2013-00820

Federal Register, Volume 78 Issue 13 (Friday, January 18, 2013)[Federal Register Volume 78, Number 13 (Friday, January 18, 2013)]

[Proposed Rules]

[Pages 4093-4094]

From the Federal Register Online via the Government Printing Office [www.gpo.gov]

[FR Doc No: 2013-00820]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 1, 3, 22, 30 and 140

RIN 3038-AD88

Extension of Comment Period for the Rulemaking Enhancing

Protections Afforded Customers and Customer Funds Held by Futures

Commission Merchants and Derivatives Clearing Organizations

AGENCY: Commodity Futures Trading Commission.

ACTION: Extension of comment period.

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SUMMARY: On November 14, 2012, the Commodity Futures Trading Commission

(``Commission'') published in the Federal Register a notice of proposed

rulemaking (the ``Customer Protection Proposal'') \1\ to adopt new

regulations and amend existing regulations to require enhanced customer

protections, risk management programs, internal monitoring and

controls, capital and liquidity standards, customer disclosures, and

auditing and examination programs for futures commission merchants

(``FCMs''). The Customer Protection Proposal also addressed certain

related issues concerning derivatives clearing organizations (``DCOs'')

and chief compliance officers (``CCOs''). In order to provide

interested parties with an additional opportunity to comment on the

Customer Protection Proposal, the Commission is extending the comment

period for the Customer Protection Proposal.

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\1\ See Enhancing Protections Afforded Customers and Customer

Funds Held by Futures Commission Merchants and Derivatives Clearing

Organizations, 77 FR 67866 (Nov. 14, 2012).

DATES: The comment period for the Customer Protection Proposal is

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extended until February 15, 2013.

ADDRESSES: You may submit comments, identified by RIN 3038-AD88, by any

of the following methods:

Agency Web site, via its Comments Online process at http://comments.cftc.gov. Follow the instructions for submitting comments

through the Web site, and submit all comments through the ``submit

comment'' link associated with this extension.

Mail: Send to Natise Stowe, Office of the Secretariat,

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

Street NW., Washington, DC 20581.

Hand Delivery/Courier: Same as mail above.

Please submit your comments using only one method.

All comments must be submitted in English, or if not, accompanied

by an English translation. Comments will be posted as received to

http://www.cftc.gov. You should submit only information that you wish

to make available publicly. If you wish the Commission to consider

information that may be exempt from disclosure under the Freedom of

Information Act, a petition for confidential treatment of the exempt

information may be submitted according to the procedures established in

Sec. 145.9 of the Commission's regulations, 17 CFR 145.9.\2\

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\2\ Commission regulations referred to herein are found at 17

CFR Ch. 1 (2012). Commission regulations are accessible on the

Commission's Web site, www.cftc.gov.

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The Commission reserves the right, but shall have no obligation, to

review, pre-screen, filter, redact, refuse or remove any or all of your

submission from http://www.cftc.gov that it may deem to be

inappropriate for publication, such as obscene language. All

submissions that have been redacted or removed that contain comments on

the merits of the rulemaking will be retained in the public comment

file and will be considered as required under the Administrative

Procedure Act and other applicable laws, and may be accessible under

the Freedom of Information Act.

FOR FURTHER INFORMATION CONTACT: Division of Swap Dealer and

Intermediary Oversight: Gary Barnett, Director, 202-418-5977,

[email protected]; Thomas Smith, Deputy Director, 202-418-5495,

[email protected]; Ward P. Griffin, Associate Chief Counsel, 202-418-

5425, [email protected], Commodity Futures Trading Commission, Three

Lafayette Centre, 1155 21st Street NW., Washington, DC 20581; 202-418-

5648; or Kevin Piccoli, Deputy Director, 646-746-9834,

[email protected], 140 Broadway, 19th Floor, New York, NY 10005.

Division of Clearing and Risk: Robert B. Wasserman, Chief Counsel,

202-418-5092, [email protected], Commodity Futures Trading

Commission, Three Lafayette Centre, 1155 21st Street NW., Washington,

DC 20581. Office of the Chief Economist: Camden Nunery, Economist,

[email protected], 202-418-5723, Commodity Futures Trading Commission,

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

SUPPLEMENTARY INFORMATION:

I. Background

The protection of customers--and the safeguarding of money,

securities or

[[Page 4094]]

other property deposited by customers with an FCM--is a fundamental

component of the Commission's disclosure and financial responsibility

framework. Section 4d(a)(2) \3\ of the Commodity Exchange Act (``Act'')

\4\ requires each FCM to segregate from its own assets all money,

securities and other property deposited by futures customers to margin,

secure, or guarantee futures contracts and options on futures contracts

traded on designated contract markets. Section 4d(a)(2) further

requires an FCM to treat and deal with futures customer funds as

belonging to the futures customer, and prohibits an FCM from using the

funds deposited by a futures customer to margin or extend credit to any

person other than the futures customer that deposited the funds.

Section 4d(f) of the Act, which was added by section 724(a) of the

Dodd-Frank Wall Street Reform and Consumer Protection Act, requires,

subject to certain exceptions, each FCM to segregate from its own

assets all money, securities and other property deposited by Cleared

Swaps Customers to margin transactions in Cleared Swaps.

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\3\ 7 U.S.C. 6d(a)(2).

\4\ 7 U.S.C. 1 et seq.

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The Commission issued the Customer Protection Proposal because

market events had illustrated both the need to: (i) Require that care

be taken about monitoring excess segregated and secured funds, and the

conditions under and the extent to which such funds may be withdrawn;

and (ii) place appropriate risk management controls around the other

risks of the business to help relieve (A) the likelihood of an exigent

event or, (B) if such an event occurs, the likelihood of a failure to

prepare for such an event, which in either case could create pressures

that might result in an inappropriate withdrawal of customer funds.

Although the Commission stated that it believed that existing

regulations provide an essential foundation to fostering a well-

functioning marketplace, wherein customers are protected and

institutional risks are minimized, it noted that recent events had

demonstrated the need for additional measures to effectuate the

fundamental purposes of the statutory provisions discussed above.

Further, the Commission believed that, concurrently with the enhanced

responsibilities for FCMs contained in the Customer Protection

Proposal, the oversight and examination systems should be enhanced to

mitigate risks and effectuate the statutory purposes.

II. Reopening and Extension of Comment Periods and Request for Comment

Subsequent to issuing the Customer Protection Proposal, the

Commission has received a number of comments from interested parties

requesting that the Commission extend the comment period for the

proposal. Of particular note are the requests of the futures industry's

self-regulatory organizations, which have requested an extension to the

comment period to provide additional time for all interested parties to

evaluate the costs and benefits of the Customer Protection Proposal,

and to propose alternative measures to provide increased customer

protection and enhanced monitoring of FCMs.

In light of the comments received, the Commission is extending the

comment period of the Customer Protection Proposal to provide the

public with an additional opportunity to comment on the proposal's

provisions. Given the emphasis of the comments received thus far on the

potential costs of the Customer Protection Proposal, the Commission

specifically seeks comments providing quantitative information

addressing the costs and benefits of the proposed rulemaking.

All comments that were received after the close of the originally

established comment period of the Customer Protection Proposal will be

treated as if they were received during the extended comment period and

need not be resubmitted.

Issued in Washington, DC, this 11th day of January 2013, by the

Commission.

Stacy D. Yochum,

Counsel to the Executive Director.

[FR Doc. 2013-00820 Filed 1-17-13; 8:45 am]

BILLING CODE 6351-01-P

 

Last Updated: January 18, 2013