[Federal Register: March 1, 2000 (Volume 65, Number 41)]
[Rules and Regulations]
[Page 10939-10943]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01mr00-7]

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COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 4


Commodity Pool Operators; Exclusion for Certain Otherwise
Regulated Persons From the Definition of the Term ``Commodity Pool
Operator''

AGENCY: Commodity Futures Trading Commission.

[[Page 10940]]


ACTION: Proposed rule.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is proposing to amend Rule 4.5 by adding a plan defined as a
church plan in Section 3(33) of Title I of the Employee Retirement
Income Security Act of 1974 (``ERISA'') \1\ (``Church Plan'') to the
employee benefit plans that the rule currently provides shall not be
construed to be commodity pools. The CFTC also is proposing certain
technical conforming amendments to the existing paragraphs under Rule
4.5 to which this amendment would be added.
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    \1\ 29 U.S.C. 1002(33)(1994).

DATES: Comments on the proposed rule change must be received by March
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31, 2000.

ADDRESSES: Comments on the proposed rule should be sent to Jean A.
Webb, Secretary, Commodity Futures Trading Commission, Three Lafayette
Center, 1155 21st Street, N.W., Washington, DC, 20581. Comments may be
sent by facsimile transmission to (202) 418-5528, or by e-mail to
[email protected] Reference should be made to ``Proposed Amendment to
Rule 4.5 for Church Plans.''

FOR FURTHER INFORMATION CONTACT: Barbara S. Gold, Assistant Chief
Counsel, or Christopher W. Cummings, Special Counsel, Division of
Trading and Markets, Commodity Futures Trading Commission, Three
Lafayette Center, 1155 21st Street, NW., Washington, DC, 20581.
Telephone: (202) 418-5450.

SUPPLEMENTARY INFORMATION:

I. Background

A. Section 4.5

    The term ``commodity pool operator'' (``CPO'') is defined in
section 1a(4) of the Commodity Exchange Act, as amended, (the ``Act'')
\2\ to mean:
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    \2\ 7 U.S.C. 1a(4) (1994).

    Any person engaged in a business that is of the nature of an
investment trust, syndicate, or similar form of enterprise, and who,
in connection therewith, solicits, accepts, or receives from others,
funds, securities, or property, either directly or through capital
contributions, the sale of stock or other forms of securities, or
otherwise, for the purpose of trading in any commodity for future
delivery on or subject to the rules of any contract market, except
that the term does not include such persons not within the intent of
the definition of the term as the Commission may specify by rule,
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regulation, or order.

    Section 4m(1) of the Act \3\ makes it unlawful for any person to
engage in business as a CPO without being registered as such. Part 4 of
the Commission's regulations \4\ governs the operations and activities
of CPOs, through specific operational, disclosure, reporting and
recordkeeping requirements set forth in Subpart B thereof.\5\ In
particular, Rule 4.10(d)(1) defines the term ``pool'' to mean ``any
investment trust, syndicate or similar form of enterprise operated for
the purpose of trading commodity interests.'' \6\
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    \3\ 7 U.S.C. 6m(1) (1994).
    \4\ 17 CFR Ch. I, Part 4 (1999).
    \5\ See Rules 4.20 through 4.26. Part 4 similarly governs the
operations and activities of commodity trading advisors (``CTAs'').
See Rules 4.30 through 4.36.
    \6\ The term ``commodity interest'' is defined in Rule 4.10(a)
to mean:
    (1) Any contract for the purchase or sale of a commodity for
future delivery; and
    (2) Any contract, agreement or transactions subject to
Commission regulation under section 4c or 19 of the Act.
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    In connection with the adoption of the Futures Trading Act of
1982,\7\ the Senate Committee on Agriculture, Nutrition, and Forestry
(the ``Committee'') considered an amendment to the Act that would have
exempted certain persons from the CPO definition. In lieu of adopting
such an amendment to the CPO definition, the Committee directed the
Commission to issue regulations that would have the effect of providing
relief from regulation as a CPO for certain otherwise regulated
persons.\8\ Pursuant to this directive, in 1985 the Commission adopted
Rule 4.5.\9\
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    \7\ Pub. L. No. 97-444, 96 Stat. 2294 et seq. (1983).
    \8\ See S. Rep. No. 384, 97th Cong., 2d Sess. 79-80 (1982).
Specifically, the Committee Report states:
    The Committee beleives, consistent with the amendment offered by
Chairman Helms, that certain entities are not within the intent of
the definition of the term `commodity pool operator', as that term
is defined in the Act, unless these entities have other attributes
or features which would warrant their regulation as a commodity pool
operator. Specifically, an entity regulated under the Investment
Company Act of 1940 or an insurance company or a bank or trust
company acting in its fiduciary capacity and subject to regulation
by any state or the United States could ordinarily be excluded from
the definition of the term `commodity pool operator,' provided that
(1) the entity uses commodity futures contracts or options thereon
solely for hedging purposes; (2) initial margin requirements or
premiums for such futures or options contracts will never be in
excess of 5 percent of the fair market value of the entity's assets
(in the case of an investment company) or of the assets of any
trust, custodial account or other separate unit of investment for
which the entity is acting as a fiduciary; (3) the entity has not
been and will not be, marketing participations to the public as or
in a commodity pool or otherwise as or in a vehicle for trading in
the commodities markets; and (4) the entity will disclose to each
prospective participant the purpose of and limitations on the scope
of the commodity futures or commodity option trading it conducts for
such participants.
    Also, a defined benefit plan that is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA) and
is insured by the Pension Benefit Guaranty Corporation, or any
fiduciary thereof, ordinarily could be excluded from the definition
of the term ``commodity pool operator'', provided that its commodity
futures (or options on futures) trading activity is solely
incidental to the conduct of its business as such a plan or as a
fiduciary thereof. The Committee understands that such a plan and
its fiduciaries are subject to extensive regulation under ERISA.
Therefore, while the Commission should retain discretion in this
area, the Committee believes that, unless otherwise inappropriate,
exemption by rule, regulation, or order from commodity pool operator
registration and related requirements, other than antifraud
provisions, should generally be granted to these classes of
entities.
    \9\ 50 FR 15868 (Apr. 23, 1985); amended 58 FR 6371 (Jan. 28,
1993); 58 FR 43791 (Aug. 18, 1993).
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    Rule 4.5 makes available an exclusion from the definition of the
term ``commodity pool operator'' to certain ``eligible persons'' with
respect to their operation of ``qualifying entities'' as follows:
investment companies registered as such under the Investment Company
Act of 1940; state-regulated insurance companies with respect to their
operation of separate accounts; state-or federally-regulated financial
depository institutions with respect to their operation of separate
units of investment; and trustees, named fiduciaries and employers of
pension plans subject to Title I of ERISA with respect to their
operation of such plans.\10\ To claim relief under Rule 4.5, an
eligible person must file a notice of eligibility with the National
Futures Association and the CFTC, which notice must contain specified
identifying information and operating representations, e.g., that the
qualifying entity will: (1) Use commodity interests solely for bona
fide hedging purposes provided, that in addition, with respect to
speculative positions, it will not commit more than five percent of its
assets to establish such positions; and (2) submit to special calls
from the CFTC to demonstrate compliance with the operating criteria set
forth in Rule 4.5.\11\
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    \10\ Rules 4.5(a) and (b).
    \11\ Rules 4.5(c) through (f).
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    Rule 4.5 further provides that certain pension plans are not
commodity pools and, thus, no notice needs to be filed and no operating
criteria need to be followed for exclusionary relief to be
available.\12\ Specifically, Rule 4.5(a)(4) states:
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    \12\ The operators of these ``non-pools,'' then, are not subject
to Rules 4.5(c) through (f).

    That for purposes of this Sec. 4.5 the following employee
benefit plans shall not be construed to be pools:
    (i) A noncontributory plan, whether defined benefit or defined
contribution, covered under title I of the Employee Retirement
Income Security Act of 1974;
    (ii) A contributory defined benefit plan covered under title IV
of the Employee

[[Page 10941]]

Retirement Income Security Act of 1974; Provided, however, That with
respect to any such plan to which an employee may voluntarily
contribute, no portion of an employee's contribution is committed as
margin or premiums for futures or options contracts; and
    (iii) A plan defined as a governmental plan in section 3(32) of
title I of the Employee Retirement Income Security Act of 1974.
    (iv) Any employee welfare benefit plan that is subject to the
fiduciary responsibility provisions of the Employee Retirement
Income Security Act of 1974.

    With respect to Rule 4.5(a)(4)(iii) in particular, it should be
noted that these governmental plans are exempted from Titles I and IV
of ERISA,\13\ which concern, respectively, the protection of employee
rights (e.g., disclosure and reporting) and the fiduciary
responsibility provisions of ERISA. In adopting Rule 4.5(a)(4)(iii) the
Commission stated that--
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    \13\ 29 U.S.C. 1001 (1994 and Supp. III 1997)) and 1301 (1994),
respectively.

    [it] agrees with those commenters who contended that
governmental pension plans are not appropriate subjects for
regulation and, therefore, that they need not qualify for any
exclusion from such regulation. As was stated in connection with
excluding such plans from coverage under ERISA:
    State and local governments must be allowed to make their own
determination of the best method to protect the pension rights of
municipal employees. These are questions of state and local
sovereignty and the Federal government should not interfere.\14\
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    \14\ 50 FR 15868 at 15873, citing I Legislative History of the
Employee Retirement Income Security Act of 1974, 97th Cong., 2d
Sess. 224 (Comm. Print 1976).
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B. Church Plans

    Section 3(33)(A) of ERISA defines the term ``church plan'' to mean
``a plan established and maintained * * * by a church or by a
convention or association of churches which is exempt from tax under
section 501 of title 26.'' \15\ However, a plan that is a Church Plan
is exempted from Titles I and IV of ERISA, provided that the Church
Plan does not elect under Section 410(d) of Title 26 \16\ to be subject
to certain provisions of ERISA from which it is otherwise exempt--e.g.,
participation, vesting and funding provisions. The purpose of this
exemption was ``to avoid excessive Government entanglement with
religion in violation of the First Amendment to the Constitution.''
\17\ In drafting ERISA, ``Congress recognized that there were serious
Constitutional objections to subjecting the churches, through their
plans, to the examination of books and records and possible levy on
church property to satisfy plan liabilities. As a consequence, 'church
plans' were excluded from the purview of ERISA.'' \18\
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    \15\ Specifically, Section 3(33)(A) of ERISA states:
    The term ``church plan'' means a plan established and maintained
(to the extent required in clause (ii) of subparagraph (B)) for its
employees (or their beneficiaries) by a church or by a convention or
association of churches which is exempt from tax under section 501
of title 26.
    Section 3(33)(B)(ii) of ERISA generally provides that a plan is
not a ``church plan'' if less than substantially all of the
individuals included in the plan are individuals described in
Section 3(33)(A), set forth above, or in Section 3(33)(C), which
provides in relevant part that:
    (i) A plan established and maintained for its employees (or
their beneficiaries) by a church or by a convention or association
of churches includes a plan maintained by an organization, whether a
civil law corporation or otherwise, the principal purpose or
function of which is the administration or funding of a plan or
program for the provision of retirement benefits or welfare
benefits, or both, for the employees of a church or a convention or
association of churches, if such organization is controlled by or
associated with a church or a convention or association of churches.
    (ii) The term employee of a church or a convention or
association of churches includes--
    (I) a duly ordained, commissioned, or licensed minister of a
church in the exercise of his ministry, regardless of the source of
his compensation;
    (II) an employee of an organization, whether a civil law
corporation or otherwise, which is exempt from tax under section 51
of title 26 and which is controlled by or associated with a church
or a convention or association of churches; and
    (III) an individual described in clause (v).
    (iii) A church or a convention or association of churches which
is exempt from tax under section 501 of title 26 shall be deemed the
employer of any individual included as an employee under clause
(ii).
    (iv) An organization, whether a civil law corporation or
otherwise, is associated with a church or a convention or
association of churches if it shares common religious bonds and
convictions with that Church or convention or association of
churches.
    26 U.S.C. 501(c) (1994) provides in relevant part that the
following organizations are exempt from federal income taxation:
    (3) Corporations, and any community chest, fund, or foundation,
organized and operated exclusively for religious, charitable,
scientific, testing for public safety, literary, or educational
purposes * * * no part of the net earnings of which inures to the
benefit of any private shareholder or individual, no substantial
part of the activities of which is carrying on propaganda, or
otherwise attempting, to influence legislation (except as otherwise
provided * * *) and which does not participate in, or intervene in
(including the publishing or distributing of statements), any
political campaign on behalf of (or in opposition to) any candidate
for public office.
    \16\ 26 U.S.C. 410(d) 1994).
    \17\ 124 Cong. Rec. 12,108 (1998).
    \18\ Hearings on S. 209, Etc. Before the Subcomm. on Private
Pension Plans and Employee Fringe Benefits of the Senate Comm. on
Finance, 96th Cong., 1st Sess. 364 (1979).
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    As stated above, Rule 4.5(a)(4) makes an exclusion from the CPO
definition available to the operators of pension plans that are subject
to Title I of ERISA. Church Plans, however, are not so subject. As also
stated above, Rules 4.5(a)(4)(i) through (iv) provide that certain
pension plans shall not be deemed to be commodity pools--e.g., a plan
defined as a ``governmental plan'' in Section 3(32) of ERISA--but these
rules do not provide for Church Plans. Thus, under existing Rule 4.5
the operators of Church Plans are not among the eligible persons who
may claim an exclusion from the CPO definition and Church Plans are not
among the pension plans that are deemed not to be commodity pools.

II. The Proposed Amendments to Rule 4.5

A. The Substantive Amendment: Church Plans Deemed Not To Be Commodity
Pools

    In connection with its adoption of Rule 4.5 the Commission stated:

    Whether any other pension plan not specified in Sec. 4.5 merits
such relief as the rule provides, or any other regulatory relief,
remains to be determined on a case-by-case basis in light of the
facts particular to such plan--e.g., whether, and to what extent,
the operations of such plan are subject to other regulation. As
explained above, the Commission intends that its staff shall issue
such determinations. The Commission further intends that, as it
gains experience in this area, it will reevaluate this aspect of the
rule.\19\
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    \19\ 50 FR 15868 at 15873-74

    Accordingly, after the adoption of Rule 4.5, Commission staff
issued several CPO registration no-action letters to the operators of
pension plans defined as Church Plans in response to requests for those
positions.\20\ Staff issued those letters based upon, among other
things, the requesters' explanations, as stated above, of Congress'
reasons for exempting Church Plans from Titles I and IV of ERISA in
connection with its adoption of ERISA--i.e., to avoid excessive
Government entanglement in religion in violation of the First Amendment
to the Constitution. As also stated above, Titles I and IV concern,
respectively, the protection of employee rights (e.g., disclosure and
reporting) and fiduciary responsibility provisions of ERISA.
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    \20\ See, e.g., Unpublished letter dated July 30, 1990; CFTC
Staff Interpretative Letter No. 87-11, [1987-90 Transfer Binder]
Comm. Fut. L. Rep. (CCH) para. 24,019 (December 4, 1987). In each
letter the staff stated that it would not recommend enforcement
action to the Commission if the operator of the Church Plan at issue
did not register as a CPO under Section 4m(1) of the Act.
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    Commission staff subsequently has received further requests from
the operators of other Church Plans for a no-action position with
respect to CPO registration under Section 4m(1) of the Act.\21\ In
support of this no-action position, one of the requesters stated that
in connection with the adoption of

[[Page 10942]]

ERISA Congress expressed the concern that--
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    \21\ Letters to the Director of the Division of Trading and
Markets dated November 20, 1998 and July 11, 1997.

the examinations of books and records that may be required in any
particular case as part of the careful and responsible
administration of the insurance system might be regarded as an
unjustified invasion of the confidential relationship that is
believed to be appropriate with regard to churches and their
religious activities. Sen. Rep. 93-383, 93rd Cong., 2d Sess. 1974-3
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C.B. Supp. 160.

    This requester further noted that in connection with the adoption
of the National Securities Markets Improvement Act of 1996,\22\
Congress adopted new Section 3(c)(14) of the Investment Company Act of
1940 (``ICA''), which specifically provides that church plans are not
investment companies under the ICA and therefore that they are not
subject to registration under the ICA.\23\
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    \22\ Pub. L. No. 104-290, 110 Stat. 3416 (1996).
    \23\ 15 U.S.C. 80a-3(c)(14) (Supp. II 1996). Specifically,
Section 3(c)(14) provides that a ``church plan'' described in Title
26 is not an investment company if: under any such plan, no part of
the assets may be used for, or diverted to, purposes other than the
exclusive benefits of plan participants or beneficiaries, or any
company or account that is--
    (A) established by a person that is eligible to establish and
maintain such a plan under section 414(e) of title 26; and
    (B) substantially all of the activities of which consist of--
    (i) managing or holding assets contributed to such church plans
or other assets which are permitted to be commingled with the assets
of church plans under title 26; or
    (ii) administering or providing benefits pursuant to church
plans.
    Section 414(e) of Title 26, generally defines the term ``church
plan'' to mean a pension plan established and maintained (to the
extent specified) by a church or by a convention or association of
churches which is exempt from tax under Section 501 of the IRC. 26
U.S.C. 414(e) (1994).
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    While the issuance of another CPO registration no-action letter to
the operator of a Church Plan would be consistent with past staff
practice, the Commission believes at this time that this practice
should be formalized through an amendment to Rule 4.5. As the
Commission articulated in connection with its recent adoption of Rule
140.99, it now intends, to the extent practicable, to handle repetitive
requests such as these through rulemaking.\24\
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    \24\ 63 FR 68175 at 68176 (December 10, 1998).
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    Accordingly, the Commission is proposing to amend Rule 4.5 by
adding Church Plans to the existing employee benefit plans in Rule
4.5(a)(4) that ``shall not be construed to be pools,'' and for which no
notice needs to be filed and no operating criteria need to be followed
for exclusionary relief to be available. Specifically, the Commission
is proposing to add a new Rule 4.5(a)(4)(v) that will contain this
Church Plan exclusion. However, just as ERISA restricts the exclusion
of Church Plans from coverage under Title I and Title IV of that
statute to Church Plans with respect to which no election has been made
under Section 410(d) of Title 26, proposed Rule 4.5(a)(4)(v) similarly
would restrict its exclusion to Church Plans with respect to which no
election has been made under Section 410(d).\25\
    In making this proposal to include Church Plans among those
employee benefit plans that shall not be construed to be pools under
Rule 4.5(a)(4), the Commission notes that the basis for its action
would be similar to its rationale for providing in Rule 4.5(a)(4)(iii)
that state and local government pension plans shall not be construed to
be pools. As stated above, Congress exempted from Titles I and IV of
ERISA: (1) Governmental plans, to avoid Federal interference with these
questions of state and local sovereignty; and (2) Church Plans, to
avoid excessive Federal entanglement with religion in violation of the
first amendment to the Constitution. The Commission further notes that
the proposal would be broader than the CPO registration no-action
positions that its staff previously has issued to the operators of
Church Plans.\26\ Also, under this proposal the operators of Church
Plans would not need to file a Notice of Eligibility to claim relief
and they would not need to restrict their Plans' activities to the
operating criteria of Rule 4.5(c). The Commission believes the breadth
of its proposal is appropriate in light of Congress' rationale in
excluding Church Plans from coverage under Titles I and IV of ERISA.
The Commission nonetheless requests comment on whether rather than
adding Church Plans to the list of plans that should not be construed
to be a pool as proposed, the Commission should include the operator of
a Church Plan as an eligible person who may claim an exclusion from the
CPO definition. The Commission also requests comment on whether relief
under Rule 4.5 should be available solely to those Church Plans that
have not made an election under Section 414(e) of the IRC to be subject
to certain provision of ERISA.
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    \25\ As stated above, a Church Plan is exempted from Titles I
and IV of ERISA, provided the Church Plan does not elect under
Section 410(d) of Title 26 to be subject to certain provisions of
ERISA from which it is otherwise exempt--e.g., participation,
vesting and funding provisions.
    \26\ If a collective investment vehicle (such as a Church Plan)
is not Commodity pool, the oopeprator of the vehicle would not be a
CPO. The operator would nonetheless be a person for all other
purposes of the Act and CFTC rules--e.g., it would be subject to the
general antifraud provisions of section 4b of the Act, 7 U.S.C. 6b
(1994), and to the large trader reporting requirements of Part 18 of
the regulations. If a collective investment vehicle is a pool, in
addition to being a person for the purposes of the Act and the
rules, its operator would be a CPO subject to all provisions of the
Act and Commission rules applicable to CPOs regardless of
registration status--e.g., to the special antifraud provisions for
CPOs (and CTAs) in section 40 of the Act, 70 U.S.C. 6o (1994), the
operational requirements for CPOs in Rule 4.20 and the advertising
requirements for CPOs (and CTAs) in Rule 4.41.
    In this regard, the Commission wishes to emphasize that the
status of a collective investment vehicle as a pool or a ``non-
pool'' does not affect the registration or Part 4 requirements of
any CTA to the vehicle. But see Rule 4.14(a)(8), which makes
available an exemption from CTA registration to certain registered
investment advisers who, among other things, provide commodity
interest trading advice to Rule 4.5 trading vehicles in a manner
solely incidental to their business of providing securities advice
to those vehicles.
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B. The Technical Amendments: Conforming the Rule

    When the Commission initially adopted Rule 4.5 there were three
types of pension plans that Rule 4.5(a)(4) stated ``shall not be
construed to be pools'': the plans set forth in paragraphs (a)(4)(i);
(a)(4)(ii); and (a)(4)(iii) of the rule.\27\ The Commission
subsequently amended Rule 4.5 to add in new paragraph (a)(4)(iv)
another type of pension plan that would not be construed to be a
pool.\28\ However, the Commission did not at that time concurrently
conform the punctuation of the rule. Moreover, if the proposed
substantive amendment to Rule 4.5 for Church Plans is adopted, the rule
further will have to be amended to accommodate grammatically this new
paragraph.
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    \27\ 50 FR 15868.
    \28\ 58 FR 43791.
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    Accordingly, the Commission also is proposing certain technical,
conforming amendments to Rule 4.5. Specifically, the Commission is
proposing to amend Rule 4.5 by removing the word ``and'' at the end of
existing paragraph (a)(4)(ii), by removing the period and adding a
semi-colon at the end of existing paragraph (a)(4)(iii), and by
removing the period and adding a semi-colon and the word ``and'' at the
end of existing paragraph (a)(4)(iv). The text of each of the foregoing
paragraphs under Rule 4.5 would remain intact.

III. Related Matters

A. Paperwork Reduction Act

    When publishing proposed rules, the Paperwork Reduction Act of 1995
(the ``PRA'') \29\ imposes certain requirements on Federal agencies
(including the Commission) in connection with their conducting or
sponsoring any collection of information as defined by the PRA. In

[[Page 10943]]

compliance with the PRA, the Commission previously has submitted Rule
4.5 in proposed form and its associated information collection
requirements to the Office of Management and Budget. The Office of
Management and Budget has approved the collection of information of
which this proposed rule is a part through September 30, 2001, OMB
Control Number 3038-0005: Rules Relating to the Operations and
Activities of Commodity Pool Operators and Commodity Trading Advisors
and to Monthly Reporting by Futures Commission Merchants. While this
proposed rule has no burden, the group of rules (3038-0005) of which it
is a part has the following burden:
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    \29\ 44 U.S.C. 3501 et seq. (Supp. II 1996).
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    Average Burden Hours Per Response: 7.49.
    Number of Respondents: 6,949.
    Frequency of Response: Monthly, Quarterly, Annually, On Occasion.
    Copies of the OMB approved information collection package
associated with this rule are available from the Desk Officer, CFTC,
Office of Management and Budget, Room 10202, NEOB, Washington, DC
20503, (202) 395-7340.

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'') \30\ requires each federal
agency to consider in the course of proposing substantive rules the
effect of those rules on small entities. The definitions of small
entities that the Commission has established for this purpose do not
address the persons and qualifying entities set forth in Rule 4.5
because, by the very nature of the rule, the operations and activities
of such persons and entities generally are regulated by Federal and
State authorities other than the Commission. Assuming, arguendo, that
church plans would be small entities for purposes of the RFA, the
Commission believes that the proposed amendment to Rule 4.5 would not
have a significant economic impact on them because it would not require
the filing of a notice containing specified operating criteria with the
Commission to claim the relief available under proposed Rule
4.5(a)(4)(v). Moreover, the Commission notes that the proposed
amendment potentially would relieve a greater number of persons (i.e.,
the operators of Church Plans) from the requirement to register as a
CPO and from the disclosure, reporting and recordkeeping requirements
applicable to registered CPOs.
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    \30\ 5 U.S.C. 601 et seq. (1994 and Supp. II 1996).
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    Accordingly, the Chairman, on behalf of the Commission, certifies
pursuant to Section 3(a) of the RFA \31\ that the proposed rules will
not have a significant economic impact on a substantial number of small
entities.
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    \31\ 5 U.S.C. 605(b).
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List of Subjects in 17 CFR Part 4

    Commodity pool operators, Commodity futures.

    In consideration of the foregoing and pursuant to the authority
contained in the Commodity Exchange Act and, in particular, sections
1a(4), 4k, 4l, 4m, 4n, 4o and 8a, 7 U.S.C. 1a(4), 6k, 6l, 6m, 6n, 6o
and 12a, the Commission hereby proposes to amend Chapter I of the Code
of Federal Regulations as follows:

PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS

    1. The authority citation for Part 4 continues to read as follows:

    Authority: 7 U.S.C. 1a, 2, 4, 6b, 6c, 6l, 6m, 6n, 6o, 12a and
23.

    2. In Sec. 4.5, in paragraph (a)(4) introductory text, the proviso
text is republished and paragraph (a)(4) is proposed to be amended by
removing the word ``and'' at the end of paragraph (a)(4)(ii), by
removing the period and adding a semi-colon at the end of paragraph
(a)(4)(iii), by removing the period and adding a semi-colon and the
word ``and'' at the end of paragraph (a)(4)(iv), and by adding a new
paragraph (a)(4)(v), to read as follows:


Sec. 4.5  Exclusion for certain otherwise regulated persons from the
definition of the term ``commodity pool operator.''

    (a) * * *
    (4) * * * Provided, however, That for purposes of this Sec. 4.5 the
following employee benefit plans shall not be construed to be pools:
* * * * *
    (v) A plan defined as a church plan in Section 3(33) of title I of
the Employee Retirement Income Security Act of 1974 with respect to
which no election has been made under 26 U.S.C. 410(d).
* * * * *

    Issued in Washington, DC on February 22, 2000, by the
Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 00-4747 Filed 2-29-00; 8:45 am]
BILLING CODE 6351-01-P


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