[Federal Register: June 25, 2002 (Volume 67, Number 122)]
[Rules and Regulations]
[Page 42709-42710]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr25jn02-2]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 4
RIN 3038-AB60
Profile Documents for Commodity Pools; Correction
AGENCY: Commodity Futures Trading Commission.
ACTION: Correcting amendments.
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SUMMARY: This document contains corrections to the final regulations
that were published in the Federal Register of October 2, 2000 (65 FR
58648). The regulations related to accommodating National Futures
Association's (``NFA'') Rule 2-35(d) regarding profile documents for
commodity pools and establishing procedures for the use, amendment and
filing of profile documents that are parallel to those applicable to
disclosure documents.
DATES: Effective July 25, 2002.
FOR FURTHER INFORMATION CONTACT: Eileen R. Chotiner, Futures Trading
Specialist, (202) 418-5467, electronic mail: ``[email protected],''
Division of Trading and Markets, Commodity Futures Trading Commission,
1155 21st Street, NW., Washington, DC 20581.
SUPPLEMENTARY INFORMATION: Commission regulation 4.26(b), which was
adopted in 1995,\1\ required a commodity pool operator (``CPO'') to
attach the most current account statement and annual report for the
pool to the disclosure document used to solicit prospective
participants. As an alternative to attaching the account statement, the
COP was permitted to provide information concerning the performance of
the pool that was current within 60 days of the date the disclosure
document was distributed.
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\1\ 46 FR 38146 at 38189 (July 25, 1995).
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In July 2000, the Commission proposed changes to its rules to
permit CPOs to use a summary or ``profile'' comment prior to delivery
of the pool's disclosure document, in accordance with rules proposed by
NFA.\2\ The sole change the Commission proposed to Rule 4.26 was to
extend to profile documents the provision requiring correction of a
materially inaccurate or incomplete disclosure document. The Commission
received only one comment letter on the proposed changes, which
supported the amendments. The comment letter did not address the
proposed change to Rule 4.26.
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\2\ 65 FR 46122 (July 27, 2000).
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The commission adopted final rules that were essentially the same
as those proposed.\3\ Subsequent to publication of these rules, it has
come to the Commission's attention that the revised text was
inadvertently substituted for section 4.26(b) rather than 4.26(c).
Today's amendment restores the text of 4.26(b), which requires that the
most recent account statement and annual report be attached to
commodity pool disclosure documents, and deletes the text of 4.26(c)
that was intended to be replaced.
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\3\ 65 FR 58648 (October 2, 2000).
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Section 553(b) of the Administrative Procedure Act (``APA''), 5
U.S.C. 553(b), generally requires that notice of proposed rulemaking be
published in the Federal Register and that an opportunity for public
comment be
[[Page 42710]]
provided when an agency promulgates new rules. APA Sec. 553(b)(B)
provides an exception to this requirement ``when the agency for good
cause finds (and incorporates the finding and a brief statement of
reasons therefore in the rules issued) that notice and public procedure
thereon are impracticable, unnecessary, or contrary to the public
interest.'' Commission staff have been advised by National Futures
Association, the designated self-regulatory association (``DSRO'') for
CPOs, that despite the inadvertent amendment of Rule 4.26(b), CPOs have
been following the rule as though the requirement for the most current
account statement and annual report had not been eliminated. Thus, the
Commission has determined that publication of this correction for
comment is unnecessary because CPOs, the entities subject to the rule,
have been operating as though the rule had been in effect.
Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-611 (1994),
requires that agencies, in proposing rules, consider the impact of
those rules on small businesses. The Commission has previously
established certain definitions of ``small entities'' to be used by the
Commission in evaluating the impact of its rules on such entities in
accordance with the RFA.\4\ The Commission previously has determined
that registered CPOs are not small entities for the purpose of the
RFA.\5\ Therefore, the Chairman, on behalf of the Commission, hereby
certifies, pursuant to 5 U.S.C. 605(b), that the action taken herein
will not have a significant economic impact on a substantial number of
small entities.
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\4\ 47 FR 18618-18621 (April 30, 1982).
\5\ 47 FR 18619-18620.
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B. Paperwork Reduction Act
This rule does not contain information collection requirements.
Filing requirements regarding the disclosure document and information
that must be distributed with it are included in section 4.21 and 4.22,
which are part of an approved paperwork collection [OMB Control No.
3038-0005].
C. Cost-Benefit Analysis
Section 15 of the Commodity Exchange Act, as amended by section 119
of the CFMA, requires the Commission, before promulgating a new
regulation under the Act, to consider the costs and benefits of the
Commission's action. Section 15 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. The Commission may, in its
discretion, give greater weight to any one of the five enumerated areas
of concern and may, in its discretion, determine that, notwithstanding
its costs, a particular regulation was necessary or appropriate to
protect the public interest or to effectuate any of the provisions or
to accomplish any of the purposes of the Act.
The main area of concern relevant to this rulemaking is the first
set forth in the Act, ``protection of market participants and the
public.'' The other factors are inapplicable to this rule. The
Commission concludes that the benefit to the public of receiving the
financial information specified above outweighs the costs of providing
the information.
List of Subjects in 17 CFR Part 4
Brokers, Commodity futures Commodity pool operators, Commodity
trading advisors.
Accordingly, 17 CFR part 4 is corrected by making the following
correcting amendments:
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. Section 4.26 is amended by removing paragraph (c), redesignating
paragraph (b) as paragraph (c), and adding a new paragraph (b) to read
as follows:
Sec. 4.26 Use, amendment and filing of Disclosure Document.
(a) * * *
(b) The commodity pool operator must attach to the Disclosure
Document the most current Account Statement and Annual Report for the
pool required to be distributed in accordance with Sec. 4.22; provided,
however, that in lieu of the most current Account Statement the
commodity pool operator may provide performance information for the
pool current as of a date not more than sixty days prior to the date on
which the Disclosure Document is distributed and covering the period
since the most recent performance information contained in the
Disclosure Document.
* * * * *
Issued in Washington, DC on June 19, 2002 by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 02-15994 Filed 6-24-02; 8:45 am]
BILLING CODE 6351-01-M