[Federal Register: February 24, 1999 (Volume 64, Number 36)]
[Page 9129]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]



Proposed Amendments to the Contract Size and Other Provisions of
the Chicago Mercantile Exchange Random Lengths Lumber Futures Contract,
Submitted Under Fast Track Review Procedures

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of availability of proposed contract market rule


SUMMARY: The Chicago Mercantile Exchange (CME or Exchange) has proposed
amendments to the random lengths lumber futures contract to change the
contract size to 110,000 board feet from 80,000 board feet. Under the
proposal, the deliverable unit will range from 105,000 to 115,000 board
feet. The speculative position limits also would be decreased in
proportion to the increased size of the trading unit. The proposals
were submitted under the Commission's 45-day fast track procedures. The
Acting Director of the Division of Economic Analysis (Division) of the
Commission, acting pursuant to the authority delegated by Commission
Regulation 140.96, has determined that the proposals are of major
economic significance, and that publication for comment is in the
public interest, will assist the Commission in considering the views of
interested persons, and is consistent with the purpose of the Commodity
Exchange Act.\1\

    \1\ Section 5a(a)(12) of the Act, which requires the Commission
to publish proposed rules of ``major economic significance,'' does
not define the meaning of the term. Moreover, section 5a(a)(12)
provides that the Commission's determination that proposed exchange
rules are of major economic significance under the section if final
and not subject to judicial review. The Commission staff has
interpreted the meaning of ``major economic significance'' broadly
as proposed rules which may have an effect on the pricing of a
contract, on the value of existing contracts, on a contract's
hedging or price basing utility, or on deliverable supplies. Section
5a(a)(12) does not define rules of ``major economic significance''
based upon a specific dollar impact on the economy or other such
measures used in other statutes, such as those used in determining
whether an agency rule is a ``major rule'' under 5 U.S.C. section

DATES: Comments must be received on or before March 11, 1999.

ADDRESSES: Interested persons should submit their views and comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581. In
addition, comments may be sent by a facsimile transmission to facsimile
number (202) 418-5521, or by electronic mail to [email protected] gov.
Reference should be made to the amendments to the CME random lengths
lumber futures contract.

FOR FURTHER INFORMATION CONTACT: Please contact John Forkkio of the
Division of Economic Analysis, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581,
telephone (202) 418-5281. Facsimile number: (202) 418-5527. Electronic
mail: [email protected]

SUPPLEMENTARY INFORMATION: The CME justified the proposal by noting

    . . . railcars from 70 feet to 73 feet in length are now the
majority (51.7%) of all railcars used in originating shipments of
lumber from western areas. These railcars have a loading capacity
ranging from 110,000 bf to 115,000 bf. It is reported by the
carriers that railcars of this size are the only cars being built
because smaller cars are more costly to load and haul on a per-pound
basis. The current trading unit of 80,000 bf [board feet] is shipped
on the smallest cars of 78,000 -92,000 bf loading capacity. The
smallest cars are a declining portion of the railcar fleet in both
absolute and relative terms.
    Allowing deliveries to be made in a range of 105,000 to 115,000
bf will permit shipments to be made on railcars that are between 67
feet and 73 feet in length. These cars make up an estimated 59% of
the railcar population used in hauling lumber. The largest cars (73
feet) are estimated to be 46.5% of this population. The variation
allowed in the delivered unit is less than 5% of the total trading
unit. Mills will have some flexibility in meeting their
transportation needs with this variation.
    The speculative position limits have been lowered to account for
the increased size of the trading unit. On a total board-foot basis,
the position limits are unchanged.

    The CME proposes to implement the amendments for application to
newly listed contracts only. The first month to be affected is the
January 2000 contract month.
    The Division requests comment on the extent to which the proposed
changes to the random length lumber futures contract reflect current
and expected cash market practices.
    The proposed amendments were submitted pursuant to the Commission's
fast tract procedures for streamlining the review of futures contract
rule amendments and new contract approvals (62 FR 10434). Under those
procedures, the proposals, absent any contract action by the
Commission, may be deemed approved at the close of business on March
25, 1999, 45 days after receipt of the proposals. In view of the
limited review period provided under the fast track procedures, the
Commission has determined to publish for public comment notice of the
availability of the terms and conditions for 15 days, rather than 30
days as provided for proposals submitted under the regular review
    Copies of the proposed amendments will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.
Copies can be obtained through the Office of the Secretariat by mail at
the above address, by phone at (202) 418-5100, or via the internet on
the CFTC website at www.cftc.gov under ``What's New & Pending''.
    Other materials submitted by the CME in support of the proposals
may be available upon request pursuant to the Freedom of Information
Act (5 U.S.C. 552) and the Commission's regulations thereunder (17 CFR
Part 145 (1997)), except to the extent they are entitled to
confidential treatment as set forth in 17 CFR 145.5 and 145.9. Requests
for copies of such materials should be made to the FOI, Privacy and
Sunshine Act Compliance Staff of the Office of Secretariat at the
Commission's headquarters in accordance with 17 CFR 145.7 and 145.8.
    Any person interested in submitting written data, views, or
arguments on the proposals, or with respect to other materials
submitted by the CME, should send such comments to Jean A. Webb,
Secretary, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st Street NW, Washington, DC 10581 by the specified

    Issued in Washington, DC, on February 18, 1999.
John R. Mielke,
Acting Director.
[FR Doc. 99-4548 Filed 2-23-99; 8:45 am]

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