For Release: April 27, 2009
CFTC Adopts Final Definition of “Public Director.”
Washington, DC – The Commodity Futures Trading Commission (Commission) announced today that it has adopted a final definition of “public director” for the acceptable practices to Section 5(d)(15) (Core Principle 15) of the Commodity Exchange Act. The final definition will be effective 30 days after its publication in the Federal Register, at which time the Commission will also lift its stay on the acceptable practices.
The final definition of public director completes the Commission’s work in developing the acceptable practices for Core Principle 15, and will facilitate their successful implementation by all designated contract markets (DCMs). “To be truly effective, DCM corporate governance and self-regulatory oversight require strong, independent voices on boards of directors,” said Commission Acting Chairman Michael V. Dunn. “The acceptable practices for Core Principle 15 provide DCMs with critical guidance to ensure that boards of directors maintain sufficient independence, and identify and avoid potential conflicts of interest.”
The acceptable practices recognize DCMs’ unique public interest responsibilities as self-regulatory organizations, and remind all DCMs that they bear special responsibility to regulate effectively, impartially, and with due consideration of the public interest. To advance these important public policy considerations, the acceptable practices offer DCMs a safe harbor by which they may demonstrate compliance with Core Principle 15’s requirement to minimize conflicts of interest in their decision making processes.
The acceptable practices consist of three operating provisions—boards of directors composed of at least 35% public directors, board-level regulatory oversight committees consisting exclusively of public directors, and disciplinary panels including at least one public person—and one provision which provides necessary definitions, including the definition of public director.
All DCMs must implement these provisions, or otherwise demonstrate full compliance with Core Principle 15, within one year of the Federal Register publication noted above.
R. David Gary
Last Updated: April 27, 2009