Contract Market Rule Review Procedures

COMMODITY FUTURES TRADING COMMISSION

17 CFR Part 1

Contract Market Rule Review Procedures

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rulemaking.

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SUMMARY: The Commodity Futures Trading Commission (Commission) is

proposing automatically to approve certain exchange rule amendments

upon adoption and to require their subsequent submission to the

Commission in a single summary filing, rather than individually as

currently mandated. In addition, the Commission is proposing to

reorganize in a clearer and more accessible format its rules on

expedited approval procedures of proposed exchange rule amendments. The

proposed comprehensive reorganization of these rules is intended to

further the Commission's overall regulatory reform program by reducing

unnecessary regulatory burdens and costs on United States exchanges

associated with the Commission's review and approval of proposed

exchange rules and rule amendments while maintaining the basic public

protections of the Commodity Exchange Act.

DATES: Comments must be received August 16, 1999.

ADDRESSES: Comments should be mailed to the Commodity Futures Trading

Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington,

DC 20581. Office of the Secretariat; transmitted by facsimile at (202)

418-5521; or transmitted electronically at [[email protected]].

FOR FURTHER INFORMATION CONTACT: Richard H. Shilts, Director, Market

Analysis Section or Kimberly A. Browning, Attorney/Advisor, Division of

Economic Analysis, Commodity Futures Trading Commission, Three

Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581. Telephone

(202) 418-5260. E-mail:[RS[email protected]] or [KB[email protected]].

SUPPLEMENTARY INFORMATION:

I. Background

Over the years the Commission has updated and streamlined its

procedures for reviewing proposed exchange rules. Section 5a(a)(12) of

the Commodity Exchange Act (Act), 7 U.S.C. 7a(a)(12), provides that all

rules of a contract market \1\ which relate to a futures contract's

terms and conditions must be submitted to the Commission for prior

approval.\2\ This requirement is premised on considerable regulatory

experience indicating that Commission review and approval of proposed

exchange rules before their implementation, among other things, is the

preferred way to minimize the possibility of market manipulation or

distortions due to improperly designed contract terms. Moreover, the

proposed amendment of an existing futures contract potentially may

affect adversely traders, producers or commercials. Commission pre-

approval review of such changes enables those persons or entities to

have their views considered.

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\1\ Commission Rule 1.41(a)(1) defines ``rule'' of a contract

market as follows: Any constitutional provision, article of

incorporation, bylaw, rule regulation, resolution, interpretation,

stated policy, or instrument corresponding thereto, in whatever form

adopted, and any amendment or addition thereto or repeal thereof,

made or issued by a contract market, or by the governing board

thereof or any committee thereof.

\2\ Section 5a(a)(12) further requires that contract markets

submit all other rules to the Commission except those relating to

setting of margins or that the Commission may specify by rule. Such

other rules may be made effective ten days after Commission receipt

unless, within the ten-day period, the exchange requests Commission

approval of the Commission notifies the exchange that it intends to

review the rules for approval.

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The Commission, while preserving the important public protections

of prior review, has aggressively sought to reduce unnecessary cost and

regulatory burdens associated with this requirement. For example, the

Commission has long established an expedited review and automatic

approval of proposed exchange rule amendments falling within a number

of categories. In addition, since 1997, the Commission has carried out

a far-

[[Page 38160]]

reaching program of regulatory reform. As part of that on-going

program, the Commission established fast track procedures \3\ for

Commission review and approval of applications for new contracts and

for proposed exchange rules and rule amendments not eligible for

expedited review. These initiatives have modernized and streamlined the

Commission's review processes, reducing unnecessary burdens and their

associated costs to United States exchanges.

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\3\ See, Commission Rules 5.1 and 1.41(b). 62 FR 10434 (March 7,

1997).

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Together, the expedited review, automatic approval and fast track

procedures have been uniquely effective in reducing the time for

Commission review and approval of proposed exchange rules and rule

amendments. In fiscal year 1998, the Commission processed 290 changes

to contract terms and conditions, of which 152 were processed under

expedited procedures. Of the 152, 47 were treated as approved upon

exchange adoption and 105 were approved on an expedited basis within 10

days after receipt. Of the remaining 138 that the Commission approved

under non-expedited procedures, seven were approved under the fast

track procedure. Of the 131 that were approved under regular review

procedures, 36 were approved in 10 days of fewer, 101 were approved in

30 days or fewer and all but nine were approved within 60 days.\4\

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\4\ In addition, the Commission adopted fast track review

procedures for new contract designation applications. Since June

1997, the Commission has approved a total of 70 contracts under fast

track procedures, 36 under the 10-day procedure and 34 under its 45-

day procedure. Forty-two additional contracts were approved under

non-fast-track review procedures.

Most recently, the Commission revised the rules governing the

designation application itself, replacing over five pages of rules

with three, user-friendly application forms that make extensive use

of checklists and charts. (See, 64 FR 29217 June 1, 1999).

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In keeping with this record, the Commission continues to innovate

in finding additional ways further to reduce unnecessary burden on

United States exchange, and is proposing herein to expand the types of

exchange rules and rule amendments that it approves automatically upon

exchange adoption, to streamline dramatically the required filing

notice of those rule amendments with the Commission, to add a new

three-day expedited review procedure and to expand the types of

proposed contract terms and conditions which are eligible for such

expedited rule approval.

II. The Proposed Amendments

A. Rule 1.41(b)

Based upon its experience in administering the current review

procedures, the Commission is proposing to expand the categories of

rules eligible for automatic approval in proposed new Rule 1.41(b)(5).

Exchange rule amendments eligible for approval upon their adoption

include routine changes to an index, other than a stock index, used as

the settlement of a futures contract compiled by a third party,

typographical, renumbering and other types of non-material changes,

trading hours and trading months, and discretionary option strike

prices. The routine changes to an index eligible for this treatment are

those types of changes that are frequent and anticipated to be needed

in order to maintain the continuity and integrity of a pricing

algorithm or formula which has been defined in the contract's terms. It

does not include non-routine or unanticipated changes to the basic

construction of an index as defined in the contract, for example, by

changing the geographic pricing point of an agricultural index. The

listing of trading months are not eligible for this treatment if the

trading month cycle has been interrupted by the delisting of a

contract, unless the listing of relisting is in conjunction with, or

subsequent to, the approval of the Commission of substantive changes to

the contract's terms or conditions.

The Commission also is proposing to reduce the associated filing

requirements for automatically approved exchange rule amendments.

Specifically, the Commission would replace the current requirement that

the exchange file a separate notice of each such amendment, with a

single, summary filing of all automatically approved rule amendments

adopted by an exchange during the preceding week.\5\ This proposal

should significantly streamline the filing process for exchanges.

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\5\ Under this proposed requirement, an exchange, if it so

desired, could continue to file a separate notice of an

automatically approved rule amendment as is currently required.

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The Commission also is proposing to add a new, faster category of

expedited review. This category would be for exchange rules that would

be deemed to be approved three days after receipt of the Commission,

and includes amendments to the terms and conditions of major currency

\6\ futures contracts which meet the standards of Guideline No. 1,

amendments to the terms and conditions of options on futures

contracts,\7\ and proposed revisions to the relating to the minimum

price fluctuation and daily price limits.

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\6\ Major currencies have nearly inexhaustible deliverable

supplies, exhibit extremely deep and liquid markets, are not subject

to convertibility or delivery restrictions and are easily arbitraged

between cash and futures markets. For this rule, they are defined as

the Australian dollar; British pound; Euro (and its component

currencies); Japanese yen; Canadian dollar; Swiss franc; New Zealand

dollar; Swedish krona; and Norwegian krone.

\7\ Under the proposal, changes to the cabinet trade provisions

of an option contract, which currently are eligible for expedited

approval under Commission regulation 1.41(q), would now qualify for

expedited approval under the three day provision as provided in

proposed Rule 1.41(b)(4). In this regard, a cabinet trade is defined

as an option transaction whereby the per contract value of the

cabinet trade is less than the per-contract value of a trade at the

specified minimum premium fluctuation for the option contract.

Cabinet trades, thus, are incorporated in Chart C of Guideline No. 1

as part of an option contract's minimum premium fluctuation rules.

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These review categories reflect the Commission's experience in the

time necessary to review proposed amendments to particular types of

contract terms and conditions. The contract amendments eligible for

these procedures are routine in nature and have clearly defined, often

objective, standards regarding their permissibility under the Act and

Commission regulations and it can be determined on its face whether the

particular rule amendment complies with the applicable standard.

Moreover, such rule amendments generally do not raise any issues

relating to the contract's susceptibility to manipulation or whether

its trading would be in the public interest.

In addition to the proposed new categories and expanded eligibility

for such procedures, the Commission is proposing to reorganize its

rules on expedited approval procedures into a more accessible and

clearer format.\8\ As proposed, Rule 1.41(b) would be reorganized into

paragraphs reflecting the time permitted the Commission for review, 180

day review period, 45 day fast track review, 10 or 3 day expedited

review (currently Rules 1.41(i)-(t)) and rules approved on adoption.

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\8\ As discussed above, these procedures and standards currently

are provided in a number of different Commission rules, including

Rule 1.41(b) (which includes the fast-track procedures), and Rules

1.41(i) through (t) (expedited procedures).

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To further its goal of streamlining the filing process, the

Commission is also encouraging exchanges to file their submissions

electronically. Electronic filing of submissions will reduce

unnecessary burdens and costs associated with the submission process to

both the exchanges and the Commission.

[[Page 38161]]

B. Commission Rule 1.41(d)

Commission Rule 1.41(d) sets forth the submission requirements for

contract market rules that are exempt from the requirements of section

5a(a)(12)(A) of the Act. These rules involve non-substantive, routine

and administrative matters such as exchange standards of decorum and

typographical error corrections. The Commission is proposing that

rather than filing Rule 1.41(d) submissions on an individual basis, the

exchanges be allowed to make these filings on a weekly basis and in

electronic form if so desired.\9\ The Commission believes that, to the

extent that an exchange might otherwise make multiple Rule 1.41(d)

filings in a particular week, this proposal will significantly

streamline the filing process, thus making compliance easier to

achieve.

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\9\ Section 5a(a)(1) of the Act requires that a contract market

``promptly furnish the Commission with copies of all bylaws, rules,

regulations, and resolutions made or issued by it.'' (emphasis

added). While in these proposed rules a contract market must furnish

rules within seven days, this is not to suggest that the term

``prompt,'' which may appear in other sections of the Act or rules,

is seven days.

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C. Commission Rule 1.45

The Commission is proposing to remove Commission Rule 1.45. This

Rule requires that the terms and conditions of all exchange traded

futures contracts specify that the grades of the underlying commodities

conform to U.S. standards, if the Commission has adopted such

standards. The Commission as a matter of practice, does not officially

promulgate specific standards for commodity futures contracts. Instead,

the Commission has adopted the requirement that contract terms and

conditions must be in conformance with customary cash market practices;

provided that variances from cash market practices are permitted if

necessary or appropriate for the contract. These requirements are

currently set forth under the procedures of Guideline No. 1. Guideline

No. 1, in effect, requires that contract terms and conditions submitted

for approval must be based on U.S. standards if those standards

represent cash market standards. The Commission approves rules

requiring delivery of commodities using applicable U.S. standards based

upon its assessment of the cash market. Given these procedures under

Guideline No. 1, the Commission believes that requirements Rule 1.45

imposes are redundant and, therefore, Rule 1.45 should be removed.

These proposals should significantly reduce the regulatory burden

for United States exchanges, while maintaining the public protections

of an effective system of Commission review of exchange rule

amendments.

The Commission believes that the proposed revisions streamlining

current review procedures offer the best balance between protection of

the public and reducing regulatory and cost burdens on United States

exchanges, thereby enabling them to compete better. In addition to

relieving U.S. exchanges of any unnecessary burdens, the proposed rules

will enable the Commission to devote its staff resources to the review

of rules which raise more substantive issues. The Commission invites

comment from the public regarding additional categories of contract

terms and conditions that can be included within the relief proposed,

or other additional steps that the Commission can take under its

regulatory reform program.

Related Matters

A. Regulatory Flexibility Act

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

requires that agencies, in promulgating rules, consider the impact of

these rules on small entities. The Commission has previously determined

that contract markets are not ``small entities'' for purposes of the

RFA, 5 U.S.C., 601 et seq. 47 FR 18618 (April 30, 1982). These

amendments propose to establish streamlined procedures for Commission

review and approval of proposed exchange amendments to its rules.

Accordingly, the Acting Chairman, 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. However, the Commission invites comments from any firms

or other persons that believe that the promulgation of these rules

might have a significant impact upon their activities.

B. Paperwork Reduction Act

When publishing proposed rules, the Paperwork Reduction Act (PRA)

of 1995 {Pub. L. 104-13 (May 1, 1995)} imposes certain requirements on

federal agencies (including the Commission) in connection with their

conducting or sponsoring any collection of information defines by the

PRA. In compliance with the Act, the Commission, through this rule

proposal, solicits comments to:

(1) Evaluate whether the proposed collection of information is

necessary for the proper performance of the functions of the agency,

including the validity of the methodology and assumptions used; (2)

evaluate the accuracy of the agency's estimate of the burden of the

proposed collection of information including the validity of the

methodology and assumptions used; (3) enhance the quality, utility, and

clarity of the information to be collected; and (4) minimize the burden

of the collection of the information on those who are to respond,

including through the use of appropriate automated, electronic,

mechanical, or other technological collection techniques or other forms

of information technology, e.g. permitting electronic submissions of

responses.

The Commission has previously submitted these rules and their

associated information collection requirements to the Office of

Management and Budget (OMB). The Office of Management and Budget

approved the collection of information associated with these rules on

October 24, 1998 and assigned OMB control number 3038-0022 to the

rules. The burden associated with the entire collection (3038-0022),

including these proposed rules is as follows:

Average burden hours per response: 3,609.89.

Number of respondents: 15,893.

Frequency of response: On Occasion.

Persons wishing to comment on the information which would be

required by the proposed 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.

Copies of the OMB-approved information collection package

associated with this rulemaking may be obtained from the Desk Officer,

Commodity Futures Trading Commission, Office of Management and Budget,

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

List of Subjects in 17 CFR Part 1

Commodity exchanges, Contract market rules, Rule review procedures.

In consideration of the foregoing, and pursuant to the authority

contained in the Commodity Exchange Act and, in particular, sections

4c, 5, 5a and 8a thereof, 7 U.S.C. 6c, 7, 7a, and 12a, the Commission

hereby proposes to amend Part 1 of Chapter I of Ttitle 17 of the Code

of Federal Regulations as follows:

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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. 1a, 2, 2a, 4, 4a, 6, 6a, 6b, 6c, 6d, 6e, 6f,

6g, 6h, 6i, 6j, 6k, 6l, 6m, 6n, 6o, 6p, 7, 7a, 7b, 8, 9, 12, 12a,

12c, 13a, 13a-1, 16, 16a, 19, 21, 23, and 24.

2. Section 1.41 is proposed to be amended by revising paragraphs

(b)(1)(i) introductory text, (b)(1)(i)(A), and (b)(2), by removing

paragraphs (b)(3) and (b)(4), by adding new paragraphs (b)(3), (b)(4)

and (b)(5), by revising paragraph (d)(2) and by removing paragraphs (i)

through (t) to read as follows:

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

Commission; exemption of certain rules.

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(b) Rules that relate to contract terms and conditions.--(1) Pre-

approval review procedures. (i) Except as provided in paragraphs (b)(5)

and (f) of this section, all proposed contract market rules that relate

to terms and conditions must be submitted to the Commission for

approval pursuant to section 5a(a)(12)(A) of the Act prior to their

proposed effective dates. One copy of each rule submitted under this

section shall be furnished in hard copy or electronically in a format

specified by the Secretary of the Commission to the Commission at its

Washington, DC headquarters. If a hard copy is furnished for

submissions under appendix A to part 5 of this chapter, two additional

hard copies shall be furnished to the Commodity Futures Trading

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

DC 20581. Each submission under this paragraph (b) shall be in the

following order:

(A) Label the submission as being submitted pursuant to Regulation

1.41(b)--regular review procedures.

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(2) Fast track 45 day review. (i) All proposed contract market

rules that relate to terms and conditions submitted for review under

paragraph (b)(1) of this section shall be deemed approved by the

Commission under section 5a(a)(12)(A) of the Act, 45 days after receipt

by the Commission, unless notified otherwise within that period, if:

(A) The contract market labels the submission as being submitted

pursuant to Commission Rule 1.41(b)--Fast Track Review;

(B) The submission complies with the requirements of paragraph

(b)(1)(i)(A) through (E), of this section or for dormant contracts, the

requirements of Sec. 5.2 of this chapter;

(C) The contract market does not amend the proposed rule or

supplement the submission, except as requested by the Commission,

during the pendency of the review period; and

(D) The contract market has not instructed the Commission in

writing during the review period to review the proposed rule under the

usual procedures under section 5a(a)(12)(A) of the Act and paragraph

(b)(1) of this section.

(ii) The Commission, within 45 days after receipt of a submission

filed pursuant to paragraph (b)(2)(i) of this section, may notify the

contract market making the submission that the review period has been

extended for a period of 30 days where the proposed rules raises novel

or complex issues which required additional time for review. This

notification will briefly specify the nature of the specific issues for

which additional time for review is required. Upon such notification,

the period for fast-track review of paragraph (b)(2)(i) of this section

shall be extended for a period of 30 days.

(iii) During the 45-day period for fast track review, or the 30-day

extension when the period had been enlarged under paragraph (b)(2)(ii)

of this section, the Commission shall notify the contract market that

the Commission is terminating fast-track review procedures and will

review the proposed rule under the usual procedures of section

5a(a)(12)(A) of the Act and paragraph (b)(1) of this section if it

appears that the proposed rule may violate a specific provision of the

Act, regulation, or form or content requirement of this section. This

termination notification will briefly specify the nature of the issues

raised and the specific provision of the Act, regulation or form or

content requirement of this section that the proposed rule appears to

violate. Within 10 days of receipt of this termination notification,

the contract market may request that the Commission render a decision

whether to approve the proposed rule or to institute a proceeding to

disapprove the proposed rule under the procedures specified in section

5a(a)(12)(A) of the Act by notifying the Commission that the contract

market views its submission as complete and final as submitted.

(3) Expedited 10 day review. (i) Notwithstanding the provisions of

paragraph (b)(1) of this section, the following changes to contract

terms and conditions shall be deemed approved by the Commission ten

business days after receipt:

(A) Specifically approved standards. Changes to terms and

conditions that are consistent with the Act and Commission regulations

and with standards approved or established by the Commission in a

written notification to the contract market of the applicability of

this paragraph; provided, however, that the Commission may at any time

alter or revoke the applicability of such a notice to any particular

contract;

(B) Financial standards for delivery facilities. Changes in the

financial standards or requirements for regular delivery facilities or

comparable entities; provided that:

(1) The amended rule does not affect the regularity or delivery

status of any existing facility declared regular by the contract market

for the relevant commodity(ies) or likely candidates for regularity

status,

(2) The requirement is stated in the rules and applies uniformly to

all applications for regularity, and

(3) The requirement is related solely for the purpose of ensuring

the financial integrity of the regular facility(ies); and

(C) Delivery standards set by third parties. Changes to grades or

standards of commodities deliverable on futures contracts which are

established by an independent third party and which are incorporated by

reference as terms of the contract; provided that the grade or standard

is not established, selected or calculated solely for use in connection

with futures or option trading.

(ii) The contract market must label filings under this paragraph as

submitted for ``10 Day Expedited Review.''

(iii) The Commission will, within 10 business days after receipt of

the submission, notify the contract market making the submission if it

appears that the change is not consistent with the provisions of this

paragraph. Upon such notification by the Commission to the contract

market, the change will be subject to the usual procedures under

section 5a(a)(12)(A) of the Act and paragraph (b)(1) of this section.

(4) Expedited three day review, (i) Notwithstanding the provisions

of paragraph (b)(1) of this section, the following changes to contract

terms and conditions shall be deemed approved by the Commission three

business days after receipt:

(A) Specifically approved standards. Changes to terms and

conditions that are consistent with the Act and Commission regulations

and with standards approved or established by the Commission in a

written notification to the contract market of the applicability of

this paragraph;

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provided, however, that the Commission may at any time alter or revoke

the applicability of such a notice to any particular contract;

(B) Options on futures contracts. (1) Changes to terms and

conditions for options on futures contracts that are consistent with

the Act, Commission regulations and the standards set forth in Part 5,

Appendix A(c)(3) of this chapter;

(2) Changes to exchange rules governing option trading months,

including a procedure for listing options with different expiration

dates based on the same underlying futures contract month (option

serial months), that are specified and automatic; and

(3) Changes to option automatic exercise procedures that are

specified and objective, apply only to in-the-money options and provide

an opportunity for option holders to override the automatic exercise

provision.

(C) Currency futures contracts. Changes to terms and conditions

that are consistent with the Act, Commission regulations and the

standards set forth in Part 5, Appendix A(a)(3)(1)-(15) of this chapter

for futures and options on physicals contracts based on the following

currencies (including currency cross rates); Australian dollar, British

pound; Euro (and its component currencies); Japanese yen; Canadian

dollar; Swiss franc; New Zealand dollar; Swedish krona; and Norwegian

krone.

(D) Minimum price fluctuation limits. Changes to the minimum tick

provisions for futures contracts that do not increase tick size; and

(E) Price limit provisions for futures contracts. Changes to price

limit rules for futures contracts, except for equity index contracts,

provided that the change does not reduce the existing price limit.

(ii) The contract market must label filings under this paragraph as

submitted for ``Three Day Expedited Review.''

(iii) The Commission will, within three business days after receipt

of the submission, notify the contract market making the submission if

it appears that the change is not consistent with the provisions of

this paragraph. Upon such notification by the Commission to the

contract market, the change will be subject to the usual procedures

under section 5a(a)(12)(A) of the Act and paragraph (b)(1) of this

section.

(5) Pre-approved rules. (i) Notwithstanding the provisions of

paragraph (b)(1) of this section, the following changes to contract

terms and conditions shall be deemed approved by the Commission at the

time the change is adopted by the contract market:

(A) Specifically approved standards. Changes to terms and

conditions that are consistent with the Act and Commission regulations

and with standards approved or established by the Commission in a

written notification to the contract market of the applicability of

this paragraph; provided, however, that the Commission may at any time

alter or revoke the applicability of such a notice to any particular

contract;

(B) Index contracts. Routine changes in the composition,

computation, or method of selection of component entities of an index

other than a stock index referenced and defined in the contract's

terms, made by an independent third party whose business relates to the

collection or dissemination of price information and which was not

formed solely for the purpose of compiling an index for use in

connection with a futures of option contract;

(C) Survey lists for cash settled contracts. Proposals relating to

the initial listing or changes to the lists of banks, brokers, dealers

or other entities which provide price or cash market information to a

contract market for purposes of computing cash settlement prices or a

cash price series or for defining the deliverable supply for physical

delivery contracts, if consistent with a rule approved by the

Commission establishing standards or criteria for the persons or

entities which qualify for the list;

(D) Non-material revisions. Corrections of typographical errors,

renumbering, periodic routine updates to identifying information about

approved entities and other such nonsubstantive revisions of contract

terms and conditions that have no effect on the economic

characteristics of the contract;

(E) Trading hours. Changes to trading hours; provided that for

changes that permit trading between 6:00 p.m. and 7:00 am local time

where the contract market is located, the contract market has

previously received Commission approval for trading in such hours in at

least one designated contact, and that the change does not provide for

the initial listing of a contract on an automated trading system;

(F) Trading months. Proposals to list initially or to change the

listing of trading months for futures and options on physicals

contracts which are not outside of a previously approved listing cycle

and were not previously delisted, unless the delisted month is being

relisted subsequent to the amendment of a contract term or condition

approved or deemed to be approved by the Commission under this section

and proposals to delist trading months having no open interest;

(G) Discretionary option strike prices. The non-routine listing of

option strike prices not required to be listed under the automatic

listing procedures; and

(H) Listings on supplemental trading sessions. Changes to the

months or strike prices listed for trading during supplemental trading

sessions outside normal trading hours where such listings represent all

or a subset of the months or strikes listed during regular trading

hours.

(ii) The contract market must provide to the Commission at least

weekly a summary notice of all rule changes made pursuant to this

paragraph during the preceding week. Such notice must be labeled

``Weekly List of Pre-Approved Rule Changes'' and need not be filed for

weeks during which no such actions have been taken. One copy of each

such submission shall be furnished in hard copy or electronically in a

format specified by the Secretary of the Commission to the Commodity

Futures Trading Commission, Three Lafayette Centre, 1155 21st Street

NW., Washington, DC 20581.

(iii) The Commission will, within three business days after receipt

of the submission, notify the contract market making the submission if

it appears that change is not consistent with the provisions of this

paragraph. Upon such notification by the Commission to the contract

market, the change will be subject to the usual procedures under

section 5a(a)(12)(A) of the Act and paragraph (b)(1) of this section.

* * * * *

(d) * * *

(2) Rules that are exempt from the requirements of section

5a(a)(12)(A) of the Act in accordance with the provisions of this

paragraph (d) shall nonetheless be submitted to the Commission pursuant

to the provisions of section 5a(a)(1) of the Act. Each such submissions

shall be labeled as being submitted pursuant to section 5a(a)(1) of the

Act and paragraph (d) of this section. The contract market may instead

provide to the Commission, at least weekly, a summary notice of all

rule changes made pursuant to this paragraph during the preceding week.

One copy of each such submissions shall be furnished in hard copy or

electronically in a format specified by the Secretary of the Commission

to the Commodity Futures Trading Commission, Three Lafayette Centre,

[[Page 38164]]

1155 21st Street NW., Washington, DC 20581.

* * * * *

3. Section 1.45 is removed and reserved.

Issued in Washington, DC, this 7th day of July, 1999 by the

Commodity Futures Trading Commission.

Jean Webb,

Secretary of the Commission.

[FR Doc. 99-17812 Filed 7-14-99; 8:45 am]

BILLING CODE 6351-01-M