Commodity Futures Trading Commission 17 CFR Part 171 Rules Relating To Review of National Futures Association Decisions in Disciplinary, Membership Denial, Registration and Member Responsibility Actions[Federal Register: August 2, 2007 (Volume 72, Number 148)]

[Rules and Regulations]

[Page 42276-42277]

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





17 CFR Part 171

RIN 3038-AC43

Rules Relating To Review of National Futures Association

Decisions in Disciplinary, Membership Denial, Registration and Member

Responsibility Actions

AGENCY: Commodity Futures Trading Commission.

ACTION: Final Rule.


SUMMARY: The Commodity Futures Trading Commission (``Commission'' or

``CFTC'') hereby amends 17 CFR Part 171, by adding language to

Commission Rule Sec. 171.9(b) (manner of service), allowing for

service by facsimile (``fax'') or by electronic means (``e-mail''),

making either means of service effective upon receipt. The amendment

will also indicate that parties who consent to accepting service of

documents by electronic means or fax in the underlying NFA action also

consent to accepting service by the same means in proceedings under

Part 171.

DATES: August 2, 2007.

FOR FURTHER INFORMATION CONTACT: Thuy Dinh, Office of the General

Counsel, Commodity Futures Trading Commission, Three Lafayette Centre,

1155 21st Street, NW., Washington, DC 20581. Telephone: (202) 418-5128.

SUPPLEMENTARY INFORMATION: On October 9, 1990, the Commission adopted

Part 171 to establish standards and procedures for its review of

decisions of registered futures associations such as the National

Futures Association (``NFA'') in disciplinary actions, membership

denial actions, registration actions and member responsibility actions.

55 FR 41061. From the time Part 171 was promulgated until now,

Commission Rule 171.9(b) provides only for service by personal delivery

(effective upon receipt) or service by mail (effective upon deposit).

On May 22, 2007, the NFA asked the Commission to amend language to Rule

171.9(b), to allow service by fax and e-mail. In proposing the

amendment, NFA cited three supporting arguments: (1) To avoid undue

delay (due to cautionary procedures adopted in the post-September 11

climate, postal mail to U.S. government agencies is often delayed and

thus is not as effective as it used to be prior to September 11); (2)

to take advantage of technological means of service, which will be

faster and less costly than the mails; (3) to

[[Page 42277]]

streamline procedures. NFA cites Commission Rules under 17 CFR Part 10,

which allows for service of documents by fax in enforcement

proceedings. In addition, it cites its own rules governing arbitration,

compliance and disciplinary cases as allowing service by both fax and

e-mail. Thus, NFA asserts, to allow service by fax and e-mail in Part

171 would make the process more efficient.

After reviewing NFA's proposed amended language and its

justifications for the proposal, the Commission has decided to adopt

NFA's request in its entirety. Amending the 17 CFR 171.9(b) to allow

for service by fax and e-mail will(a) enhance the efficiency of

proceedings under Part 171; and (b) comport with the various

capabilities of today's changing world.

Related Matters

A. No Notice Is Required Under 5 U.S.C. 553

The Commission has determined that this amendment to Part 171 is

exempt from the provisions of the Administrative Procedure Act, 5

U.S.C. 553, which generally require notice of proposed rulemaking and

provide other opportunities for public participation. However, 5 U.S.C.

553 gives an agency discretion not to provide notice for ``rules of

agency organization, procedure, or practice.'' Notice and public

procedure are unnecessary in this case. The proposed amendment, if made

effective immediately, will actually promote efficiency and facilitate

the Commission's core mission. For the above reasons, the notice

requirements under 5 U.S.C. 553 are inapplicable.

B. Regulatory Flexibility Act

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

requires agencies with rulemaking authority to consider the impact

those rules will have on small businesses. With respect to persons

seeking Commission reviews of NFA adjudicatory decisions, the

amendments will impose no additional regulatory burden. Commission

review of NFA disciplinary and membership denial actions has been

carried out pursuant to 17 CFR Part 171 since 1990. These amendments to

17 CFR 171.9(b) do not present any significant changes and will in fact

ease the regulatory burden by providing more options, greater certainty

and predictability concerning manners of service under Part 171.

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

certifies, pursuant to 5 U.S.C. 605(b), that the amendments will not

have a significant economic impact on a substantial number of small


C. Paperwork Reduction Act

The amendments to Part 171 rules do not impose a burden within the

meaning and intent of the Paperwork Reduction Act of 1980, 44 U.S.C.

3501, et seq.

D. Cost-Benefit Analysis

Section 15(a) of the Commodity Exchange Act, 7 U.S.C. 19(a),

requires the Commission to consider the costs and benefits of its

action before issuing a new regulation. Section 15(a) further specifies

that costs and benefits 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. Accordingly,

the Commission can, in its discretion, give greater weight to any one

of the five enumerated areas of concern and can, in its discretion,

determine that notwithstanding its costs, a particular rule is

necessary or appropriate to protect the public interest or to

effectuate any of the provisions, or accomplish any of the purposes, of

the Commodity Exchange Act.

The amendments to Part 171 will not create any significant change

in the Commission's appellate process or impose new burdens or costs

thereon. In fact, the amendments should enhance the protection of

market participants and the public by making service more certain,

faster and cheaper.

After considering these above factors, the Commission has

determined to amend Part 171, as set forth below.

List of Subjects in 17 CFR Part 171

Administrative practice and procedure, Commodity exchanges,

Commodity futures.


In consideration of the following, and pursuant to authority contained

in the Commodity Exchange Act, the Commission hereby amends chapter I

of title 17 of the Code of Federal Regulations to read as follows:





1. The authority citation for Part 171 continues to read as follows:

Authority: 7 U.S.C. 4a, 12a, and 21.


2. Section 171.9 is amended by revising paragraph (b) to read as


Sec. 171.9 Service

* * * * *

(b) Manner of Service: Service may be made by personal delivery

(effective upon receipt), mail (effective upon deposit), facsimile

(effective upon receipt) or electronic mail (effective upon receipt).

When service is effected by mail, the time within which the person

served may respond thereto shall be increased by five days. Parties who

consent to accepting service of documents by electronic means in the

underlying NFA action also consent to accepting service by the same

means in proceedings under this Part 171.

* * * * *

Issued in Washington, DC on the 26th of July 2007, by the


Eileen A. Donovan,

Acting Secretary of the Commission.

[FR Doc. E7-14922 Filed 8-1-07; 8:45 am]


Updated August 02, 2007

Last Updated: August 4, 2007