Voting by Interested Members of Self-Regulatory Organization Governing Boards and Committees

COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 1

Voting by Interested Members of Self-Regulatory Organization

Governing Boards and Committees

AGENCY: Commodity Futures Trading Commission.

ACTION: Final rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'' or

``CFTC'') has adopted a new Regulation 1.69 that implements the

statutory directives of Section 5a(a)(17) of the Commodity Exchange Act

(``CEA'') as it was amended by Section 217 of the Futures Trading

Practices Act of 1992 (``FTPA'').\1\

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\1\ Pub. L. No. 102-546, section 217, 106 Stat. 3590 (1992).

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New Commission Regulation 1.69 requires self-regulatory

organizations (``SRO'') to adopt rules prohibiting governing board,

disciplinary committee and oversight panel members from deliberating or

voting on certain matters where the member has either a relationship

with the matter's named party in interest or a financial interest in

the matter's outcome. This final rulemaking also has amended Commission

Regulations 1.41 and 1.63 to make modifications made necessary by new

Commission Regulation 1.69.

EFFECTIVE DATE: March 5, 1999.

FOR FURTHER INFORMATION CONTACT: David P. Van Wagner, Acting Associate

Director, or Martha A. Mensoian, Attorney-Advisor, Division of Trading

and Markets, Commodity Futures Trading Commission, Three Lafayette

Centre, 1155 21st Street, N.W., Washington, D.C. 20581. Telephone:

(202) 418-5490.

SUPPLEMENTARY INFORMATION

I. Introduction

Section 217 of the FTPA amended Section 5a(1)(17) of the CEA to

``provide for the avoidance of conflict of interest in deliberations by

the governing board and any disciplinary and oversight committee.'' \2\

On May 3, 1996, the Commission published for pubic comment in the

Federal Register a proposed new Regulation 1.69 and related amendments

to existing Commission Regulations 1.41 and 1.63 which would have

required SROs to adopt rules prohibiting governing board, disciplinary

committee and oversight panel members from deliberating and voting on

certain matters where the member had either a relationship with the

matter's named party in interest or a financial interest in the

matter's outcome.\3\ In response to that proposed rulemaking release,

the Commission received letters from eleven commenters. After reviewing

those comments, the Commission decided to incorporate into its

rulemaking many of the suggestions made by the commenters and to issue

for pubic comment re-proposed versions of Regulation 1.69 and amended

Regulations 1.41 and 1.63. The Commission published its re-proposed

rulemaking in the Federal Register on January 23, 1998.\4\ That release

extensively discusses the comments that were made on the originally

proposed rulemaking, indicates whether and how the re-proposed

rulemaking responds to the comments and explains the Commission's

reasons for proposing a re-proposed version of the rulemaking. The

comment period for the re-proposed rulemaking expired on March 25,

1998.

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\2\ For the purposes of this release, the term ``committee''

generally will be used to include governing boards, disciplinary

committees and oversight panels unless otherwise specified.

\3\ 61 FR 19869 (May 3, 1996).

\4\ 61 FR 3492 (Jan. 23, 1998).

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II. Comments Received

The Commission received ten comment letters in response to its re-

proposed rulemaking. The comment letters were submitted by five futures

exchanges (the Chicago Board of Trade (``CBT''), the Chicago Mercantile

Exchange (``CME''), the Coffee, Sugar & Cocoa Exchange, Inc.

(``CSCE''), the Minneapolis Grain Exchange (``MGE''), and the New York

Mercantile Exchange (``NYMEX'')); a futures clearing organization (the

Board of Trade Clearing Corporation (``BOTCC'')); two trade

associations (the Futures Industry Association (``FIA'') and the

National Grain Trade Council (``NGTC'')); a futures commission merchant

(American Futures Group, Inc. (``AFG'')) and Mr. Evan Tucker, an

individual who was formerly an associated person with AFG.

The Commission has carefully reviewed these comments and has

decided to issue new Regulation 1.69 and amended Regulations 1.41 and

1.63 as final with certain modifications from the re-proposed version

of the rulemaking. The following sections of this release analyze the

Commission's final rulemaking. Each section describes a provision of

the Commission's reproposed rulemaking, discusses comments which were

made on that particular provision, indicates how the provision has been

adopted in the final rulemaking, and explains the Commission's

rationale for adopting the provision. (For ease of reference, the re-

proposed rulemaking will be referred to as the ``proposed'' rulemaking

throughout the remainder of this release.)

III. Final Rulemaking

A. Definitions (Regulation 1.69(a))

1. Disciplinary Committee (Regulation 1.69(a)(1))

As proposed, Regulation 1.69(a)(1) defined ``disciplinary

committee'' to mean ``any person or committee of persons, or any

subcommittee thereof'' that is authorized by an SRO ``to issue

disciplinary charges to conduct disciplinary proceedings, to settle

disciplinary charges, to impose disciplinary sanctions, or to hear

appeals thereof'' in any case involving a violation of an SRO's rules.

The proposed definition excluded persons who were individually

authorized by an SRO to impose sanctions summarily for decorum-type

rule violations. CBT, CME, CSCE, FIA and NYMEX each commented that the

definition should exclude any person or committee of persons that

summarily imposed minor disciplinary fines. These commenters contended

that imposing conflict of interest restrictions on anyone taking

summary actions, whether a single person or a committee, would be

cumbersome for SROs to implement.

The Commission has reviewed these comments and concurs that

applying conflict of interest requirements to SRO disciplinary

authorities when they take summary actions for minor rule violations

could be administratively burdensome and might hamper the SROs' ability

to take quick, decisive actions in these circumstances. Accordingly,

the Commission has determined to establish a disciplinary committee

definition that would exclude committees and persons who summarily

issue minor penalties for violating rules regarding ``decorum, attire,

the timely submission of accurate records for clearing or verifying

each day's transactions or other similar activities.''

[[Page 17]]

2. Family Relationship (Regulation 1.69(a)(2))

As further discussed below, proposed Regulation 1.69(b)(1)(i)(E)

prohibited committee members from deliberating and voting on committee

matters in which they had a ``family relationship'' with the matter's

named party in interest. For these purposes, proposed Regulation

1.69(a)(2) defined ``family relationship'' to mean a person's ``spouse,

former spouse, parent, stepparent, child, stepchild, sibling,

stepbrother, stepsister, grandparent, grandchild, uncle, aunt, nephew,

niece or in-law.''

CBT commented that the inclusion of ``former spouses'' in the

definition ran counter to the approach taken in proposed Regulation

1.69(b)(1)(i)(D) where conflicts of interests were limited to current,

``ongoing'' business relationships with the named party in interest.

The Commission believes that the two types of relationships cited by

the CBT are distinguishable. The rationale for limiting conflict of

interest requirements to committee members with ``ongoing'' business

relationships is that, when a member and a matter's named party in

interest have an ongoing business relationship, a committee action that

could impact the party financially also could redound to the financial

advantage or disadvantage of anyone who is doing business with the

party at that point in time, including the committee member. Once a

business relationship between two parties no longer exists, however,

presumably the financial health of the two parties no longer has any

degree of interdependence. By contrast, a committee member's

relationship with a former spouse may have emotional and financial

implications that continue after their marriage, especially if there is

any sort of monetary support arrangement between the former spouses.

Accordingly, the Commission has determined to include former spouses in

the final definition of family relationship and to adopt the definition

as proposed.

3. Governing Board (Regulation 1.69(a)(3))

As proposed, Regulation 1.69(a)(3)'s definition of ``governing

board'' included any SRO ``board of directors, board of governors,

board of managers, or similar body, or any subcommittee thereof,'' such

as an executive committee that was authorized to ``take action or to

recommend the taking of action'' on behalf of its SRO. The CBT

commented that the definition should not include governing board

subcommittees because any potential harm from any conflict of interest

on such a subcommittee would be cured by the fact that its actions

would be subject to the independent review and oversight of a governing

board. The Commission believes that, although board subcommittee

actions usually have to be ratified by governing boards, oftentimes

recommendations of such subcommittee are the primary influence on board

decision. Accordingly, in order to advance the integrity of the SRO

committee decision-making process, the Commission has decided to apply

its conflict of interest restrictions to governing board subcommittees

and to adopt the same governing board definition as proposed.

4. Oversight Panel (Regulation 1.69(a)(4))

In the proposed rulemaking, the Commission defined ``oversight

panel'' as an SRO committee authorized to ``recommend or establish

policies or procedures with respect to the [SRO's] surveillance,

compliance, rule enforcement, or disciplinary responsibilities.'' \5\

The CBT and NYCE commented that this definition was too broad and

should not include committees which recommend policies as such a

definition would deter people, inside and outside of the futures

industry, from serving on task forces and planning committees that

formulate ideas that are helpful to the SROs.

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\5\ See proposed Commission Regulation 1.69(a)(4).

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The Commission believes that SRO policies with respect to

surveillance, compliance, rule enforcement and disciplinary

responsibilities are an integral part of the self-regulatory process

and that persons who are entrusted with recommending such policies

should be free from conflicts of interests. Accordingly, the Commission

has decided to adopt the proposed definition of oversight panels.

5. Member's Affiliated Firm (Regulation 1.69(a)(5))

Under proposed Regulation 1.69(a)(5), a ``member's affiliated

firm'' was defined as any firm at which a committee member was either:

(1) A principal, as defined by Regulation 3.1(a), or (2) an employee.

The term became operative under proposed Regulation 1.69(b)(2)(iii)

which required SROs to review positions at a committee member's

``affiliated firm'' when determining whether the member had a direct

and substantial financial interest in the outcome of a significant

action. CME commented that the ``member's affiliated firm'' definition

should be limited to firms where the member was a principal. CME

contended that firms which employ committee members should not be

included in the definition as firm employees have much less knowledge

regarding their firms' positions than do principals. The Commission

believes the potential for a committee member to be influenced by an

employment relationship is sufficient to warrant his or her

disqualification from deliberating and voting on significant actions

which might impact the member's employer. Many firm employees have as

much knowledge of their firm's positions as do the firm's principals.

In fact, the Commission believes that in some instances an employment

relationship may have an even greater influence on a committee member

than an ownership relationship in that employees may be under the

control of their employing firm. Accordingly, the Commission has

determined not to modify this aspect of the definition of ``member's

affiliated firm'' but rather to adopt the definition as proposed.

6. Named Party in Interest (Regulation 1.69(a)(6))

In its proposed rulemaking, the term ``named party in interest''

was defined to mean a party who was ``the subject of any matter being

considered'' by an SRO committee. In its comment letter, CBT suggested

that ``named party in interest'' be defined to mean a ``person who is

identified by name to a governing board, disciplinary committee or

oversight panel as the subject of a matter to be considered by it.''

The Commission believes the CBT's suggestion would help to clarify the

named party in interest definition. Accordingly, the Commission has

adopted the substance of CBT's proposed definition with the

modification that the provision include any ``person or entity'' that

is identified by name as a subject of a committee action. In adopting

this definition of ``named party in interest,'' the Commission reminds

the SROs that it would be inconsistent with the intent of Regulation

1.69 for SROs to shield the identities of named parties in interests

from committee members in order to circumvent the conflict of interest

requirements.

7. Self-Regulatory Organization (Regulation 1.69(a)(7))

Proposed Regulation 1.69 defined SROs to include exchanges,

clearing organizations and registered futures associations

(``RFAs'')(with RFAs being excluded from the definition for the

purposes of Regulation 1.69(b)(2)

[[Page 18]]

``financial interest'' conflicts of interest). BOTCC and CBT both

objected to the inclusion of clearing organizations in the definition

of SRO on the ground that CEA Section 5a(a)(17), Regulation 1.69's

statutory enabling provision, only applies to contract markets and not

clearing organizations.

The Commission believes that BOTCC's and CBT's suggestions would

lead to significant inconsistencies in the application of Regulation

1.69. Some contract markets have in-house clearing organizations (e.g.,

CME and NYMEX), while other contract markets are cleared by independent

clearing organizations (e.g., CBT and CSCE). Applying Regulation 1.69

to clearing organizations, as well as contract markets, would ensure

that there would not be differing treatment of contract markets based

on whether or not they had an in-house or independent clearing

mechanism.

The Commission notes that, while CEA Section 5a(a)(17) only

specifies ``contract markets,'' the provision also requires that its

conflict of interest restrictions shall apply to committees handling

certain types of margin changes. Margin levels in the futures industry

are established by both contract markets and clearing organizations.

The Commission also notes that there have been previous occasions when

CEA requirements for contract markets have been applied to clearing

organizations. For example, Section 5a(a)(12)(A) of the CEA mandates

Commission review of ``contract market'' rules while Commission

Regulation 1.41, which establishes procedures for Commission review of

proposed rules, specifically includes clearing organizations within its

definition of contract markets for these purposes. In addition,

clearing organizations already are subject to regulatory requirements

that are comparable to Regulation 1.69 such as Regulation 1.41(f)'s

emergency action provisions and Regulation 1.63's prohibition on

committee service by persons with disciplinary histories.

For each of the above reasons, the Commission has determined that

it is appropriate to make clearing organizations subject to Regulation

1.69 and to include them in the definition of SRO.

8. Significant Actions (Regulation 1.69(a)(8))

Proposed Regulation 1.69(b)(2) applied conflict of interest

restrictions to SRO committees whenever they considered any significant

action. The term ``significant action'' was proposed to mean: (1)

Actions or rule changes that address Regulation 1.41(a)(4) non-physical

emergencies; (2) margin changes that respond to extraordinary market

conditions, such as ``an actual or attempted corner, squeeze,

congestion or undue concentration of positions''; and (3) margin

changes that are likely to have a substantial effect on contract prices

of any contract traded or cleared at the particular SRO. BOTCC and CBT

commented that this provision should track the language of the CEA and

that, accordingly, the rulemaking should pertain only to those contract

market margin changes that respond to extraordinary market conditions

that are likely to have a substantial effect on contract prices.

The Commission believes that margin changes that are made in

response to corners, squeezes, congestion, or undue concentrations of

positions serve important market integrity purposes and that committee

members should not be influenced by their personal interests when

considering such decisions. Accordingly, the Commission has determined

not to reduce the scope of the significant action definition, but

rather to adopt the provision as it was proposed.

B. Self-Regulatory Organization Rules (Regulation 1.69(b))

Proposed Commission Regulation 1.69(b) required SROs to adopt rules

prohibiting committee members from deliberating and voting on certain

types of matters as to which they had conflicts of interest. Proposed

Regulation 1.69(b)(1) restricted committee participation for members

who had a relationship with a matter's named party in interest.

Proposed Regulation 1.69(b)(2) restricted committee participation for

members who had a ``direct and substantial financial interest'' in

certain types of committee actions that do not require prior Commission

review and approval. Proposed Commission Regulations 1.69(b)(1) and (2)

also mandated certain procedures that SROs must follow when making a

determination as to the existence of a conflict of interest.

1. Conflict of Interest Due to a Relationship With Named Party in

Interest (Regulation 1.69(b)(1))

a. Nature of Relationship (Regulation 1.69(b)(1)(i))

Under proposed Regulation 1.69(b)(1)(i), SRO committee members were

required to abstain from deliberating and voting on any matter where

they had a significant relationship with the ``named party in

interest.'' These relationships would include family, employment,

broker association and ``significant, ongoing business'' relationships.

In its comment letter, the CBT noted that CEA Section 5a(a)(17) limits

this abstention requirement to ``confidential'' deliberations and

voting. Accordingly, CBT suggested that Regulation 1.69(b)(1)(i) should

be revised to conform with Section 5a(a)(17) in this regard.

Although the CEA only mandates that, at a minimum, committee

members must abstain from confidential deliberations on matters in

which they have a relationship with a named party in interest, the

Commission believes that adopting a more prophylactic approach in these

types of matters would ensure that SRO committees could not undermine

the intent of this provision by declaring ``open'' committee meetings

in lieu of applying conflict of interest restrictions. Accordingly, the

Commission has decided to adopt Regulation 1.69(b)(1)(i) as proposed

and to apply its requirements to all committee deliberations,

regardless of whether they are confidential or not.

CME, CSCE and NYMEX commented that the Commission should clarify

Regulation 1.69(b)(1)(i) so that it does not apply to committee actions

such as price change register revisions and the certification of the

late submission of pit cards. The commenters contended that these

situations already are addressed by their own existing procedures and

that, accordingly, a Commission rulemaking in this area would be an

unnecessary administrative encumbrance.

The fact that these commenters already have their own conflict of

interest requirements for price change register revisions and late pit

card certifications does not obviate the need for the Commission to

establish an industry-wide standard in this area. In addition, the

existence of such requirements at these exchanges also would seem to

contradict the contention that Commission-established requirements

would be administratively cumbersome to enforce. Accordingly, in

connection with this provision, the Commission wishes to clarify that,

if a particular, identifiable person approaches an SRO committee member

to request sign-off on a price change register revision or a late pit

card certification, Regulation 1.69(b)(1) should apply, and the

committee member should abstain from handling the matter if his or her

relationship with

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the requesting member falls within the parameters of Regulation

1.69(b)(1)(i).\6\

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\6\ The Commission notes that committees which act in these

capacities would qualify as oversight panels under Regulation

1.69(a)(4), rather than disciplinary committees or governing boards.

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The Commission recognizes that a floor committee would not be

subject to Regulation 1.69(b)(1)'s requirements when taking summary

disciplinary actions for minor rule violations,\7\ while the same

committee would be subject to Regulation 1.69(b)(1)'s requirements when

taking actions such as price change register revisions and the

certification of the late submission of pit cards. This distinction

reflects the important regulatory interests implicated by these latter

actions but not summary actions for minor rule violations.

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\1\ See discussion of Regulation 1.69(a)(1)'s definition of

disciplinary committee in Section III.A.1 above.

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AFG and Mr. Tucker each suggested that regulation 1.69(b)(1)(i)'s

restrictions should extend to relationships where a committee member

and a matter's named party in interest may have shared liability for

facts that are under consideration by a committee. AFG and Mr. Tucker

indicated that their suggestions were prompted by a particular SRO

enforcement case in which a member of the disciplinary committee

hearing the case potentially shared liability with the case's named

party. The Commission believes that the proposed provision would be

difficult to formulate and would likely be overbroad in application. In

addition, the types of relationships described by the commenters would

probably qualify as employment or significant business relationships

and, thus, would already appear to qualify as one of Regulation

1.69(b)(1)(i)'s list of disqualifying relationships.

MGE commented that, because of its small size, some of its broker

associations contain practically all of the exchange's floor brokers

and consequently, under proposed Regulation 1.69(b)(1)(i)(C), a large

number of MGE committee members would be disqualified in matters where

a floor broker was a named party in interest. In order to address

possible hardships that Regulation 1.69 may impose on smaller futures

exchanges, the Commission has decided to consider granting small

exchanges exemptions from certain provisions of Regulation 1.69 on a

case-by-case basis. In making a request for such an exemption, the

requesting exchange must: (1) Demonstrate that the pertinent provision

of Regulation 1.69 would create a material hardship and (2) provide for

alternative procedures that are not inconsistent with the policy

considerations underlying Regulation 1.69.

b. Disclosure of Relationship (Regulation 1.69(b)(1)(ii))

Proposed Regulation 1.69(b)(1)(ii) required that SRO committee

members disclose to the appropriate SRO staff whether they had any one

of the relationships listed in Regulation 1.69(b)(1)(i) with respect to

a matter's named party in interest. No commenter addressed this

provision, and the Commission has determined to adopt Regulation

1.69(b)(1)(ii) as proposed.

c. Procedures for Determination (Regulation 1.69(b)(1)(iii))

Proposed Regulation 1.69(b)(1)(iii) required that SROs establish

procedures for determining whether committee members had a

disqualifying relationship with a matter's named party in interest. The

provision mandated that the determination must be based upon: (1)

information provided by the committee members to the appropriate SRO

staff (Regulation 1.69(b)(1)(iii)(A)), and (2) ``any other source of

information that is reasonably available'' to the SRO (Regulation

1.69(b)(1)(iii)(B)).

The CBT, CSCE and NYMEX each proposed amendments to the clause

covering ``any other source of information reasonably available'' to

the SRO. CBT suggested that SROs be able to rely upon ``any information

of which the [SRO] has actual knowledge.'' CSCE suggested that SROs be

able to rely upon ``any information otherwise known to the SRO in the

ordinary course of business.'' Finally, NYMEX proposed that SROs be

permitted to rely upon information in their membership and broker

association files.

The Commission believes that CBT's and CSCE's respective proposed

changes could create an undesirable incentive for SROs to remain

ignorant of their committee members' relationships. On the other hand,

the Commission believes that NYMEX's proposed change is too limited in

that it would permit SROs to overlook committee member information they

may hold somewhere other than in their membership or broker association

files.

In order to avoid the ambiguities and compliance issues created by

proposed Regulation 1.69(b)(1)(iii)(B)'s knowledge standard, the

Commission has determined to establish a more defined, narrower scope

for SRO reviews undertaken to determine whether committee members have

a conflict of interest with a named party in interest. Accordingly, in

addition to the particular information required to be provided to SROs

by committee members pursuant to Regulation 1.69(b)(1)(iii)(A), final

Regulation 1.69(b)(1)(iii)(B) requires that SROs review information

that is ``held by and reasonably available'' to them.

NYMEX also suggested that SROs be permitted to take into account

the ``exigency'' of a committee action in determining what type of

information to review when assessing committee member relationships

with named parties in interest. The Commission has determined to adopt

NYMEX's suggestion and has incorporated an ``exigency'' modifier into

final Regulation 1.69(b)(1)(iii). The Commission notes that the

revision parallels what proposed Regulation 1.69(b)(2)(iv) already

provided in connection with SRO determinations of conflict due to

financial interests in significant actions.

2. Conflict of Interest Due to a Financial Interest in a Significant

Action (Regulation 1.69(b)(2))

Proposed Regulation 1.69(b)(2) required committee members to

abstain from ``significant actions'' by their committees, as that term

is defined in Regulation 1.69(a), if the member knowingly had a direct

and substantial financial interest in the outcome of the matter.

While most of the comments addressing proposed Commission

Regulation 1.69(b)(2) focused on the provisions that mandated SRO

procedures for implementing this provision, See Regulations

1.69(b)(2)(ii) through (iv), MGE and NGTC both contended that

Regulation 1.69(b)(2)'s basic restriction would adversely impact small

exchanges. They commented that small exchanges often have a single

dominant contract that most of the exchange members (and hence most

committee members) trade. According to these commenters, apply

Regulation 1.69(b)(2) to significant actions concerning these contracts

would cause a large number of committee members to abstain and would

cripple the decisionmaking ability of small exchange committees.

The Commission is prepared to consider granting small exchanges

exemptions from Regulation 1.69(b)(2), on a case-by-case basis. In

applying for such an exemption, an exchange must: (1) Demonstrate that

Regulation 1.69(b)(2) would create a material hardship (e.g., an

exchange that has a single large contract which is traded by a large

majority of its members), and (2) provide for alternative procedures

that

[[Page 20]]

are not inconsistent with the policy considerations underlying

Regulation 1.69(b(2).

a. Nature of Interest (Regulation 1.69(b)(2)(i))

Proposed Commission Regulation 1.69(b)(2)(i) required that SRO

committee members abstain from committee deliberations and voting on

certain matters in which they ``knowingly [had] a direct and

substantial financial interest.'' The proposed restriction applied

whenever a committee considered significant actions.\8\ No commenter

addressed this provision in particular. Accordingly, the Commission has

determined to adopt Regulation 1.69(b)(2)(i) as proposed. In adopting

this provision, however, the Commission emphasizes that Regulation

1.69(b)(2)(i) itself states that the bases for a committee member's

direct and substantial financial interest in a significant action are

limited to exchange and non-exchange positions that ``reasonably could

be expected to be affected by the action.'' SROs should follow this

standard in establishing the level of disclosure made by committee

members pursuant to Regulation 1.69(b)(2)(ii) and the level of position

review made by them and their staffs pursuant to Regulations 1.69(b)(2)

(iii) and (iv).\9\

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\8\ The definition of such significant actions is established by

final Regulation 1.69(a)(8) and is discussed above in Section

III.A.8.

\9\ BOTCC, CBT and CME each requested clarification on this

particular point in their respective comment letters.

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b. Disclosure of Interest (Regulation 1.69(b)(2)(ii))

Proposed Regulation 1.69(b)(2)(ii) required that, prior to the

consideration of a significant action, committee members must disclose

to appropriate SRO staff prescribed position information that was

``known'' to the committee member.

BOTCC, CBT, CME and FIA each suggested that Regulation 1.69

specifically permit a committee member to recuse himself/herself from

deliberating and voting on a matter without having to make the required

disclosure pursuant to Regulation 1.69(b)(2)(ii). The commenters'

suggestions are consistent with the Commission's original intent in

proposing Regulation 1.69(b)(2)(ii). Accordingly, the Commission has

made responsive changes to the final provision.

c. Procedure for Determination (Regulation 1.69(b)(2)(iii))

In determining a committee member's financial interest in a

significant action, proposed Regulation 1.69(b)(2)(iii) (A) through (D)

required SROs to review certain types of positions held at the SRO by

the member, the member's affiliated firm, and customers of the member's

firm in any contract that could be affected by the committee's

significant action. In addition, Regulation 1.69(b)(2)(iii)(E) required

SROs to review ``any other types of positions, whether at that [SRO] or

elsewhere,'' that the SRO ``reasonably expect[ed] could be affected by

the significant action.''

CBT commented that the review of positions held outside of the

particular SRO should be limited to positions owned or controlled by

the committee member himself or herself and should not include outside

positions held by the member's firm or customers of the member's firm.

The Commission concurs with this suggestion insofar as it pertains to

positions held outside of an SRO by customers of a committee member's

firm. Such positions would be both difficult to ascertain and would be

less likely to influence a committee member's decisionmaking. In

contrast, positions held by a committee member are certainly less

difficult to ascertain, and both positions held by a member and in the

proprietary accounts of a member's affiliated firm are more likely to

influence a committee member's decisionmaking. Accordingly, the

Commission has amended final Regulation 1.69(b)(2)(iii)(E) to require

SRO review of outside positions held in a member's personal accounts or

the proprietary accounts of a member's affiliated firm.

CME suggested that it was not necessary to have an SRO conduct the

same level of review for positions held outside of the SRO as for

positions held at the SRO and that Regulation 1.69(b)(2)(iii) should be

appropriately amended. The Commission does not believe that it is

appropriate to establish some lessened level of review standard for

positions held outside of the subject SRO. Regulation 1.69(b)(2)

already includes provisions that serve the same purpose. For example,

Regulation 1.69(b)(2)(i) limits the bases for conflict of interest

determinations to positions that ``reasonably'' could be expected to be

affected by a significant action. In addition, Regulation

1.69(b)(2)(iv) states that SROs may take into account ``the exigency of

the significant action'' when undertaking a review of the various

sources of information to be considered when making a conflict of

interest determination.

d. Bases for Determination (Regulation 1.69(b)(2)(iv))

Proposed Regulation 1.69(b)(2)(iv) specified what sources of

information SROs should rely upon in determining whether a committee

member had a conflict of interest in a significant action. Generally,

the provision directed SROs to consult: (1) The most recent large

trader reports and clearing records available to the SRO (Regulation

1.69(b)(2)(iv)(A)); (2) position information provided to the SRO by the

committee member (Regulation 1.69(b)(2)(iv)(B)); and (3) any other

source of information that was ``held by and reasonably available'' to

the SRO, whether it be from inside or outside the SRO (Regulation

1.69(b)(2)(iv)(C)).

CBT and CSCE each suggested replacement language for Regulation

1.69(b)(2)(iv)(C)'s requirement that SROs consult ``any other source of

information that is reasonably available'' to the SRO. CBT suggested

that SROs be permitted to rely on ``any information of which the [SRO]

has actual knowledge.'' CSCE suggested that SROs be able to rely on

``any information otherwise known to [the SRO] in the ordinary course

of business.''

The Commission does not believe that either of these suggested

review standards would be appropriate in that they could create a

disincentive for SROs to remain apprised of their committee members'

positions. The Commission has adopted an alternative revision to

Regulation 1.69(b)(2)(iv)(C) which provides that SROs consult ``any

other source of information that is held by and reasonably available''

to the SRO. The Commission notes that this revision parallels the

standard which the Commission has adopted in Regulation 1.69(b)(1)(iii)

with respect to information that SROs should consult in determining

whether a committee member has a conflict due to a relationship with a

matter's named party in interest.

3. Participation in Deliberations (Regulation 1.69(b)(3))

CEA Section 5a(a)(17) recognizes that in some instances a committee

member with a conflict in a particular committee matter also might have

special knowledge or experience regarding that matter. Accordingly, in

a limited number of circumstances, proposed Commission Regulation

1.69(b)(3) permitted SRO committees to allow a committee member, who

otherwise would be required to abstain from

[[Page 21]]

deliberations and voting on a matter because of a conflict, to

deliberate but not to vote on the matter. This ``deliberation

exception'' was only made applicable to matters in which a committee

member had a conflict of interest as the result of having a ``direct

and substantial financial interest'' in the outcome of a vote on a

significant action under Regulation 1.69(b)(2). Consistent with Section

5a(a)(17), proposed Regulation 1.69(b)(3)'s deliberation exception did

not apply to matters in which a committee member had a conflict due to

his or her relationship with a matter's named party in interest under

Regulation 1.69(b)(1).

In determining whether to permit a ``conflicted'' committee member

to deliberate on a matter, proposed Regulation 1.69(b)(3) required that

the presiding committee consider a number of factors including: (1)

Whether the member had unique or special expertise, knowledge or

experience in the matter involved, and (2) whether the member's

participation in deliberations would be necessary for the committee to

obtain a quorum.\10\ Proposed Regulation 1.69(b)(3)(iii) also required

that when SRO committees determine whether to grant a deliberation

exception, they ``must fully consider the position information'' which

evidences the committee member's financial interest in the matter.

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

\10\ The Commission, in its proposed rulemaking, indicated that

it believed that, given the factors that must be considered,

deliberation exception determinations should be made by the

committee involved, rather than SRO staff. For any particular SRO

committee matter, the committee members themselves would be in a

better position than SRO staff to assess their individual levels of

expertise in the matter and their need for input during

deliberations from the committee member who otherwise would be

required to abstain. The Commission continues to adhere to this

view, and no commenters on the proposed rulemaking addressed this

issue. Accordingly, final Regulations 1.69 specifically confers the

responsibility for deliberation exception determinations on the SRO

committee involved.

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

The Commission has decided to retain the basic requirements of

proposed Regulation 1.69(b)(3)'s deliberation exception provision in

this final rulemaking. The Commission believes that the provision

strikes a reasonable balance between ensuring that SRO committees make

well-informed decisions while minimizing the influence of a committee

member's potential bias or self-interest in a matter.

Only two commenters addressed proposed Regulation 1.69(b)(3).

Specifically, CBT and CSCE commented that Regulation 1.69(b)(3)(iii)

should not be interpreted to mean that a member's precise position

information must be disclosed to the entire SRO committee and that,

instead, some sort of general summary of the member's positions should

be sufficient disclosure.

The disclosure of a ``conflicted'' committee member's position

information to the committee, pursuant to Regulation 1.69(b)(3)(iii),

generally serves two purposes. First, it enables the committee to

evaluate the depth of a committee member's financial interest in the

outcome of a significant action and to balance whether his or her

participation in deliberations would be worthwhile. Second, in the case

of a committee member who receives a deliberation exception, the

disclosure of the member's interest to his or her fellow committee

members should help to mitigate any prejudicial influence such member's

views could have on the other members during the course of

deliberations. In light of this important need for accurate position

information, the Commission does not believe that it would be

appropriate for SRO committees to make deliberation exception

determinations based upon a general summary of a conflicted member's

position information. Accordingly, the Commission has not revised this

provision in the final rulemaking.

4. Documentation of Determination (Regulation 1.69(b)(4))

Whenever an SRO committee made a conflict of interest

determination, proposed Regulation 1.69(b)(4) required that certain

information regarding the abstention determination be recorded. Such a

record was required to indicate: (1) The committee members who attended

the meeting (Regulation 1.69(b)(4)(i)), (2) the name of any committee

member who was directed to abstain or who voluntarily recused himself

or herself and the reasons why (Regulation 1.69(b)(4)(ii)), (3) a

listing of the position information reviewed for each committee member

(Regulation 1.69(b)(4)(iii)), and (4) in those instances when a

committee member was granted a deliberation exception, a general

description of the views expressed by the member during the committee's

deliberations on the underlying significant action (Regulation

1.69(b)(4)(iv)).

The CSCE commented that, under the proposal, committee members who

received a deliberation exemption would be ``chilled'' from expressing

their opinions by the requirement that their views be particularly

recorded. The Commission concurs with CSCE's comment and, accordingly,

has deleted this requirement from final Regulation 1.69.

C. Amendments to Other Commission Regulations Made Necessary by Final

Commission Regulation 1.69

Section 213 of the FTPA amended Section 5a(a)(12)(B) of the CEA to

require that the Commission issue regulations establishing ``terms and

conditions'' under which contract markets may take temporary emergency

actions without prior Commission approval. Section 5a(a)(12)(B) and

Regulation 1.41(f), the Commission's implementing regulation, require

that any such temporary emergency action be adopted by a two-thirds

vote of a contract market's governing board. In recognition of the fact

that governing board members may be required to abstain from

deliberations and voting on such actions under contract market rules

implementing Regulation 1.69, the Commission, as part of its proposed

conflict of interest rulemaking, proposed to amend Regulation 1.41(f)

to provide that such abstaining board members not be included in

determining whether a temporary emergency action has been approved by a

two-thirds majority of a governing board. Abstaining board members are,

however, included for quorum purposes so that the existence of

conflicted members will not prevent a board from taking temporary

emergency actions.

No commenters addressed this provision, and the Commission has

determined to amend Regulation 1.41(f)(10) as proposed.

The Commission also proposed to amend Commission Regulation 1.63's

definition of ``disciplinary committee'' so that it more closely

conformed with Regulation 1.69's definition of the same term. As

indicated above in Section III.A.1., the Commission now has revised

Regulation 1.69(a)(1)'s definition of disciplinary committee to exclude

committees and persons who summarily issue minor penalties for minor

offenses regarding ``decorum, attire, the timely submission of accurate

records for clearing or verifying each day's transactions or other

similar activities.'' This revision was made in response to the concern

that the application of conflict of interest requirements to SRO

disciplinary authorities when they take summary actions for minor rule

violations would be administratively burdensome and might hamper the

SROs' ability to take quick and decisive actions in such circumstances.

The same concerns are not presented by Regulation 1.63 which generally

prohibits persons with disciplinary histories from serving on

disciplinary committees for at least three years after the date of the

[[Page 22]]

underlying disciplinary judgment or settlement agreement. Accordingly,

the Commission has determined to adopt Regulation 1.63(a)(2)'s

disciplinary committee definition as proposed. The definition is

identical to Regulation 1.69's disciplinary committee definition,

except that Regulation 1.63's definition does not exclude committees

that handle summary disciplinary matters.

Finally, the CME in its comment on proposed Regulation 1.69

suggested that Commission Regulation 8.17(a)(1), which already imposes

a general conflict of interest requirement on disciplinary committees,

be amended to clarify that Regulation 1.69 pre-empts Regulation

8.17(a)(1). The Commission does not believe that compliance with

Regulation 1.69 will necessarily constitute compliance with Regulation

8.17(a)(1). Specifically, instances when a disciplinary committee

member is a witness to the alleged misconduct, testifies about the

alleged misconduct or investigates the alleged misconduct would not

constitute a conflict of interest pursuant to Regulation 1.69 but would

possibly be a conflict of interest pursuant to Regulation 8.17(a)(1)

requiring the member's recusal from the disciplinary committee. See In

the Matter of Malato, [1987-1990 Transfer Binder] Comm. Fut. L. Rep.

(CCH) para. 24,084, at 34,704 (CFTC Dec. 22, 1987). Accordingly, for

these reasons, the Commission has determined not to amend Regulation

8.17(a)(1) as suggested by the CME.

D. Conclusion

The Commission believes that final Regulation 1.69 and the

amendments to Regulation 1.41 and 1.63 meet the statutory directives of

Section 5a(a)(17) of the CEA as it was amended by Section 217 of the

FTPA. The rulemaking establishes guidelines and factors to be

considered in determining whether an SRO committee member is subject to

a conflict of interest which could potentially impinge on his or her

ability to make fair and impartial decisions in a matter and, thus,

warrants abstention from participation in committee deliberations and

voting.

IV. Related Matters

A. Regulatory Flexibility Act

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

(1980), requires that agencies, in promulgating rules, consider the

impact of those rules on small businesses. The Commission has

previously determined that contract markets are not ``small entities''

for purposes of the RFA. 47 Fed. Reg. 18618, 18619 (Apr. 30, 1982).

Furthermore, the then Chairman of the Commission previously has

certified on behalf of the Commission that comparable rules affecting

clearing organizations and registered futures associations did not have

a significant economic impact on a substantial number of small

entities. 51 FR 44866, 44868 (Dec. 12, 1986).

This rulemaking will affect individuals who serve on SRO governing

boards, disciplinary committees and oversight panels. The Commission

believes that this rulemaking will not have a significant economic

impact on these SRO committee members. This rulemaking requires these

committee members to disclose to their SROs certain information which

is known to them at the time that their committees consider certain

types of matters. The Commission believes that this requirement will

not have any significant economic impact on such members because the

information which they are required to provide should be readily

available to them.

Accordingly, the Chairperson, on behalf of the Commission, hereby

certifies, pursuant to Section 3(a) of the RFA, 5 U.S.C. Sec. 605(b),

that the action taken herein will not have a significant economic

impact on a substantial number of small entities.

B. Agency Information Activities; Proposed Collection; Comment Request

When publishing final rules, the Paperwork Reduction Act of 1995

(``PRA'') (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

PRA. In compliance with the Act, this final rule informs 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) an estimate, to the extent practicable, of the average

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

direct to the agency any comments concerning the accuracy of this

burden estimate and 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 Office of Management and Budget (``OMB''

control number.

The Commission previously submitted this rule in proposed form and its

associated information collection requirements to OMB. OMB approved the

collection of information associated with this rule on October 24,

1998, and assigned OMB control number 3038-0022, Rules Pertaining to

Contract Markets and their Members, to the rule. The burden associated

with this entire collection, including this final rule, is as follows:

Average burden hours per response: 788,857.

Number of respondents: 434,052.

Frequency of response: On occasion.

The burden associated with this specific final rule, is as follows:

Average burden hours per response: 2.00.

Number of respondents: 20.

Frequency of response: On occasion.

Persons wishing to comment on the information required by this

final rule should contact the Desk Officer, CFTC, 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 in 17 CFR Part 1

Commodity futures, Contract markets, Clearing organizations,

Members of contract market.

In consideration of the foregoing, and based on the authority

contained in the Commodity Exchange Act and, in particular, Sections 3,

4b, 5, 5a, 6, 6b, 8, 8a, 9, 17, and 23(b) thereof, 7 U.S.C. 5, 6b, 7,

7a, 8, 13a, 12, 12a, 13, 21 and 26(b), the Commission hereby amends

Title 17, Chapter I, Part 1 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, 6e, 6f, 6g,

6h, 6i, 6j, 6k, 6l, 6m, 6n, 6o, 7, 7a, 8, 9, 12, 12a, 12c, 13a, 13a-

1, 16, 19, 21, 23, and 24, unless otherwise stated.

2. Section 1.41 is amended by adding paragraph (f)(10) to read as

follows:

Sec. 1.41 Contract market rules; submission of rules to the

Commission; exemption of certain rules.

* * * * *

(f) * * *

(10) Governing board members who abstain from voting on a temporary

emergency rule pursuant to Sec. 1.69 shall not be counted in

determining whether such a rule was approved by the two-

[[Page 23]]

thirds vote required by this regulation. Such members can be counted

for the purpose of determining whether a quorum exists.

3. Section 1.63 is amended by revising paragraph (a)(2) to read as

follows:

Sec. 1.63 Service on self-regulatory organization governing boards or

committees by persons with disciplinary histories.

(a) * * *

(2) Disciplinary committee means any person or committee of

persons, or any subcommittee thereof, that is authorized by a self-

regulatory organization to issue disciplinary charges, to conduct

disciplinary proceedings, to settle disciplinary charges, to impose

disciplinary sanctions or to hear appeals thereof.

* * * * *

4. Section 1.69 is added to read as follows:

Sec. 1.69 Voting by interested members of self-regulatory organization

governing boards and various committees.

(a) Definitions. For purposes of this section:

(1) Disciplinary committee means any person or committee of

persons, or any subcommittee thereof, that is authorized by a self-

regulatory organization to issue disciplinary charges, to conduct

disciplinary proceedings, to settle disciplinary charges, to impose

disciplinary sanctions, or to hear appeals thereof in cases involving

any violation of the rules of the self-regulatory organization except

those cases where the person or committee is authorized summarily to

impose minor penalties for violating rules regarding decorum, attire,

the timely submission of accurate records for clearing or verifying

each day's transactions or other similar activities.

(2) Family relationship of a person means the person's spouse,

former spouse, parent, stepparent, child, stepchild, sibling,

stepbrother, stepsister, grandparent, grandchild, uncle, aunt, nephew,

niece or in-law.

(3) Governing board means a self-regulatory organization's board of

directors, board of governors, board of managers, or similar body, or

any subcommittee thereof, duly authorized, pursuant to a rule of the

self-regulatory organization that has been approved by the Commission

or has become effective pursuant to either Section 5a(a)(12)(A) or

17(j) of the Act to take action or to recommend the taking of action on

behalf of the self-regulatory organization.

(4) Oversight panel means any panel, or any subcommittee thereof,

authorized by a self-regulatory organization to recommend or establish

policies or procedures with respect to the self-regulatory

organization's surveillance, compliance, rule enforcement, or

disciplinary responsibilities.

(5) Member's affiliated firm is a firm in which the member is a

``principal,'' as defined in Sec. 3.1(a), or an employee.

(6) Named party in interest means a person or entity that is

identified by name as a subject of any matter being considered by a

governing board, disciplinary committee, or oversight panel.

(7) Self-regulatory organization means a ``self-regulatory

organization'' as defined in Sec. 1.3(ee) and includes a ``clearing

organization'' as defined in Sec. 1.3(d), but excludes registered

futures associations for the purposes of paragraph (b)(2) of this

section.

8 (Significant action) includes any of the following types of self-

regulatory organization actions or rule changes that can be implemented

without the Commission's prior approval:

(i) Any actions or rule changes which address an ``emergency'' as

defined in Sec. 1.41(a)(4)(i) through (iv) and (vi) through (viii);

and,

(ii) Any changes in margin levels that are designed to respond to

extraordinary market conditions such as an actual or attempted corner,

squeeze, congestion or undue concentration of positions, or that

otherwise are likely to have a substantial effect on prices in any

contract traded or cleared at such self-regulatory organization; but

does not include any rule not submitted for prior Commission approval

because such rule is unrelated to the terms and conditions of any

contract traded at such self-regulatory organization.

(b) Self-regulatory organization rules. Each self-regulatory

organization shall maintain in effect rules that have been submitted to

the Commission pursuant to Section 5a(a)(12)(A) of the Act and

Sec. 1.41 or, in the case of a registered futures association, pursuant

to Section 17(j) of the Act, to address the avoidance of conflicts of

interest in the execution of its self-regulatory functions. Such rules

must provide for the following:

(1) Relationship with named party in interest--(i) Nature of

relationship. A member of a self-regulatory organization's governing

board, disciplinary committee or oversight panel must abstain from such

body's deliberations and voting on any matter involving a named party

in interest where such member:

(A) is a named party in interest;

(B) is an employer, employee, or fellow employee of a named party

in interest;

(C) is associated with a named party in interest through a ``broker

association'' as defined in Sec. 156.1;

(D) has any other significant, ongoing business relationship with a

named party in interest, not including relationships limited to

executing futures or option transactions opposite of each other or to

clearing futures or option transactions through the same clearing

member; or,

(E) Has a family relationship with a named party in interest.

(ii) Disclosure of relationship. Prior to the consideration of any

matter involving a named party in interest, each member of a self-

regulatory organization governing board, disciplinary committee or

oversight panel must disclose to the appropriate self-regulatory

organization staff whether he or she has one of the relationships

listed in paragraph (b)(1)(i) of this section with a named party in

interest.

(iii) Procedure for Determination. Each self-regulatory

organization must establish procedures for determining whether any

member of its governing board, disciplinary committees or oversight

committees is subject to a conflicts restriction in any matter

involving a named party in interest. Taking into consideration the

exigency of the committee action, such determinations should be based

upon:

(A) information provided by the member pursuant to paragraph

(b)(1)(ii) of this section; and

(B) any other source of information that is held by and reasonably

available to the self-regulatory organization.

(2) Financial Interest in a Significant Action--(i) Nature of

Interest. A member of a self-regulatory organization's governing board,

disciplinary committee or oversight panel must abstain from such body's

deliberations and voting on any significant action if the member

knowingly has a direct and substantial financial interest in the result

of the vote based upon either exchange or non-exchange positions that

could reasonably be expected to be affected by the action.

(ii) Disclosure of Interest. Prior to the consideration of any

significant action, each member of a self-regulatory organization

governing board, disciplinary committee or oversight panel must

disclose to the appropriate self-regulatory organization staff the

position information referred to in paragraph (b)(2)(iii) of this

section that is known to him or her. This

[[Page 24]]

requirement does not apply to members who choose to abstain from

deliberations and voting on the subject significant action.

(iii) Procedure for Determination. Each self-regulatory

organization must establish procedures for determining whether any

member of its governing board, disciplinary committees or oversight

committees is subject to a conflicts restriction under this section in

any significant action. Such determination must include a review of:

(A) gross positions held at that self-regulatory organization in

the member's personal accounts or ``controlled accounts,'' as defined

in Sec. 1.3(j);

(B) gross positions held at that self-regulatory organization in

proprietary accounts, as defined in Sec. 1.17(b)(3), at the member's

affiliated firm;

(C) gross positions held at that self-regulatory organization in

accounts in which the member is a principal, as defined in Sec. 3.1(a);

(D) net positions held at that self-regulatory organization in

``customer'' accounts, as defined in Sec. 1.17(b)(2), at the member's

affiliated firm; and,

(E) any other types of positions, whether maintained at that self-

regulatory organization or elsewhere, held in the member's personal

accounts or the proprietary accounts of the member's affiliated firm

that the self-regulatory organization reasonably expects could be

affected by the significant action.

(iv) Bases for Determination. Taking into consideration the

exigency of the significant action, such determinations should be based

upon:

(A) the most recent large trader reports and clearing records

available to the self-regulatory organization;

(B) information provided by the member with respect to positions

pursuant to paragraph (b)(2)(ii) of this section; and,

(C) any other source of information that is held by and reasonably

available to the self-regulatory organization.

(3) Participation in Deliberations. (i) Under the rules required by

this section, a self-regulatory organization governing board,

disciplinary committee or oversight panel may permit a member to

participate in deliberations prior to a vote on a significant action

for which he or she otherwise would be required to abstain, pursuant to

paragraph (b)(2) of this section, if such participation would be

consistent with the public interest and the member recuses himself or

herself from voting on such action.

(ii) In making a determination as to whether to permit a member to

participate in deliberations on a significant action for which he or

she otherwise would be required to abstain, the deliberating body shall

consider the following factors:

(A) whether the member's participation in deliberations is

necessary for the deliberating body to achieve a quorum in the matter;

and

(B) whether the member has unique or special expertise, knowledge

or experience in the matter under consideration.

(iii) Prior to any determination pursuant to paragraph (b)(3)(i) of

this section, the deliberating body must fully consider the position

information which is the basis for the member's direct and substantial

financial interest in the result of a vote on a significant action

pursuant to paragraph (b)(2) of this section.

(4) Documentation of Determination. Self-regulatory organization

governing boards, disciplinary committees, and oversight panels must

reflect in their minutes or otherwise document that the conflicts

determination procedures required by this section have been followed.

Such records also must include:

(i) the names of all members who attended the meeting in person or

who otherwise were present by electronic means;

(ii) the name of any member who voluntarily recused himself or

herself or was required to abstain from deliberations and/or voting on

a matter and the reason for the recusal or abstention, if stated; and

(iii) information on the position information that was reviewed for

each member.

Issued in Washington, D.C. on December 23, 1998, by the

Commission.

Catherine D. Dixon,

Assistant Secretary of the Commission.

[FR Doc. 98-34516 Filed 12-31-98; 8:45 am]

BILLING CODE 6351-01-M