17 CFR Part 30

Limited Marketing Activities From a United States Location by

Certain Firms and Their Employees or Other Representatives Exempted

Under Commodity Futures Trading Commission Regulation 30.10

AGENCY: Commodity Futures Trading Commission.

ACTION: Order.


SUMMARY: The Commodity Futures Trading Commission (``Commission'') is

confirming that designated members of the Taiwan Futures Exchange

(``TAIFEX'') may engage in limited marketing conduct with respect to

foreign futures or options contracts within the U.S. through their

employees or representatives consistent with prior Commission orders.

This order is issued pursuant to Commission Regulation 30.10, which

permits persons to file a petition with the Commission for exemption

from the application of certain of the Regulations set forth in Part 30

and authorizes the Commission to grant such an exemption if such action

would not be otherwise contrary to the public interest or to the

purposes of the provision from which exemption is sought.

DATES: Effective Date: July 9, 2008.

FOR FURTHER INFORMATION CONTACT: Andrew Chapin, Special Counsel,

Division of Clearing and Intermediary Oversight, at (202) 418-5430

Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st

Street, NW., Washington, DC 20581. Electronic mail: [email protected]

SUPPLEMENTARY INFORMATION: The Commission has issued the following


Order Issued Pursuant to Regulation 30.10 Confirming That Designated

Members of TAIFEX May Engage in Limited Marketing Conduct With Respect

to Foreign Futures and Options Contracts Within the United States

Through Their Employees or Other Representatives.

Commission regulations governing the offer and sale of commodity

futures and option contracts traded on or subject to the regulations of

a foreign board of trade to customers located in the U.S. are contained

in Part 30 of the Commission's regulations.\1\ These regulations

include requirements for intermediaries with respect to registration,

disclosure, capital adequacy, protection of customer funds,

recordkeeping and reporting, and sales practice and compliance

procedures that are generally comparable to those applicable to

transactions on U.S. markets.



\1\ Commission regulations referred to herein are found at 17

CFR Ch. I (2007). Appendix A to Part 30, ``Interpretative Statement

With Respect to the Commission's Exemptive Authority Under Sec.

30.10 of Its Rules'' generally sets forth the elements the

Commission will evaluate in determining whether a particular

regulatory program may be found to be comparable for purposes of

exemptive relief pursuant to Regulation 30.10. 52 FR 28990, 29001

(Aug. 5, 1987).



In formulating a regulatory program to govern the offer and sale of

foreign futures and option products to customers located in the U.S.,

the Commission, among other things, considered the desirability of

ameliorating the potential extraterritorial impact of such a program

and avoiding duplicative regulation of firms engaged in international

business. Based upon these considerations, the Commission determined to

permit persons located outside the U.S. and subject to a comparable

regulatory structure in the jurisdiction in which they were located to

seek an exemption from certain of the requirements under Part 30 of the

Commission's regulations based upon substituted compliance with the

regulatory requirements of the foreign jurisdiction (``Regulation 30.10


On October 28, 1992, the Commission issued an order to permit firms

that have obtained confirmation of Regulation 30.10 relief to engage in

limited marketing conduct with respect to foreign futures or options

contracts within the U.S. through their employees or representatives

without prior notification to the Commission.\2\ The Commission stated




\2\ 57 FR 49644 (Nov. 3, 1992).

the success of the [Regulation] 30.10 program as well as the

existence of working relationships established under that program

with foreign regulatory and self-regulatory authorities provide

assurances that the conduct of [Regulation] 30.10 exempted firms

through their employees or other representatives located in the

United States, if of a limited duration and subject to proper

supervisory controls, will not be inconsistent with the Commission's

obligations under the [Commodity Exchange Act] to ensure appropriate



customer protection.

[[Page 39227]]

To provide the appropriate level of customer protection, the relief was

limited to conduct directed towards certain institutions and

governmental entities as described in Regulation 4.7.\3\ In addition,

the Commission stated that any person who established a fixed location

in the U.S. for the solicitation or acceptance of business, or whose

marketing activities involved long or repeated periods within the U.S.

that can be characterized as a de facto fixed presence, would be

disqualified from Regulation 30.10 relief and would be required to

register with the Commission. On August 4, 1994, the Commission issued

an order expanding the category of persons to whom designated firms may

direct limited marketing conduct to include all ``accredited

investors,'' as that term is defined in section 230.501(a) of

Securities and Exchange Commission Regulation D issued pursuant to the

Securities Act of 1933.\4\ The orders issued by the Commission in 1992

and 1994 are collectively known as the Limited Marketing Orders.



\3\ The order limited the relief to marketing conduct directed

towards persons whose description in terms of sophistication and

assets was derived generally from the definition of ``qualified

eligible participant'' (``QEP''), as defined in Regulation

4.7(a)(1)(ii). In 2000, the Commission streamlined Regulation 4.7 by

combining into a single definition those persons formerly defined as

QEPs and ``qualified eligible clients'' (``QECs''). As a result of

the revision, both QEPs and QECs are termed ``qualified eligible

persons.'' 65 FR 47848, 47849-50 (Aug. 4, 2000).

\4\ 59 FR 42156 (Aug. 17, 1994).



Pursuant to the terms set forth therein, a foreign regulatory or

self-regulatory organization must obtain a written confirmation from

the Commission that the Limited Marketing Orders apply to firms in its

jurisdiction with confirmed Regulation 30.10 relief. On March 23, 2007,

the Commission issued an order granting relief under Regulation 30.10

authorizing designated members of TAIFEX to solicit and accept orders

from customers located in the U.S. for otherwise permitted transactions

on TAIFEX.\5\ By letter dated April 16, 2008, counsel for TAIFEX

petitioned the Commission to confirm that designated TAIFEX members may

engage in limited marketing conduct with respect to foreign futures or

options contracts within the U.S. through their employees or other

representatives, as set forth in the Limited Marketing Orders.



\5\ 72 FR 14413 (Mar. 28, 2007) (``TAIFEX Order'').



As previously stated, the Commission believes that certain contacts

between firms with confirmed Regulation 30.10 relief and certain

sophisticated customers located in the U.S., who have a high degree of

sophistication and financial resources, would not be contrary to the

public interest. Accordingly, the Commission has determined to issue

this order permitting designated TAIFEX members to engage in limited

marketing conduct with respect to foreign futures or option contracts

within the U.S. through their employees or other representatives, as

set forth in the Limited Marketing Orders.

Prior to engaging in any marketing activity in the U.S., a TAIFEX

member must obtain confirmation of Regulation 30.10 relief from the

National Futures Association (``NFA'').\6\ Any TAIFEX member operating

pursuant to this order will remain subject to all of the terms and

conditions set forth in the Limited Marketing Orders and the TAIFEX

Order. In particular, the Commission notes that every order granting

Regulation 30.10 relief has required a firm seeking relief under such

an order to consent to jurisdiction in the U.S. under the Commodity

Exchange Act and file with NFA a valid and binding appointment of an

agent in the U.S. for service of process.



\6\ The Commission has delegated to NFA certain

responsibilities, including the responsibility to receive requests

for confirmation of Regulation 30.10 relief on behalf of particular

firms, to verify such firms' fitness and compliance with the

conditions of the appropriate Regulation 30.10 Order and to grant

exemptive relief from registration to qualifying firms. 62 FR 47792,

47793 (Sept. 11, 1997).



Dated: July 3, 2008.

By the Commission

David Stawick,

Secretary of the Commission.

[FR Doc. E8-15606 Filed 7-8-08; 8:45 am]


Last Updated: July 9, 2008