Changes in Reporting Levels for Large Trader Reports

COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 15

Changes in Reporting Levels for Large Trader Reports

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is

amending its regulations to raise the reporting levels at which futures

commission merchants (FCMs), clearing members, foreign brokers, and

traders must file large trader reports in natural gas, heating oil,

frozen concentrated orange juice, and cocoa futures. By increasing the

large trader reporting levels, this amendment reduces both burdens on

persons reporting and the processing workload of the Commission.

EFFECTIVE DATE: January 1, 1995.

FOR FURTHER INFORMATION CONTACT:

Lamont L. Reese, Division of Economic Analysis, 2033 K Street, NW,

Washington, D.C. 20581, Telephone (202) 254-3310.

SUPPLEMENTARY INFORMATION:

I. Background

Reporting levels are set in futures to ensure that the Commission

receives adequate information to carry out its market surveillance

programs. These are designed to detect and prevent market congestion

and price manipulation and to enforce speculative position limits. In

addition, the information serves as a basis to gauge overall hedging

and speculative uses of the futures markets, use of the markets by

foreign participants, and other matters of public concern.

Generally, Parts 17 and 18 of the regulations require reports from

members of contracts markets, FCMs or foreign brokers (``firms'') and

traders, respectively, when a trader holds a ``reportable position'';

i.e., any open position held or controlled by a trader at the close of

business in any one future of a commodity traded on any one contract

market that is equal to or in excess of the quantities fixed by the

Commission in Sec. 15.03 of the regulations.\1\

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\1\Firms which carry accounts for traders who hold ``reportable

positions'' are required to identify such accounts on a Form 102 and

report on the series '01 forms any reportable positions in the

account, the delivery notices issued or stopped by the account and

any exchanges of futures for physicals. Traders who own or control

reportable positions are required to file annually a CFTC Form 40

giving certain background information concerning their trading in

commodity futures and, on call by the Commission, must submit a Form

103 showing positions and transactions in the contract market

specified in the call.

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The Commission periodically reviews information concerning trading

volume, open interest, and the number and position sizes of individual

traders relative to the reporting levels for each market to determine

if coverage is adequate for effective market surveillance. In this

regard, the Commission also is mindful of the paperwork burden

associated with these reporting requirements and reviews them with an

eye to ameliorating that burden to the extent compatible with adequate

market coverage. The Commission's most recent review of reporting

levels indicates that the size of trading volume, open interest, and

positions of individual traders enable the Commission to raise

reporting levels as follows: In cocoa, from 50 to 100 contracts; in

frozen concentrated orange juice, from 25 to 50 contracts; in natural

gas, from 50 to 100 contracts; and in heating oil, from 175 to 250

contracts. The Commission estimates that, by adopting the subject

amendment, the number of daily position reports (i.e., series '01

reports) filed by reporting firms for the four commodities would

decrease by about 33 percent. There would also be a proportionate

decrease in the number of form 102's filed by firms and form 40's filed

by large traders. Market coverage represented by the percent of total

open interest reported through the large trader system in the subject

commodities, however, is estimated to decline on average by no more

than 5 percent on either the long or short side of the market.

Exchanges which trade these four commodities also maintain large

trader reporting systems that are similar in most respects to that

operated by the Commission. All of the exchange systems rely on routine

position and account identification reports from member firms similar

to the Commission's series '01 reports and form 102s. As part of the

current review, Commission and exchange surveillance staff have

discussed the potential impact of these rule amendments on exchange

surveillance programs. Exchange staff are in agreement that the new

levels will provide adequate coverage for market surveillance.

II. Related Matters

A. Notice and Comment

The Administrative Procedure Act, 5 U.S.C. 553(b), requires, in

most instances, that a notice of proposed rulemaking be published in

the Federal Register, and that opportunity for comment be provided when

an agency promulgates new regulations. Section 553(b) sets forth an

exception, however, when the agency, for good cause, finds (and

incorporates the findings and a brief statement of its reasons) that

notice and public procedure thereon are impracticable, unnecessary, or

contrary to the public interest.

The Commission finds that notice and public comments on the rule

changes announced herein are unnecessary, because the amendments are

routine determinations made by the Commission with respect to futures

contracts that experience a growth in activity. These routine

determinations are made to adjust reporting levels, when increasing

activity in the market leads to the receipt by the Commission of a

larger number of reports than is necessary for efficient surveillance

of the market. In this regard, it should be further noted that these

amendments do not establish any new obligations under the Act. On the

contrary, these changes simplify compliance with the Act by reducing

persons' reporting obligations under the rules in question.

B. The Regulatory Flexibility Act (RFA)

The RFA requires that agencies, in proposing rules, consider the

impact of those rules on small businesses. These amendments affect

large traders and FCMs, and other similar entities, such as foreign

brokers and foreign traders. The Commission has defined ``small

entities'' as used by the Commission in evaluating the impact of its

rule in accordance with the RFA. 47 FR 18618-18621 [April 30, 1982].

In that statement, the Commission concluded that large traders and

FCMs are not considered to be small entities for purposes of the RFA.

In this regard, the amendments to reporting requirements fall mainly

upon FCMs. Similarly, foreign brokers and foreign traders report only

if carrying or holding reportable (i.e., large) positions. In addition,

these amendments relieve a regulatory burden. Accordingly, the

amendments have no significant impact on a substantial number of small

entities. For the above reasons, and pursuant to Sec. 3(a) of the RFA

(5 U.S.C. 605(b)), the Chairman, on behalf of the Commission, certifies

that these regulations will not have a significant economic impact on a

substantial number of small entities.

C. Paperwork Reduction Act (PRA)

The PRA, 44 U.S.C. 3501 et seq., 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 compliance with the PRA, the Commission previously

submitted this rule and its associated information collection

requirements to the Office of Management and Budget (OMB). OMB approved

the collection of information associated with this rule in June 1993,

and assigned OMB control number 3038-0009 to the rule. The burden

associated with this entire collection, including this amended rule, is

as follows:

Average Burden Hours Per Response........................... 0.19

Number of Respondents....................................... 4,584

Frequency of Response....................................... Daily

Persons wishing to comment on the information which would be

required by these rules should contact Gary Waxman, Office of

Management and Budget, Room 3228, NEOB, Washington, DC, 20503, (202)

395-7304. Copies of the information collection submission to OMB are

available from Joe F. Mink, CFTC Clearance Officer, 2033 K Street, NW,

Washington, DC 20581, (202) 254-9735.

List of Subjects in 17 CFR Part 15

Brokers, Reporting and recordkeeping requirements.

In consideration of the foregoing, and pursuant to the authority

contained in the Act and, in particular, sections 4g, 4i, 5 and 8a of

the Act, 7 U.S.C. 6g, 6i, 7 and 12a (1990), the Commission hereby

amends Chapter I of Title 17 of the Code of Federal Regulations as

follows:

PART 15--REPORTS--GENERAL PROVISIONS

1. The authority citation for Part 15 continues to read as follows:

Authority: 7 U.S.C. 2, 4, 5, 6a, 6c (a)-(d), 6f, 6g, 6i, 6k, 6m,

6n, 7, 9, 12a, 19 and 21; 5 U.S.C. 552 and 552(b).

2. Section 15.03 is revised to read as follows:

Sec. 15.03 Quantities Fixed for Reporting.

The quantities for the purpose of reports filed under parts 17 and

18 of this chapter are as follows:

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Commodity Quantity

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Wheat (bushels).............................................. 500,000

Corn (bushels)............................................... 750,000

Soybeans (bushels)........................................... 500,000

Oats (bushels)............................................... 300,000

Cotton (bales)............................................... 5,000

Frozen Concentrated Orange Juice (contracts)................. 50

Soybean oil (contracts)...................................... 175

Soybean meal (contracts)..................................... 175

Live cattle (contracts)...................................... 100

Feeder cattle (contracts).................................... 50

Hogs (contracts)............................................. 50

Sugar No. 11 (contracts)..................................... 300

Sugar No. 14 (contracts)..................................... 100

Cocoa (contracts)............................................ 100

Coffee (contracts)........................................... 50

Copper (contracts)........................................... 100

Gold (contracts)............................................. 200

Silver bullion (contracts)................................... 150

Platinum (contracts)......................................... 50

No. 2 heating oil (contracts)................................ 250

Crude Oil, sweet (contracts)................................. 300

Unleaded gasoline (contracts)................................ 150

Natural gas (contracts)...................................... 100

Long-term U.S. Treasury bonds (contracts).................... 500

GNMA (contracts)............................................. 100

Three-month (13 week) U.S. Treasury bills (contracts)........ 150

Long-term U.S. Treasury notes (contracts).................... 500

Medium-term U.S. Treasury notes (contracts).................. 300

Short-term U.S. Treasury notes (contracts)................... 200

Three-month Eurodollar time deposit rates (contracts)........ 850

Thirty-Day Interest Rates (contracts)........................ 100

One-Month Labor Rates (contracts)............................ 100

Foreign currencies (contracts)............................... 200

U.S. Dollar Index (contracts)................................ 50

Standard and Poor's 500 stock price index (contracts)........ 300

New York Stock Exchange composite index (contracts).......... 50

Amex major market index-maxi (contracts)..................... 100

Nikkei stock index (contracts)............................... 50

Municipal bonds (contracts).................................. 100

Value line average index (contracts)......................... 50

All other commodities (contracts)............................ 25

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Issued in Washington, DC, this 15th day of December 1994, by the

Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 94-31258 Filed 12-22-94; 8:45 am]

BILLING CODE 6351-01-M