[Federal Register: August 20, 1999 (Volume 64, Number 161)]
[Notices]
[Page 45515-45517]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20au99-52]
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COMMODITY FUTURES TRADING COMMISSION
Citrus Associates of the New York Cotton Exchange: Proposed
Amendments to the Frozen Concentrated Orange Juice-2 (FCOJ-2) Futures
Contract Providing for Delivery of FCOJ Originating in Florida and
Brazil Only, Changing the Contract's Quality Specifications and
Providing for Trading of the FCOJ-2 Futures Contract at a Price
Differential to the Existing FCOJ-1 Futures Contract
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of availability of proposed amendments to contract terms
and conditions.
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SUMMARY: The Citrus Associates of the New York Cotton Exchange (CANYCE
or Exchange) has proposed amendments to the Exchange's dormant frozen
concentrated orange juice-2 (FCOJ-2) futures contract. The proposed
amendments would provide for the delivery of FCOJ originating in
Florida and Brazil only, make the contract's quality specifications
conform to the quality specifications of the FCOJ-1 futures contract,
amend the contract's speculative position limits, and provide for the
trading of the FCOJ-2 futures contract as a differential price spread
to the FCOJ-1 futures contract. The Exchange also proposes to
recommence trading in this dormant contract pursuant to the provisions
for Commission Regulation 5.2. The proposed amendments were submitted
under the Commission's 45-day Fast Track procedures which provides
that, absent any contrary action by the Commission, the proposed
amendments may be deemed approved on September 27, 1999--45 days after
the Commission's receipt of the proposals. 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 proposed amendments are of major economic
significance, within the meaning of section 5a(a)(12) of the Commodity
Exchange Act (Act), and that their publication is in the public
interest and will assist the Commission in considering the views of
interested persons.
DATES: Comments must be received on or before September 7, 1999.
ADDRESSES: Interested persons should submit their views and comments to
Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three
[[Page 45516]]
Lafayette Centre, 21st Street, NW Washington, DC 20581. In addition,
comments may be sent by facsimile transmission to facsimile number
(202) 418-5521, or by electronic mail to [email protected]. Reference
should be made to the proposed amendments to the CANYCE FCOJ-2 futures
contract.
FOR FURTHER INFORMATION CONTACT: Please contact John Bird of the
Division of Economic Analysis, Commodity Futures Trading Commission,
Three Lafayette Centre, 21st Street NW, Washington, DC 20581, telephone
(202) 418-5274. Facsimile number: (202) 418-5527. Electronic mail:
[email protected]
SUPPLEMENTARY INFORMATION: The Exchange currently is designated to
trade two FCOJ futures contracts, the actively traded FCOJ-1 futures
contract and dormant FCOJ-2 futures contract. The terms and conditions
of the FCOJ-1 and FCOJ-2 futures contracts are identical, except with
respect to the contracts' quality specifications. In this regard, the
FCOJ-1 futures contract provides for the delivery of FCOJ having a Brix
value of acid ratio of not less than 14.0 to 1 and not more than 18.0
to 1 and a minimum score of 94, with minimum component quality factors
of 37 for color, 37 for flavor, and 19 for defects. In contract, the
FCOJ-2 futures contract provides for the delivery of FCOJ having a Brix
value to acid ratio of not less than 13.0 to 1 and not more than 19.0
to 1 and a minimum score of 92, with minimum component quality factors
of 36 for color, 36 for flavor, and 19 for defects.
The existing terms of the FCOJ-1 and FCOJ-2 futures contracts
permit delivery of FCOJ of all origins, imported or domestic. In
addition, both futures contracts provide for the delivery of shipping
certificates, which require the certificate issuers to load FCOJ into
transportation equipment provided by the certificate holder. The
contracts' delivery points consist of approved delivery facilities
located at Wilmington, Delaware; Newark and Port Elizabeth, New Jersey,
in 11 specified counties in California; and in 16 specified counties in
central Florida. FCOJ is deliverable at par at delivery facilities
located in Florida, Wilmington, Newark and Port Elizabeth. FCOJ in
delivery facilities in California is deliverable at a discount of 10
cents per pound. Currently, a trader's combined position in the FCOJ-1
and FCOJ-2 futures contracts is subject to speculative position limits
of 3,000 contracts in all contract months combined, 1,800 contracts in
individual non-spot contract months, and 300 contracts in the spot
month.
The proposed amendments to the FCOJ-2 futures contract would limit
the origins of deliverable FCOJ to FCOJ produced in Florida and Brazil.
In addition, the proposed amendments would make the FCOJ-2 futures
contract's quality specifications identical to the quality
specifications of the FCOJ-1 futures contract, as noted above.
The proposed amendments also would provide for the trading of the
FCOJ-2 futures contract as a component of a differential price spread
between the FCOJ-2 and FCOJ-1 futures contracts (``FCOJ Differential
Contracts'') during most of the trading life of an FCOJ-2 contract
month. In this respect, the proposed amendments define a long FCOJ
Differential Contract as consisting of a long FCOJ-2 futures contract
and a short FCOJ-1 futures contract. A short FCOJ Differential Contract
is defined as a short FCOJ-2 futures contract and a long FCOJ-1 futures
contract. The FCOJ Differential Contract will be traded as a single
contract until the second business day preceding the first delivery
notice day for the expiring contract month. The proposed amendments
would provide that, on the second business day preceding the first
delivery notice day for a contract month, each FCOJ Differential
Contract position in the expiring contract month will be divided into
its component FCOJ-1 and FCOJ-2 positions, i.e., a trader will receive
by book entry a long (short) position in the FCOJ-2 futures contract
and an opposite short (long) position in the FCOJ-1 futures contract.
Trading in the FCOJ-2 futures contract will then continue until the
first delivery notice day, with the quoted prices reflecting the value
of FCOJ originating in Florida and Brazil (not the price spread
differential between the FCOJ-2 and FCOJ-1 futures contracts). Trading
in the FCOJ-2 futures contract would end on the first delivery notice
day for a contract month and all positions remaining open after the
close of trading on that day would be settled by delivery. The proposed
amendments would not change the existing trading and delivery notice
periods for expiring FCOJ-1 futures contract months.
In addition, the proposed amendments will provide for speculative
position limits of 3,000 contracts for each of the FCOJ-1 and FCOJ-2
futures contracts in all contract months combined and 1,800 contracts
for each of the FCOJ-1 and FCOJ-2 futures contracts in individual non-
spot contract months. The spot month speculative position limit would
continue to be applicable to a trader's combined gross position in the
FCOJ-1 and FCOJ-2 futures contracts.
The CANYCE intends to make the proposed amendments effective in
October 1, 1999 with the commencement of trading in the revised FCOJ-2
futures contract.
In support of the proposed amendments, the CANYCE indicated that
the proposal to trade the FCOJ-2 futures contract as a component of a
differential price spread between the FCOJ-2 and FCOJ-1 futures
contract is intended to avoid diluting the open interest and trading
activity in the FCOJ-1 futures contract. The Exchange also indicated
that proposal to divide each FCOJ Differential Contract position into
its FCOJ-2 futures contract and FCOJ-1 futures contract components two
business days before the first notice day of expiring contract months
is intended to allow traders sufficient time to adjust their futures
positions as necessary. In addition, the CANYCE indicated that, because
FCOJ that meets the proposed delivery requirements of the FCOJ-2
futures contract constitutes approximately 90% of all FCOJ currently
deliverable on the FCOJ-1 futures contract, there will be an adequate
deliverable supply of FCOJ available for the amended FCOJ-2 futures
contract.
The Division is requesting comments on the proposed amendments to
the FCOJ-2 futures contract.
Copies of the proposed amendments will be available for inspection
at the Office of the Secretariat, Commodity Futures Trading Commission,
Three Lafayette Centre, 21st Street NW, Washington, DC 20581. Copies of
the proposed amendments 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 at [email protected].
Other materials submitted by the CANYCE in support of the proposal
may be available upon request pursuant to the Freedom of Information
Act (5 U.S.C. 552) and the Commission's regulations thereunder (17
C.F.R. Part 145 (1987)), except to the extent they are entitled to
confidential treatment as set forth in 17 C.F.R. 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 C.F.R. 145.7 and
145.8.
Any person interested in submitting written data, views, or
arguments on the proposed amendments, or with respect to other
materials submitted by the CANYCE, should send such comments to Jean A.
Webb, Secretary, Commodity
[[Page 45517]]
Futures Trading Commission, Three Lafayette Centre, 21st Street NW,
Washington, DC 20581 by the specified date.
Issued in Washington, DC, on August 16, 1999.
John R. Mielke,
Acting Director.
[FR Doc. 99-21671 Filed 8-19-99; 8:45 am]
BILLING CODE 6351-01-M
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