Recordkeeping; Reports by Futures Commission Merchants, Clearing Members, Foreign Brokers, and Large Traders

COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 1, 15, 16 and 17

Recordkeeping; Reports by Futures Commission Merchants, Clearing

Members, Foreign Brokers, and Large Traders

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rule.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is

amending its regulations to require that futures commission merchants,

clearing members and foreign brokers (firms) file options large trader

reports with the Commission on a daily basis. The amendments specify a

joint options and futures reporting level, a new record format for

reporting information in machine-readable form, an earlier time for

submission of the data, and a requirement that corrections to

previously transmitted data be provided in machine-readable form. The

rule amendments more closely align the Commission's reporting rules

with those of the exchange and may allow some exchanges to obtain data

from the Commission rather than from reporting firms. The proposed

amendments deleting from requirement that exchanges file weekly options

large trader reports will be made effective after all firms are

providing the required reports daily.

The collection of daily options large trader data cannot begin

until the Commission has reengineered its data collection system. Since

the Commission anticipates completion of the necessary changes by

September 1997, it is setting the effective date for the amendments as

October 1, 1997. The Commission believes that, by publishing final

rules at this time, firms will have ample lead time to make changes to

their internal procedures and computer software so that joint testing

of Commission and firms software may begin on or shortly after October

1, 1997. Since this testing may take a period of time to complete, the

Commission will take no enforcement action during the testing period

against

[[Page 24027]]

reporting firms if they are not in compliance with the new requirements

provided that firms are making a good faith effort to comply and

continue in compliance with the reporting rules in effect immediately

prior to the adoption of these rules. If the Commission cannot meet its

schedule for software development, it may at a later date delay

implementation of these rules.

EFFECTIVE DATE: October 1, 1997.

FOR FURTHER INFORMATION CONTACT: Lamont L. Reese, Commodity Futures

Trading Commission, Division of Economic Analysis, Three Lafayette

Centre, 1155 21st Street, NW., Washington, DC 20581, telephone (202)

418-5310 or E-mail [email protected].

SUPPLEMENTARY INFORMATION:

I. Background

The Commission employs a comprehensive market surveillance system

which includes an exclusive data-gathering system relying heavily on

computer support. Regulations concerning this system require reports

from three primary sources: contract markets under Part 16 of the

regulations; future commission merchants (FCMs), clearing members, and

foreign brokers (firms) under parts 17 and 21 of the regulations; and

individual traders under Parts 18 and 19 of the regulations. See 17 CFR

Parts 16 through 21 (1996).

Part 17 of the Commission's regulations requires that firms submit

a daily report to the Commission with respect to futures positions in

all special accounts on their books.\1\ The regulations also specify

the format for data that is reported on machine-readable media and the

type of data processing media that is compatible with Commission

computer systems.\2\ Additionally, firms must file a CFTC form 102

showing the identifying information specified under Section 17.01 of

the regulations for each special account, 17 CFR 17.01 (1996). With

respect to exchange-traded options, the Commission receives large

trader data only on a weekly basis. Part 16 of the regulations requires

that contract markets provide the long and short put or call positions

for each options trader controlling a reportable position as of the

close of business on Tuesday.\3\

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\1\ Special account means any commodity futures or options

account in which there is a reportable position, 17 CFR 15.00

(1996). Firms report futures information to the Commission and

futures and options information to the exchanges. A reportable

position in any open position held or controlled by a trader at the

close of business in any one futures contract 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,

17 CFR 15.03 (1996).

\2\ See rule 17.00(g) for a description of the file

characteristics and rule 15.00(1) for a definition of compatible

data processing media, 17 CFR 15.00(1) and 17.00(g) (1996).

\3\ See 17 CFR 16.02 (1996). A reportable options position is

defined as any open contract position on any one contract market in

the put options or separately in the call options of a specified

option expiration date which exceeds 50 contracts, 17 CFR

15.00(b)(2) (1996).

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Due to the importance of knowing both a trader's open futures and

options positions for general and financial surveillance, the

Commission proposed rule changes that would require firms to report

large trader futures and options positions to the Commission on a daily

basis, 61 FR 37409 (July 18, 1996). The proposed amendments included

redefining reporting levels, establishing joint reporting of futures

and options, changing the current format for reporting data on machine-

readable media, and revising the time by which data must be supplied by

reporting firms. A number of these rule amendments were intended more

closely to align the Commission's and the exchanges' reporting rules,

allowing the potential for the Commission to act as a central

collection point for large trader data and distribute such data to the

exchanges.\4\ The Commission also requested comment on matters

regarding electronic transmission of data, computerizing its account

identification form, and related rule amendments concerning exchange

reporting of delta factors and settlement prices.

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\4\ As explained in the Federal Register release, firms

currently report futures and options data to the exchanges and

futures data to the Commission. Using the Commission as a single

collection point for large trader data was suggested by reporting

firms through operations committees of the Futures Industry

Association (FIA) as a means to reduce reporting burdens in the

industry, 61 FR 37410 (July 18, 1996).

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In addition to the above, the Commission proposed amendments to

Parts 18 and 19 of the regulations concerning reports filed by large

traders which were unrelated to options large trader reporting. The

amendments proposed to Part 18 required that traders who have

reportable futures or options positions file a CFTC form 40,

``Statement of Reporting Trader,'' only in response to a special

call.\5\ The amendments proposed to Part 19 required that traders file

cash position reports based on a trader's net futures and option

positions. Currently, reporting levels for the cash position reports

are based only on a trader's futures positions. The Commission has

adopted these amendments in a separate rulemaking.\6\

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\5\ Under Part 18 of the regulations, traders who become

reportable in futures must file a CFTC form 40, ``Statement of

Reporting Trader,'' within ten business days following the day that

the trader obtains a reportable position. Additional filings are

made annually as specified in rule 18.04(d).

\6\ See 62 FR 6112 February 11, 1997.

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II. Discussion of Comments and Final Rules

The Commission received eight comment letters concerning its notice

of proposed rulemaking relating to daily option large trader reports.

Commenting were the FIA, five exchanges, an FCM, and a service bureau

that provides back-office support to reporting firms. In addition,

Commission staff met with exchange representatives and attended a

meeting of the FIA's operations committee to answer questions about the

rule amendment.

A. General Considerations.

Commentors agreed that the Commission needs daily futures and

options large trader positions for effective market surveillance and

that such data should be reported by firms directly to the Commission

rather than the Commission's obtaining the data from the exchanges. In

view of this, the Commission has determined to obtain futures and

options position data directly from the firms. The Commission also

proposed amendments to Part 16 of its regulations that delete the

requirement that exchanges provide such data. As explained more fully

below, the Commission will adopt as final the amendments to Part 16

after it begins receiving option large trader data from the firms.

Commentors also supported adoption of uniform reporting rules by

the exchanges and the Commission. Generally, they believed that such

actions would reduce reporting burdens for most firms by eliminating

the maintenance costs for the many systems that are currently in place.

In commenting on this, the FIA opined that, ``although cost savings to

FIA member firms are difficult to quantify with any precision, FIA has

no doubt that such savings are real and, over time, will be

significant.''

There were, however, significant concerns about the Commission's

acting as a central depository for large trader data and distributing

such data to the exchanges. These concerns centered around time frames

for receipt of the data, control over the process of receiving such

data, and accountability of reporting firms to the Commission and the

exchanges. Commentors questioned whether the Commission could supply

data in accordance with current exchange requirements or on government

holidays when the

[[Page 24028]]

exchanges are open. Additionally, they were concerned whether there

would be sufficient backup procedures to ensure that data could be

supplied to the exchanges in the event of computer problems or

communication failures at the firms or the Commission. One commentor

noted that cost savings envisioned by this proposal may not materialize

if the exchanges must maintain backup procedures with their clearing

members.

Although Commission staff will address many of these issues in the

course of developing the Commission's surveillance system, the issues

may not be resolved to the satisfaction of every exchange.

Nevertheless, reporting burdens on the industry can be reduced, as

commentors suggested, if the Commission and the exchanges adopt uniform

formats for transmitting and uniform rules for reporting large trader

data. In this respect, the proposed rules for determining reportability

and for reporting appear to be consistent with or satisfactory for use

in exchange reporting systems.\7\ Similarly, the reporting format

proposed by the Commission, with the exception of minor technical

amendments discussed below, appears suitable for all exchange reporting

systems, and a number of exchanges have stated they plan to adopt it.

The Commission believes that significant cost savings and efficiencies

can be achieved by reporting firms if all exchanges adopt a common

format for reviewing large trader position data. Accordingly, the

Commission encourages all exchanges to adopt the format specified in

these regulations even if they ultimately choose not to receive their

large trader position data from the Commission.\8\

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\7\ These rules include proposed amendments to Part 15 that

define a reportable position and proposed amendments to Part 17 that

require reporting of all futures and options positions if a trader

becomes reportable. The Commission did not propose rule amendments

that would adjust its reporting levels to those set by the

exchanges. Reporting firms can obtain uniformity in this respect by

submitting data at the lower of either the exchanges' or the

Commission's reporting level. Although the Commission will retain

only the data it requires for its purposes, it will have the

capability to transmit to an exchange all data pertaining to that

exchange that the Commission receives.

\8\ Other avenues to reduce reporting burdens will be

investigated as well. One commentor suggested, for example, that

firms may reduce costs if they can use software already developed

sequentially to transmit the same data to different locations.

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B. Proposed Formats and Reporting

Three persons commented on the Commission's proposed amendments to

its format for reporting data on machine-readable media. One of the

commentors requested that the Commission add a one-character field to

designate whether a record submitted by a reporting firm either changed

or deleted a previously-transmitted record or represented a new record.

The Commission has changed its proposed format in accordance with this

request.\9\ Another commentor requested that the Commission retain its

five-digit designation for reporting firms and its six-digit

designation for contract markets. The Commission proposed that firms

and contract markets be identified by using exchange-assigned

designators. This commentor believed that such a change may minimize

programming costs since all firms have programmed Commission codes into

their existing systems. This argument is not persuasive. Reporting

firms must also program exchange codes in their systems, not only for

reporting to the exchanges, but also for clearing transactions. Using

Commission-generated codes would require that all exchanges and all

firms keep and periodically update tables for Commission codes as well

as those assigned by the exchanges. It appears that the reporting

burden on the industry is reduced if only exchange codes are used. In

addition to the above, the Commission's Office of Information Resources

Management has determined there is no need for the Type I record

described in proposed regulation 17.00(g)(2)(i). The Commission is

therefore amending its proposal to exclude the requirement to submit

this record. No suggestions were made for changes to the Commission's

proposed amendments to rule 15.00 that define a reportable position or

to the proposed amendments to rule 17.00(a) that define the information

that must be reported. The Commission therefore is adopting the

amendments to rules 15.00 and 17.00(a) as proposed and the amendments

to rule 17.00(g) as discussed above.

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\9\ Use of this field is described more fully below in the

discussion on correcting errors.

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C. Transmission of Data

The Commission requested comment on the potential burden to small

firms if all large trader data were required to be reported on machine-

readable media. As explained in its notice of proposed rulemaking, a

significant number of firms file paper reports. Although the amount of

data filed in this form currently is small, this may increase

appreciably when the Commission collects option large trader data. Two

persons commented on this aspect of the Commission's proposed

rulemaking. Both expressed the opinion that no exceptions to electronic

reporting be allowed since key entry of paper reports impedes timely

access to large trader positions.

Currently, regulation 17.00 requires all firms to file

electronically except as otherwise authorized by the Commission or its

designee. Previously, exemptions from this requirement were liberally

granted because of the relatively high cost for computer hardware and

software needed to transmit small amounts of data. Recently, lower

costs have made personal computers (PCs) equipped with fax/modems more

commonplace for business applications. In this respect, Commission

staff are developing a PC based software application that will

facilitate data entry for large trader positions. Staff will be

contacting firms that currently file manual reports to determine costs

a firm may incur to transmit data using a PC and will offer the data

entry software free of charge. In light of their findings,

determinations will be made on a case-by-case basis whether to require

electronic filing.

The Commission also sought comment on how best to define acceptable

data processing media. Commission-compatible data processing media is

currently defined in rule 15.00(1), but is somewhat outdated. Three

persons provided suggestions on this matter. Two of the commentors

recommended specific but differing forms of data transmission. The FIA

questioned whether it was practical to define this term by regulation

since electronic media are evolving at such a rapid pace. The

Commission agrees that flexibility is required in this area. Currently,

authority is delegated to the Executive Director to approve the use of

data processing media other than that specified in rule 15.00(1). See

17 CFR 16.07(b) and 17.03(c) (1996). In view of the above, the

Commission sees no value in citing specific media as acceptable. The

Commission is amending rule 15.00(1) to delete its list of specific

media and to define Commission-compatible data processing media to mean

media approved by the Commission or its designee. The Executive

Director will continue to have delegated authority to define acceptable

media.\10\

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\10\ This delegation of authority is being set forth in revised

rule 15.00(1), and conforming amendments are being made to rules

1.31, 16.07(b) and 17.03(c). With the exception of 8 inch magnetic

discs, the Commission will continue to accept data on media as

currently defined in rule 15.00. No data currently are provided on 8

inch magnetic discs. The Commission will support submission of data

on diskettes generated by personal computers and on certain tape

cartridges.

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[[Page 24029]]

D. Correction of Errors

The Commission did not address the issue of error correction in its

notice of proposed rulemaking. Commission rule 17.00(h) requires that

errors and omissions be filed on hard copy forms or computer printouts.

One person in commenting requested that dial-up screens and procedures

be made available for adjustments to previous transmissions, noting

that overlaying previously reported data is costly and time consuming.

This commentor noted that corrections are problematic with respect to

data for one exchange in particular since the firm's accounting system

cannot handle the exchange's timetable for processing data on those

weekends that options expire.

Generally, the Commission receives few, if any, corrections to

position data resulting from adjustments for deliveries or option

expirations that occur over a weekend. The Commission expects that such

adjustments will be reflected in changes to traders' positions as of

the close of business on the next business day. Similarly, the

Commission expects that changes to open interest resulting from such

adjustments will be reflected in the open interest published for the

next business day. Adjusting positions otherwise may be unique to a

particular exchange.

As noted above, the Commission is designating a field in its

reporting format that may be used by firms to specify certain records

they submit as changes or deletions to previously transmitted records.

Rule 17.00(h) must also be amended if corrections are to be made on

machine-readable media. In order to limit the number of paper reports

filed by firms, the Commission is amending rule 17.00(h) to require

that corrections to previously filed reports be submitted in machine-

readable form using the format specified in rule 17.00(g) unless

otherwise authorized by the Commission or its designee.\11\ The amended

rule 17.00(h) requires that, when deleting a record, firms supply all

information contained on the previously submitted record with a ``D''

in the eightieth column. When changing a record, firms must supply the

information that changed as well as all other information on the record

that was previously submitted either leaving the eightieth column blank

or inserting a ``C''. Commission staff will consider the need for

additional means to correct errors in its dealings with individual

exchanges on issues related to providing them with large trader data.

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\11\ As with the information provided under rule 17.00(a), the

Commission is delegating authority to the Director of the Division

of Economic Analysis to determine if firms will be allowed to report

data under rule 17.00(h) on hard copy forms or printouts. Rule 17.03

is being amended to effect this delegation.

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E. Electronic Transmission of Account Identification Information

Commission regulations require that firms identify all special

accounts on a CFTC form 102. Under current regulations, initial

identifying information must be provided on call by the Commission when

the account is first reported, and a completed form 102 must then be

filed within three business days. See 61 FR 6310 (February 20, 1996).

The Commission recognized in its notice of proposed rulemaking that

supplying this information was burdensome since firms must submit this

form to multiple regulators for each special account they report. The

Commission noted, however, that two exchanges, the Chicago Board of

Trade (CBT) and the Chicago Mercantile Exchange, have or are in the

process of providing means for electronic transmission of this

information. The Commission requested comment on either of the

exchanges' approach or other viable alternatives that might reduce

burdens associated with reporting this information. Two persons,

including the CBT, submitted comments concerning this matter.

The CBT recommended that the Commission's proposed record format be

altered to include the name, address and type of newly reported

accounts. This is similar to the CBT's current system for account

identification wherein reporting firms provide partial account

identification information on two records which are transmitted

electronically. The CBT offered access to its personal information

program that insures the receipt of appropriate data suggesting this

could be used as an interim system until programs for submissions of

electronic form 102s are fully operational. Adoption of a system

similar to that of the CBT would save processing costs for the

Commission since it now receives similar limited information by

telephone or facsimile and key-enters the data. Commission staff will

more fully investigate the operation of the CBT's system. The

Commission, however, will consider changes to its regulations for

obtaining account identification information only after it begins

collecting daily option large trader data.

E. Time and Place for Filing Reports

The Commission proposed amending rule 17.02 to require that firms

file large trader position reports earlier than is currently required.

In proposing this amendment, the Commission noted that exchanges

currently impose an earlier filing time than the Commission and that

the Commission's market surveillance program would benefit if the

reports were received earlier. To align its reporting rules more

closely with those of the exchanges, the Commission proposed that all

large trader reports be submitted by 9:00 a.m. or at such earlier time

as specified by an exchange that is receiving data from the Commission

for contract markets on that exchange.\12\

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\12\ Times refer to eastern times for markets located in that

time zone and central time for all other markets.

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Several exchanges commented about time frames for filing large

trader reports, expressing concern that, if the Commission acts as a

central depository, they continue to receive large trader data in a

timely fashion. In meetings with Commission staff, members of the FIA

questioned whether it was appropriate to make it a violation of

Commission regulations if firms did not submit reports within earlier

deadlines set by exchanges.

Many issues remain if the Commission is to distribute large trader

data to the exchanges. Whether the Commission can supply data in the

time frame required by any particular exchange can only be answered

after the Commission begins testing data transfers. At that time the

Commission and the exchanges can jointly determine procedures that may

be necessary to ensure the timeliness of large trader data. In view of

this, the Commission is amending its proposal to require only that data

be supplied to the Commission by 9:00 a.m. Since there were no

objections to this 9:00 a.m. filing time, the Commission is adopting

its proposal as amended. This rule does not preclude exchanges'

requiring their members to submit large trader data to the Commission

earlier so they may, in turn, receive it earlier from the Commission.

The Commission anticipates that assuring the timeliness and

completeness of large trader reporting by exchange members will be a

shared Commission/exchange responsibility if exchanges determine to

receive data from the Commission.

In addition to specifying the time that reports must be filed, Rule

17.02 specifies the location where various electronic media can be

routinely filed. Currently, rule 17.02 allows data to be submitted via

dial-up transmission only at the Chicago Regional Office, data to be

submitted via magnetic tape at either the New York or Chicago Regional

Office and data to be submitted by magnetic diskette at the Kansas

City,

[[Page 24030]]

Chicago, or New York Regional Office. Hardware to support these

functions must be purchased, maintained and operated at the appropriate

locations. In this respect, the Commission must purchase new tape

readers as part of its reengineering project.

At the current time, no exchanges or firms routinely submit data on

magnetic tape at the New York Regional Office. In view of the costs

involved, the Commission has determined that it will not purchase a new

tape reader to allow routine submissions of large trader data on

magnetic tape (reel or cartridge) at its New York Regional Office.

Back-up facilities will be maintained in this office for such media in

the event that firms or exchanges cannot transmit data. The Commission

is amended Rule 17.02 to reflect this determination.

The Commission has determined that the Administrative Procedure

Act, 5 U.S.C. 553(b)(1994), does not require notice of proposed

rulemaking and an opportunity for public participation in connection

with the adoption of this amendment. In this regard, the Commission

notes that such notice and opportunity for comment is unnecessary

because this rule amendment relates solely to agency procedure or

practice, does not establish any new obligations under the Commodity

Exchange Act and does not affect the current reporting by any firm.

Moreover, the expenditure of funds to support an unused method of

reporting would appear to be contrary to the public interest. In any

event, the Commission will have equipment available for non-routine

processing of magnetic tape.

Although this rule amendment is being promulgated as a final rule,

the Commission nevertheless will consider comments from interested

persons concerning this amendment within 60 days of publication in the

Federal Register. Comments should be mailed to the Commodity Futures

Trading Commission, Three Lafayette Centre, 1155 21st Street, NW.,

Washington, D.C. 20581, attention: Office of the Secretariat or send

via E-mail to [email protected] and should make reference to

``Option Large Trader Reports''.

F. Other Exchange Reporting

The Commission proposed amendments to rules 16.00 and 16.01 under

which exchanges make reports concerning clearing member activity and

provide market statistics. See 17 CFR 16.00 and 16.01 (1996). The

proposed amendments require that exchanges provide option and futures

market settlement prices and option delta factors by 7:00 a.m. on the

business day following the report date for the data.\13\ Currently, the

data are not provided until 3:00 p.m. of the day following the report

day. The Commission also proposed to delete the requirement that

exchanges provide the number of options exercised and assigned and the

number expiring unexercised. Last, the Commission proposed that the

current practice of the exchanges in providing information concerning

first notice day and last trading day for futures contracts and

expiration date for options contracts be set forth as a requirement

under rule 16.01. There were no objections to adoption of these

proposals. In view of this, the Commission is adopting the amendments

to rules 16.00 and 16.01 as proposed.

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\13\ The report date is the business day to which the data

pertains.

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G. Implementation Schedule

As noted above, the Commission is in the process of obtaining new

hardware and reengineering its market surveillance software to

accommodate the receipt and processing of daily option large trader

data. This involves a lengthy time period during which internal

software requirements will be defined and the software developed and

tested. It is only after these tasks are completed that the Commission

can begin receiving data from firms on a routine basis. Since the

Commission expects that its software development and internal testing

will be completed by the end of September 1997, it is setting an

effective date of October 1, 1997, for these rules. However, at this

time the Commission cannot be certain of this timetable for completion.

For this reason, the Commission may at a later date delay

implementation of these rules.

Reporting firms must also develop software for the new format

specified in Part 17. Such software and the Commission's software must

be jointly tested to ensure that data can be received and processed.

Since joint testing may not begin until after the effective date of

these rules and since firms must be dealt with on an individual basis,

this process will require some period of time beyond October 1, 1997,

before all firms are in compliance with the new rules. In view of this,

until the testing is complete, the Commission will take no enforcement

action against a firm if it is not in compliance with the new rules by

October 1, 1997, provided that the firm is making a good faith effort

to comply with the new rules and, until testing is completed, continues

in compliance with the reporting rules in effect immediately prior to

the adoption of these new rules.

During this period of testing, the Commission will continue to

receive weekly option large trader reports from the exchanges. After

the Commission is receiving all daily option large trader reports from

firms, it will undertake a final rule making concerning its proposed

amendments to Part 16 that delete the requirement that exchanges

provide such data. Since firms may be providing daily options large

trader data for an exchange or all exchanges prior to the effective

data of the amendments to Part 16, the Commission will take no

enforcement action against an exchange for not providing weekly option

large trader date if it makes a finding that firms are providing such

data for contract markets on the exchange. The Commission is delegating

to the Director of the Division of Economic Analysis the authority to

make the necessary findings and determinations concerning reporting by

firms.

III. Other Related Matters

A. The Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) 5 U.S.C. 601 et seq., requires

that agencies consider the impact of these rules on small businesses.

The Commission has previously determined that large traders and futures

commission merchants are not ``small entities'' for purposes of the

Regulatory Flexibility Act, 47 FR 18618-18621 (April 30, 1982).

Therefore, the Chairperson, 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.

B. Paperwork Reduction Act (PRA)

When publishing final rules, the Paperwork Reduction Act of 1995

(Pub. L. 104-13 (May 13, 1995)) imposes certain requirements on federal

agencies (including the Commission) in connection with their conducting

or sponsoring any collection of information as defined by the Paperwork

Reduction Act. In compliance with the Act, these final rules and/or

their associated information collection requirements inform the public

of:

``(1) the reasons the information is planned to be and/or has

been collected; (2) the way such information is planned to be and/or

has been used to further the proper performance of the functions of

the agency; (3) and estimate, to the extent practicable, of the

average burden of the collection (together with a request that the

public direct to the

[[Page 24031]]

agency any suggestions for reducing this burden); (4) whether

responses to the collection of information are voluntary, required

to obtain or retain a benefit, or mandatory; (5) the nature and

extent of confidentiality to be provided, if any; and (6) the fact

that an agency may not conduct or sponsor, and a person is not

required to respond to, a collection of information unless it

displays a currently valid OMB control number.''

The Commission previously submitted these rules in proposed form

and their associated information collection requirements to the Office

of Management and Budget. The Office of Management and Budget approved

the collection of information associated with these rules on November

26, 1996, and assigned OMB control number 3038-0009 to the rules. The

burden associated with the entire collection, including these final

rules, is as follows:

Average burden hours per response: 0.3607.

Number of Respondents: 6181.

Frequency of response: Daily.

The burden associated with these specific final rules, is as

follows:

Average burden hours per response: .3264.

Number of Respondents: 585.

Frequency of response: Daily.

Persons wishing to comment on the information required by these

final rules should contact the Desk Officer, CFTC, Office of Management

and Budget, Room 10202, NEOB, Washington, DC 20503, (202) 395-7340.

Copies of the information collection submission to OMB are available

from the CFTC Clearance Officer, 1155 21st Street, NW, Washington, DC

20581, (202) 418-5160.

List of Subjects

17 CFR Part 1

Reporting and recordkeeping requirements.

17 CFR Part 15

Brokers, Reporting and recordkeeping requirements.

17 CFR Part 16

Commodity futures, Reporting and recordkeeping requirements.

17 CFR Part 17

Brokers, Commodity futures, Reporting and recordkeeping

requirements.

In consideration of the foregoing, and pursuant to the authority

contained in the Commodity Exchange Act (Act) and, in particular,

sections 4g, 4i, 5 and 8a of the Act, 7 U.S.C. 6g, 6i, 7 and 12a

(1994), the Commission hereby amends chapter I of title 17 of the Code

of Federal Regulations as follows:

PART 1--GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT

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

Authority: 7 U.S.C. 2, 2a, 4, 4a, 6, 6a, 6b, 6c, 6d, 6f, 68, 6h,

6i, 6k, 6l, 6m, 6n, 6o, 7, 7a, 7b, 8, 9, 12, 12a, 13a, 13a-1, 16,

16a, 19, 21, and 24, unless otherwise noted.

2. Section 1.31 is amended by revising paragraphs (c)(1)(iii) and

(c)(3) to read as follows:

Sec. 1.31 Books and records; keeping and inspection.

* * * * *

(c) * * *

(1) * * *

(iii) If the records are preserved on optical disk, facilities for

immediately producing complete, accurate and easily readable hard

copies of the records and the means to provide, immediately upon

request, any Commission or Department of Justice representative with

copies of the records on Commission compatible machine-readable media

as defined in Sec. 15.00(l)(1) of this chapter.

* * * * *

(3) Be ready at all times to provide, and immediately provide at

the expense of the person required to keep such records, any hard copy

or facsimile enlargement of such records, and for records stored on

optical disk, copies of such records on approved machine-readable media

as defined in Sec. 15.00(l)(1) of this chapter which any representative

of the Commission or U.S. Department of Justice may request. Records on

machine-readable media must use a format and coding structure specified

in the request; and

* * * * *

PART 15--REPORTS--GENERAL PROVISIONS

3. 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).

4. Section 15.00 is amended by revising paragraphs (b) and (1) to

read as follows:

Sec. 15.00 Definitions of terms used in parts 15 to 21 of this

chapter.

* * * * *

(b) Reportable position means:

(1) For reports specified in Parts 17, 18 and Sec. 19.00(a)(2) and

(a)(3) of this chapter any open contract position that at the close of

the market on any business day equals or exceeds the quantity specified

in Sec. 15.03 of this part in either:

(i) Any one future of any commodity on any one contract market,

excluding future contracts against which notices of delivery have been

stopped by a trader or issued by the clearing organization of a

contract market; or

(ii) Long or short put or call options that exercise into the same

future of any commodity on any one contract market.

(2) For the purposes of reports specified in Sec. 19.00(a)(1) of

this chapter, any combined futures and futures-equivalent option open

contract position as defined in part 150 of this chapter in any one

month or in all months combined, either net long or net short in any

commodity on any one contract market, excluding futures positions

against which notices of delivery have been stopped by a trader or

issued by the clearing organization of a contract market, which at the

close of the market on the last business day of the week exceeds the

net quantity limit in spot, single or in all-months fixed in Sec. 150.2

of this chapter for the particular commodity and contract market.

* * * * *

(1) Compatible data processing media. This term means data

processing media approved by the Commission or its designee. The

Commission hereby delegates, until the Commission orders other-wise,

the authority to approve data processing media for data submissions to

the Executive Director to be exercised by such Director or by such

other employee or employees of such Director as designated from time to

time by the Director. The Executive Director may submit to the

Commission for its consideration any matter which has been delegated in

this paragraph. Nothing in this paragraph prohibits the Commission, at

its election, from exercising the authority delegated in this

paragraph.

PARTS 16--REPORTS BY CONTRACT MARKETS

5. The authority citation for part 16 continues to read as follows:

Authority: 7 U.S.C. 6a, 6c, 6g, 6i, 7 and 12A.

6. Section 16.00 is amended by revising paragraph (a)(5) to read as

follows:

Sec. 16.00 Clearing member reports.

(a) * * *

(5) For futures, the quantity of the commodity for which delivery

notices have been issued by the clearing organization of the contract

market and the quantity for which notices have been stopped during the

day covered by the report.

* * * * *

[[Page 24032]]

7. Section 16.01 is amended by revising the heading, removing

paragraphs (a)(5) and (a)(6) and redesignating paragraph (a)(7) as

(a)(5); by redesignating paragraph (c) as paragraph (b)(3); and by

adding a new paragraph (c) and revising paragraph (d) to read as

follows:

Sec. 16.01 Trading volume, open contracts, prices and critical dates.

* * * * *

(c) Critical dates. Each contract market shall report to the

Commission for each futures contract the first notice date and the last

trading date and for each option contract the expiration date in

accordance with paragraph (d) of this section.

(d) Reports to the Commission. Unless otherwise approved by the

Commission or its designee, contract markets shall submit the

information specified in paragraphs (a), (b) and (c) of this section as

follows:

(1) Using a format and coding structure approved in writing by the

Commission or its designee in both hard-copy form and on compatible

data processing media;

(2) When each such form of the data is first available but not

later than 7:00 a.m. on the business day following the day to which the

information pertains for the delta factor and settlement price and not

later than 3:00 p.m. for the remainder of the information; and

(3) Except for dial-up data transmission, at the regional office of

the Commission having local jurisdiction with respect to such contract

market.

8. Section 16.06 is revised to read as follows:

Sec. 16.06 Errors or omissions.

Contract markets shall file with the Commission on compatible data

processing media using a format and coding structure approved by the

Commission or its designee, corrections to errors or omissions in data

previously filed with the Commission pursuant to Secs. 16.00 and 16.01.

9. Section 16.07 is revised to read as follows:

Sec. 16.07 Delegation of authority to the Director of the Division of

Economic Analysis and the Executive Director.

The Commission hereby delegates, until the Commission orders

otherwise, the authority set forth in paragraph (a) of this section to

the Director of the Division of Economic Analysis and the authority set

forth in paragraph (b) of this section to the Executive Director to be

exercised by such director or by such other employee or employees of

such director as may be designated from time to time by the director.

The Director of the Division of Economic Analysis or the Executive

Director may submit to the Commission for its consideration any matter

which has been delegated in this paragraph. Nothing in this paragraph

prohibits the Commission, at its election, from exercising the

authority delegated in this paragraph.

(a) Pursuant to Secs. 16.00(b) and 16.01(d), the authority to

determine whether contract markets must submit data in machine-readable

form or hard-copy or both, and the time and Commission office at which

such data may be submitted where the director determines that a

contract market is unable to meet the requirements set forth in the

regulations.

(b) Pursuant to Secs. 16.00(b)(1), 16.01(d)(1), and 16.06, the

authority to approve the format and coding structure used by contract

markets.

PART 17--REPORTS BY FUTURES COMMISSION MERCHANTS, MEMBERS OF

CONTRACT MARKETS AND FOREIGN BROKERS

11. The authority citation for part 17 continues to read as

follows:

Authority: 7 U.S.C. 6a, 6c, 6d, 6f, 6g, 68, 7 and 12a unless

otherwise noted.

12. Section 17.00 is amended by revising paragraphs (a), (d), (e),

and (g) to read as follows:

Sec. 17.00 Information to be furnished by futures commission

merchants, clearing members and foreign brokers.

(a) Special Accounts--Reportable futures and options positions,

delivery notices and exchanges of futures for cash. Each futures

commission merchant, clearing member and foreign broker shall submit a

report to the Commission for each business day with respect to all

special accounts carried by the futures commission merchant, clearing

member or foreign broker, except for accounts carried on the books of

another futures commission merchant on a fully-disclosed basis. Except

as otherwise authorized by the Commission or its designee, such report

shall be made on compatible data processing media in accordance with

the format and coding provisions set forth in paragraph (g) of this

section. The report shall show each futures position, separately for

each contract market and for each future, and each put and call options

position separately for each contract market, expiration and strike

price in each special account as of the close of market on the day

covered by the report and, in addition, the quantity of exchanges of

futures for physicals and the number of delivery notices issued for

each such account by the clearing organization of a contract market and

the number stopped by the account.

(2) A report covering the first day upon which a special account is

no longer reportable shall also be filed showing the information

specified in paragraph (a)(1) of this section.

* * * * *

(d) Net positions. Futures commission merchants, clearing members

and foreign brokers shall report positions net long or short in each

future of a commodity and each strike price of a put or call option for

each expiration month in all special accounts, except as specified in

paragraph (e) of this section.

(e) Gross positions. In the following cases, the futures commission

merchant, clearing member or foreign broker shall report gross long and

short positions in each future of a commodity and each strike price of

a put or call option for each expiration month in all special accounts:

(1) Positions which are reported to an exchange or the

clearinghouse of an exchange on a gross basis, which the exchange uses

for calculating total open interest in a commodity;

(2) Positions in accounts owned or held jointly with another person

or persons;

(3) Positions in multiple accounts subject to trading control by

the same trader; and

(4) Positions in omnibus accounts.

* * * * *

(g) Media and file characteristics. (1) Except as otherwise

approved by the Commission or its designee, all required records shall

be submitted together in a single file. Each record will be 80

characters long. The specific record format is shown in the table

below:

Record Layout

----------------------------------------------------------------------------------------------------------------

Beginning column Length Type \1\ Name

----------------------------------------------------------------------------------------------------------------

1........................................ 2 AN Report Type.

3........................................ 3 AN Reporting Firm.

[[Page 24033]]

6........................................ 2 Reserved.

8........................................ 12 AN Account Number.

20....................................... 8 AN Report Date.

28....................................... 2 AN Exchange Code.

30....................................... 1 AN Put or Call.

31....................................... 5 AN Commodity Code (1).

36....................................... 8 AN Expiration Date (1).

44....................................... 7 S Strike Price.

51....................................... 1 AN Exercise Style.

52....................................... 7 N Long--Buy--Stopped.

59....................................... 7 N Short--Sell--Issued.

66....................................... 5 AN Commodity Code (2).

71....................................... 8 AN Expiration Date (2).

79....................................... 2 .................... Reserved.

80....................................... 1 AN Record Type.

----------------------------------------------------------------------------------------------------------------

\1\ AN--Alpha--numeric, N--Numeric, S--Signed numeric.

(2) Field definitions are as follows:

(i) Report Type. This report format will be used to report three

types of data: long and short futures and options positions, futures

delivery notices issued and stopped, and exchanges of futures for

physicals bought and sold. Valid values for the report type are ``RP''

for reporting positions, ``DN'' for reporting notices, and ``EP'' for

reporting exchanges of futures for physicals.

(ii) Reporting Firm. The clearing member number assigned by an

exchange or clearing house to identify reporting firms. If a firm is

not a clearing member, a three-character alpha-numeric identifier

assigned by the Commission.

(iii) Account Number. A unique identifier assigned by the reporting

firm to each special account. The field is zero filled with account

number right-justified. Assignment of the account number is subject to

the provisions of Secs. 17.00 (b) and (c) and 17.01(a).

iv. Report Date. The format is YYYYMMDD, where YYYY is the year, MM

is the month, and DD is the day of the month.

(v) Exchange. This is a two-character field used to identify the

exchange on which a position is held. Valid values are as follows:

01 Chicago Board of Trade

02 Chicago Mercantile Exchange

03 MidAmerica Commodity Exchange

06 Coffee, Sugar and Cocoa Exchange

07 Comex Division of NYMEX

08 Kansas City Board of Trade

09 Minneapolis Grain Exchange

10 Philadelphia Board of Trade

12 New York Mercantile Exchange

13 New York Cotton Exchange

15 New York Futures Exchange

(vi) Valid values for this field are ``C'' for a call option and

``P'' for a put option. For futures, the field is blank.

(vii) Commodity (1). An exchange-assigned commodity code for the

futures or options contract.

(viii) Expiration Date (1). The date format is YYYYMMDD and

represents the expiration date or delivery date of the reported futures

or options contract. For date-specific instruments such as flexible

products, the full date must be reported. For other options and

futures, this field is used to report the expiration year and month for

an options contract or a delivery year and month for a futures

contract. The day portion of the field for these contracts contains

spaces.

(ix) Strike Price. This is a signed numeric field for reporting

options strike prices. The strike prices should be right-justified and

the field zero-filled. Strike prices must be reported in the same

formats that are used by an exchange. For futures, the field is left

blank.

(x) Exercise Style. Valid values for this field are ``A'' for

American style options, i.e., those that can be exercised at any time

during the life of the options; and ``E'' for European, i.e., those

that can be exercised only at the end of an option's life. This field

is required only for flexible instruments or as otherwise specified by

the Commission.

(xi) Long-Buy-Stopped (Short-Sell-Issued). When report type is

``RP'', report long (short) positions open at the end of a trading day.

When report is ``DN'', report delivery notices stopped (issued) on

behalf of the account. When report type is ``EP'', report purchases

(sales) of futures for cash for the account. Report all information in

contracts. Position data are reported on a net or gross basis in

accordance with paragraphs (e) and (d) of this section.

(xii) Commodity (2). The exchange assigned commodity code for a

futures contract or other instrument that a position is exercised into

from a date-specific or flexible option.

(xiii) Expiration Date (2). Similar to other dates, the format is

YYYYMMDD and represents the expiration date or delivery month and year

of the future or other instrument that a position is exercised into

from a date-specific or flexible option.

(xiv) Record Type (1). Record type is used to correct errors or

delete records that have previously been submitted. Valid values are

``A'', ``C'', ``D'' or ``blank''. An A or ``blank'' is used in this

field for all new records. If the record corrects information for a

previously provided record, this field must contain a ``C'' or

``blank'' and the record must contain all information on the previously

transmitted record. If the record deletes information on a previously

provided record, this field must contain a ``D'' and all information on

the previously transmitted record.

* * * * *

12. Section 17.02 is amended by revising paragraph (a) as follows:

Sec. 17.02 Place and time of filing reports.

* * * * *

(a) For data submitted on compatible data processing media:

(1) At the Chicago Regional Office for dial-up data transmission or

magnetic tape; and at the Chicago, New York or Kansas City Regional

Office for magnetic diskettes.

(2) Not later than 9 a.m. on the business day following that to

which the information pertains.

* * * * *

13. Section 17.03 is revised to read as follows:

[[Page 24034]]

Sec. 17.03 Delegation of authority to the Director of the Division of

Economic Analysis and to the Executive Director.

The Commission hereby delegates, until the Commission orders

otherwise, the authority set forth in paragraphs (a) and (b) of this

section to the Director of the Division of Economic Analysis and the

authority set forth in paragraph (c) of this section to the Executive

Director to be exercised by such Director or by such other employee or

employees of such Director as designated from time to time by the

Director. The Director of the Division of Economic Analysis or the

Executive Director may submit to the Commission for its consideration

any matter which has been delegated in this paragraph. Nothing in this

paragraph prohibits the Commission, at its election, from exercising

the authority delegated in this paragraph.

(a) Pursuant to Secs. 17.00 (a) and (h), the authority to determine

whether futures commission merchants, clearing members and foreign

brokers can report the information required under Rule 17.00(a) and

Rule 17.00(h) on series '01 forms or updated Commission supplied

computer printouts upon a determination by the Director that such

person technologically is unable to provide such information on

compatible data processing media.

(b) Pursuant to Sec. 17.02, the authority to instruct and/or to

approve the time and Commission office at which the information

required under Rules 17.00 and 17.01 must be submitted by futures

commission merchants, clearing members and foreign brokers provided

that such persons are unable to meet the requirements set forth in

Sec. 17.01; and

(c) Pursuant to Sec. 17.00(a), the authority to approve a format

and coding structure other than that set forth in Sec. 17.00(g).

14. Section 17.04 is amended by revising paragraph (a) and the

introductory text of paragraph (b) to read as follows:

Sec. 17.04 Reporting omnibus accounts to the carrying futures

commission merchant or foreign broker.

(a) Any futures commission merchant, clearing member or foreign

broker who establishes an omnibus account with another futures

commission merchant or foreign broker shall report to that futures

commission merchant or foreign broker the total open long positions and

the total open short positions in each future of a commodity and, for

commodity options transactions, the total open long put options, the

total open short put options, the total open long call options, and the

total open short call options for each commodity options expiration

date and each strike price in such account at the close of trading each

day. The information required by this section shall be reported in

sufficient time to enable the futures commission merchant or foreign

broker with whom the omnibus account is established to comply with part

17 of these regulations and reporting requirements established by the

contract markets.

(b) In determining open long and open short futures positions, and

open purchased long and open granted short option positions, in an

omnibus account for purposes of complying with Sec. 17.00(f),

Sec. 1.37(b) and Sec. 1.58 of this chapter, a futures commission

merchant, clearing member or foreign broker shall total the open long

positions of all traders and the open short positions of all traders in

each future of a commodity and, for commodity options transactions,

shall total the open long put options, the open short put options, the

open long call options, and the open short call options of all traders

for each commodity option expiration date and each strike price. The

futures commission merchant, clearing member or foreign broker shall,

if both open long and short positions in the same future are carried

for the same trader, compute open long or open short futures positions

as instructed below.

* * * * *

Issued in Washington, DC., April 25, 1997, by the Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 97-11396 Filed 5-1-97; 8:45 am]

BILLING CODE 6351-01-M