, the trader is subject to Commission Regulation

18.05,\8\ which requires that the trader keep books and records showing

all details concerning:

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\7\ The Commission also uses large trader reporting information

as a means to ensure the avoidance of systemic risk in that such

information enables Commission staff to determine which FCMs

carrying accounts might have exposure in particular markets.

\8\ Regulation 18.05 states in full:

Every trader who holds or controls a reportable futures or

option position shall keep books and records showing all details

concerning all positions and transactions for future delivery in the

commodity on all reporting markets, all positions and transactions

in the commodity option, and all positions and transactions in the

cash commodity, its products and byproducts and, in addition,

commercial activities that the trader hedges in the commodity

underlying the futures contract in which the trader is reportable,

and shall upon request furnish to the Commission any pertinent

information concerning such positions, transactions or activities.

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(1) All positions and transactions for future delivery in the

commodity on all reporting markets;

(2) All positions and transactions in the commodity option;

(3) All positions and transactions in the cash commodity, its

products and byproducts; and

(4) Commercial activities that the trader hedges in the commodity

underlying the futures contract in which the trader is reportable.\9\

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\9\ In describing the requirements of Regulation 18.05 in 1981,

the Commission stated:

The regulation requires reportable traders to maintain books and

records of futures positions and transactions in the commodity in

which they are reportable and all positions and transactions in the

cash commodity and its products and byproducts * * *. [T]he

Commission wishes to underscore its view that the book and

recordkeeping requirements and inspection provision contained

therein are essential to accomplish the purposes of the Act and

within the Commission's authority to adopt pursuant to section[s] 4i

and 8a(5) of the Act. These requirements have always applied to the

traders who hold or control a reportable position, and have not been

restricted in any way. ``Reporting Requirements for Contract

Markets, Futures Commission Merchants, Members of Exchanges and

Large Traders,'' 46 FR 59960, 59963 (December 8, 1981) (footnote

omitted).

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A reportable trader is required to furnish to the Commission, upon

request, any pertinent information concerning these positions,

transactions or activities. \10\ Traders who do not hold reportable

positions do not have obligations under Regulation 18.05.

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\10\ The Commission currently requests such information an

average of three times per year.

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II. Proposal

A. Introduction

In order to enhance its ability to detect and prevent manipulation

of regulated markets and products and to ensure the avoidance of

systemic risk, as well as to clarify the meaning of the regulation and

bring it up to date, the Commission published in the Federal Register a

proposal to amend Regulation 18.05 in the following respects: \11\

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\11\ 72 FR 34413 (June 22, 2007).

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1. To make it explicit that persons holding or controlling

reportable positions on a reporting market must retain books and

records and make available to the Commission upon request pertinent

information with respect to all non-reporting transactions, i.e., all

positions and transactions in the commodity in which the trader is

reportable, including transactions

[[Page 60769]]

executed on all reporting markets, OTC and/or pursuant to Sections

2(d), 2(g) or 2(h)(1)-(2) of the Act or Part 35 of the Commission's

regulations, on ECMs operating pursuant to Sections 2(h)(3)-(5) of the

Act, on EBOTs operating pursuant to Section 5d of the Act, and on

FBOTs; and

2. To make the regulation clearer and more complete with respect to

hedging activity.

B. Proposed Amendments Related to Recordkeeping and Reporting

The proposal recognized that there is a close relationship among

transactions conducted on reporting markets and non-reporting

transactions and that it is sometimes necessary to determine all

transactions and positions in the commodity in which the trader is

reportable in order to more effectively detect and prevent manipulation

of regulated markets and products and to ensure the avoidance of

systemic risk.\12\ The Commission recognized that it is particularly

important that staff be able to assess the reportable trader's overall

position in the same commodity in light of the growing volume of

trading on the non-reporting markets, the close relationship among the

various products and markets, the increasing globalization of the

futures markets, and the growth of trading on FBOTs.\13\

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\12\ See sections 6(c), 6c, 6(d) and 9(a)(2) of the Act for the

Commission's antimanipulation authority.

\13\ For instance, since 1999, Commission staff, through foreign

terminal no-action letters, has allowed 19 FBOTs to make their

trading systems available by direct access to members and other

participants in the U.S. without requiring the FBOTs to register as

DCMs or DTEFs.

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The proposal noted that while Regulation 18.05 explicitly requires

that a trader holding reportable positions keep books and records and

provide to the Commission, upon request, pertinent information with

respect to positions and transactions in the underlying commodity on

DCMs and DTEFs, it does not explicitly do so with respect to positions

and transactions in virtually identical contracts executed on ECMs,

EBOTs or FBOTs or in the same commodity executed OTC and/or pursuant to

Sections 2(d), 2(g) or 2(h)(1)-(2) of the Act or Part 35 of the

Commission's regulations. The Commission noted that information

concerning non-reporting transactions is important to its ability to

conduct effective market surveillance of the DCM and DTEF contracts.

Thus, if a trader is reportable because of futures or option positions

in a contract on a DCM or DTEF, the trader's books and records with

respect to non-reporting positions and transactions in the same

commodity are relevant to effective surveillance and supervision of the

DCM or DTEF contract in which the trader is reportable.

The proposal noted that the Act provides ample authority to require

keeping books and records and providing pertinent information

concerning non-reporting transactions. Section 4i explicitly

encompasses non-reporting transactions on ``any other board of trade''

(such as FBOTs, ECMs operating pursuant to Sections 2(h)(3)-(5) of the

Act, and EBOTs operating pursuant to Section 5d of the Act) and in the

form of cash or spot transactions, inventories, and purchase and sale

commitments. Further, Section 3(b) of the Act declares that the purpose

of the Act is to, among other things, deter and prevent price

manipulation or any other disruptions to market integrity and to ensure

the avoidance of systemic risk. Section 8a(5) of the Act authorizes the

Commission to promulgate such regulations as, in its judgment, are

reasonably necessary to accomplish any of the purposes of the Act. As

noted in the proposal, amending Regulation 18.05 to clearly require

that reportable traders keep books and records showing all details

concerning non-reporting transactions in the reportable commodity is a

reasonably necessary means of accomplishing the purposes of Section

3(b) of the Act.

The proposal also noted that although non-reporting transactions

themselves generally are not subject to most regulatory provisions of

the Act, the futures or option transactions executed and maintained on

a DCM or DTEF that result in a reportable position are subject to such

provisions and, pursuant to Section 3(a) of the Act, are affected with

a national public interest. It is the purpose of the Act pursuant to

Section 3(b) that the Commission deter and prevent price manipulation

of all commodities traded on these regulated markets. The proposal

stated that to accomplish this purpose, it is necessary that the

Commission have the ability to review all activities in commodities

traded on these markets, regardless of where the transactions are

executed. By taking a position on a regulated market, a trader agrees

to abide by the rules of the market and the Commission, including

prohibitions against manipulation. To enhance its ability to detect and

deter manipulation and other threats to market integrity, the

Commission requires persons holding reportable positions to maintain

books and records of transactions that could impact the regulated

market and related cash market, including non-reporting transactions.

Finally, the proposal noted that staff has interpreted Regulation

18.05 to include position and transaction data for non-reporting

transactions and has received such information in response to requests

made pursuant to the Regulation. Thus, consistent with the Act and

Commission practice, the Commission proposed to amend Regulation 18.05

to make explicit that a trader with a reportable position must keep

books and records showing all details concerning all non-reporting

transactions in the same commodity and provide pertinent information to

the Commission upon request.

C. Amendments Related to Clarity and Completeness

The proposal also noted that there are two issues that arise in

connection with the Regulation 18.05 requirement that traders keep

books and records showing all details concerning ``commercial

activities that the trader hedges in the commodity underlying the

futures contract in which the trader is reportable.'' First, the phrase

has led to some confusion. Originally inserted into the paragraph as

``commercial activities that the trader hedges in the futures commodity

in which the trader is reportable,'' its purpose was to require that,

``in addition to books and records of positions or transactions in a

cash commodity, a reportable trader must also maintain records of

commercial activities which the trader hedges.'' \14\ Second, the

proposal stated that reportable positions can be option positions, as

well as futures positions, but it is not clear that the current

language also addresses commercial activities that the trader hedges in

the commodity underlying any option contract in which the trader is

reportable.

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\14\ 46 FR 42463, 42466 (August 21, 1981).

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The Commission therefore proposed to amend the regulation to revert

to the original approach and include hedges in the option contract in

which the trader is reportable. By modifying the phrase to read

``commercial activities that the trader hedges in the futures or option

contract in which the trader is reportable,'' Regulation 18.05 captures

information with respect to hedges in other than the cash commodity,

its products or byproducts (i.e., a trader with a reportable position

in gold futures or options that is a hedge of a cash position in silver

would be required to comply with the Regulation 18.05 requirements with

respect to the silver position).

[[Page 60770]]

III. Comments Regarding the Proposal

The Commission received six comment letters on its proposal.

Commenters included the American Public Gas Association (APGA), the

Industrial Energy Consumers of America (IECA), the International Swaps

and Derivatives Association, Inc. (ISDA), the Managed Funds Association

(MFA), the New York Public Service Commission (NYPSC), and the New York

Mercantile Exchange (NYMEX). Most of the commenters generally endorsed

the proposal and/or its underlying purpose, but felt that additional

steps are necessary to resolve the underlying matters that the proposal

is intended to address. Two commenters raised concerns regarding the

recordkeeping and reporting aspects of the proposal.

The APGA commented that it strongly supports the proposed amendment

but is concerned about the economic links between NYMEX and OTC

contracts and believes that further steps are necessary for the

Commission to carry out surveillance of the natural gas markets. It

expressed concern that the LTRS does not routinely reach traders' large

OTC positions and noted that it has petitioned Congress to provide the

Commission with authority for a LTRS with respect to trading in

financial contracts in natural gas. Further, the APGA commented that

reliance on special call authority leaves open the potential for

manipulation or other disruptive behavior with little risk of detection

until after damage to the market has been done.

The IECA commented that it supports the proposal but noted that

requiring companies to keep books and records does not prevent market

manipulation and that preemptive monitoring of entities with large

positions that cover both futures and OTC markets is necessary.

Further, such entities should be required to report daily to the

Commission. The IECA also recommended that the Commission support the

establishment of an advisory panel on energy markets with consumer

participation thereon.

The NYPSC noted that it supports the proposed rule and its

underlying purpose and that given the increases in natural gas prices

over the past several years, the relevant government entities must take

all available steps to prevent market manipulation and ensure the

integrity of the natural gas markets. The NYPSC maintained that it is

essential to evaluate exposure on both NYMEX and the InterContinental

Exchange (ICE), an ECM, and stated that the Commission's inability to

directly regulate traders that use ICE exclusively creates a serious

loophole in effective regulatory oversight of the financial markets.

Concerned that traders will avoid regulatory oversight by trading

exclusively on ICE, the NYPSC recommended that the Commission should

monitor the migration of traders that currently utilize NYMEX to ICE as

the exclusive means of trading natural gas contracts.

The ISDA and the MFA voiced support for the proposal but raised

concerns about the proposal's recordkeeping and reporting obligations.

The ISDA stated its view that the proposal does not create additional

recordkeeping or reporting obligations and requested clarification with

respect to the scope of Regulation 1.35(a), which contains

recordkeeping and reporting language similar to that in proposed

Regulation 18.05. Further, the ISDA requested clarification that the

records required to be retained under proposed Regulation 18.05 are

subject to Regulation 1.31 retention requirements and consist of

accurate records of positions and actual transaction documentation

created in the ordinary course of business. The MFA requested that the

Commission confirm that the current system of books and records

maintained by traders in the normal course of business and in the

format created in the normal course of business would meet the

proposal's recordkeeping and retention requirements.

The NYMEX voiced support for the intention underlying the proposal

but commented that the purpose of the proposal can be met only by

imposing identical requirements on linked trading facilities meeting

specified criteria. NYMEX posited that the proposal, if implemented,

would create an incentive for market participants to do all their

trading at unregulated or non-transparent venues or to trade at a level

below the reportable level on the regulated exchange. Further, NYMEX

commented that the proposal was limited in effectiveness because of the

anticipated infrequent use of the special call procedure; would impose

a cost on the regulated exchanges because of the shift in trading

activity; and would have adverse public policy consequences. NYMEX

recommended that the Commission defer the amendments to Regulation

18.05 in favor of a more comprehensive legislative approach that would

result in the implementation of reporting requirements on organized

trading facilities that have triggered specified criteria.\15\

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\15\ As noted above, other commenters also recommended

legislation action, i.e., to provide the Commission with authority

for a LTRS with respect to trading in financial contracts in natural

gas on non-reporting markets and to require entities that control

large positions in the OTC market to report daily to the Commission.

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The Commission has carefully considered the comments submitted and

has decided, for reasons cited herein and in the proposal, to amend the

regulation as proposed. As previously stated, staff has interpreted

Regulation 18.05 to include position and transaction data for non-

reporting transactions and has received such information in response to

requests made pursuant to the Regulation. Thus, the proposal to amend

Regulation 18.05 merely makes explicit what has been implicit.

NYMEX's comment that the proposal would lead market participants to

move their trading activity to unregulated or non-transparent venues,

or trade at a level below the reportable level on the regulated

exchange in order to avoid the consequences of holding reportable

positions, is highly speculative and, in the Commission's estimation,

unlikely. As previously discussed, the amendments to Regulation 18.05

clarify existing authority and, accordingly, any ``disincentive'' for

traders to trade on a regulated market already exists, with or without

the amendments. In addition, the Commission sees little merit in

following NYMEX's suggestion to defer in favor of a legislative

approach. The Commission can control neither the timing nor the terms

of legislation addressing reporting obligations on currently non-

reporting markets, or even whether such legislation is enacted in the

first instance. Should legislation in this area be enacted which

expands the Commission's jurisdiction with respect to transactions that

are currently non-reportable, further amendments to the regulation

could be considered.

With respect to the comments regarding the proposal's recordkeeping

and reporting obligations, the Commission confirms that the amendments

should not change current recordkeeping or reporting obligations,

assuming that traders are currently keeping complete transaction

records. Records required to be retained under Regulation 18.05 consist

of accurate records of positions and actual transaction documentation

created in the ordinary course of business. Thus, books and records

that currently should be maintained by traders in the normal course of

business and in the format created in the normal course of business

would meet the regulation's recordkeeping requirements. Such records

are subject to the Regulation 1.31 retention requirements. Finally,

[[Page 60771]]

Regulation 18.05 does not alter or add to the Regulation 1.35(a)

recordkeeping and reporting requirements.

IV. Related Matters

A. Cost Benefit Analysis

Section 15(a) of the Act requires the Commission to consider the

costs and benefits of its action before issuing a new regulation or

order under the Act. By its terms, Section 15(a) does not require the

Commission to quantify the costs and benefits of a new regulation or to

determine whether the benefits of the regulation outweigh its costs.

Rather, Section 15(a) simply requires the Commission to ``consider the

costs and benefits'' of its action.

Section 15(a) further specifies that the costs and benefits of the

rule or order shall be evaluated in light of five broad areas of market

and public concern: (1) Protection of market participants and the

public; (2) efficiency, competitiveness, and financial integrity of

futures markets; (3) price discovery; (4) sound risk management

practices; and (5) other public interest considerations. The Commission

may, in its discretion, give greater weight to any one of the five

enumerated areas of concern and may, in its discretion, determine that,

notwithstanding its costs, a particular rule or order is necessary or

appropriate to protect the public interest or to effectuate any of the

provisions or to accomplish any of the purposes of the Act.

The Commission's proposal contained an analysis of its

consideration of these costs and benefits and solicited public comment

thereon. As previously noted, NYMEX commented that the proposal, by

adding another incentive for market participants to shift their trading

activity from regulated and transparent venues to unregulated and non-

transparent venues, would impose a cost on the regulated exchanges and

would have adverse public policy consequences. NYMEX also questioned

the extent of the benefits to be obtained from the proposal in light of

the acknowledgement that special calls for information would continue

to be made on an infrequent basis.

The Commission believes, as it stated in the discussion of NYMEX's

comments above, that attempting to discern what impact amended

Regulation 18.05 will have on potential large traders, or what costs to

the regulated exchanges would be associated with any shift in trading

activity, is highly speculative. Because the amendments clarify

existing authority, any ``disincentive'' for traders to trade on a

regulated market already exists, with or without the amendments.

Additionally, the Commission finds no merit in the contention that the

extent of the benefits to be obtained from the amendments are

questionable in light of the acknowledgement that special calls for

information would continue to be made on an infrequent basis. The

Commission is confident that such special calls will be made when

deemed necessary and that the information provided in response to such

special calls will assist the Commission in meeting its regulatory

responsibilities.

After consideration of the costs and benefits and the public

comments received thereon, the Commission has determined to adopt the

amendments to Regulation 18.05 set forth below.

B. The Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq.,

requires that agencies consider the impact of their rules on small

businesses. The Commission has previously determined that exchanges,

futures commission merchants and large traders are not ``small

entities'' for the purposes of the RFA.\16\ The requirements related to

the amended recordkeeping and reporting rule fall on large traders.

Accordingly, the Acting Chairman, on behalf of the Commission, hereby

certifies, pursuant to 5 U.S.C. 605(b), that the actions adopted herein

will not have a significant economic impact on a substantial number of

small entities.

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\16\ 47 FR 18618, 18618-21 (April 30, 1982).

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C. The Paperwork Reduction Act

The Paperwork Reduction Act (PRA) \17\ imposes certain requirements

on Federal agencies, including the Commission, in connection with

conducting or sponsoring any collection of information as defined by

the PRA. An agency may not conduct or sponsor, and a person is not

required to respond to, a collection of information unless it displays

a currently valid control number. In its proposal, the Commission noted

that the proposed amendments would require traders with reportable

positions to keep books and records showing all details concerning all

positions and transactions in the commodity in which the trader is

reportable and to furnish to the Commission, upon request, any

pertinent information concerning such positions, transactions or

activities in a form acceptable to the Commission and that this

information is part of an approved collection of information. The

Commission further noted that the proposed amendments would not result

in any material modifications to this approved collection. Accordingly,

for purposes of the PRA, the Commission certified that the proposed

amendment did not impose any new reporting or recordkeeping

requirements.

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\17\ Public Law 104-13 (May 13, 1995).

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The Commission submitted the proposed rule amendments and their

associated information collection requirements to the Office of

Management and Budget (OMB) for its review. No comments were received

in response to the Commission's invitation in the notice of proposed

rulemaking to comment on the information which would be required by the

proposed rule amendments.

List of Subjects in 17 CFR Part 18

Commodity futures, Reporting and recordkeeping requirements.

0

Accordingly, 17 CFR Chapter I is amended as follows:

PART 18--REPORTS BY TRADERS

0

1. The authority citation for part 18 is revised to read as follows:

Authority: 7 U.S.C. 2, 4, 5, 6a, 6c, 6f, 6g, 6i, 6k, 6m, 6n, 12a

and 19; 5 U.S.C. 552 and 552(b), unless otherwise noted.

0

2. Revise Sec. 18.05 to read as follows:

Sec. 18.05 Maintenance of books and records.

(a) Every trader who holds or controls a reportable futures or

option position shall keep books and records showing all details

concerning all positions and transactions in the commodity:

(1) On all reporting markets;

(2) Over the counter and/or pursuant to Sections 2(d), 2(g) or

2(h)(1)-(2) of the Act or Part 35 of this chapter;

(3) On exempt commercial markets operating pursuant to Sections

2(h)(3)-(5) of the Act;

(4) On exempt boards of trade operating pursuant to Section 5d of

the Act; and

(5) On foreign boards of trade.

(b) Every such trader shall also keep books and records showing all

details concerning all positions and transactions in the cash

commodity, its products and byproducts, and all commercial activities

that the trader hedges in the futures or option contract in which the

trader is reportable.

(c) The trader shall upon request furnish to the Commission any

pertinent information concerning such positions, transactions, or

activities in a form acceptable to the Commission.

Issued in Washington, DC, this 22nd day of October, 2007, by the

Commission.

David A. Stawick,

Secretary of the Commission.

[FR Doc. E7-21077 Filed 10-25-07; 8:45 am]

BILLING CODE 6351-01-P

Last Updated: October 26, 2007