Fees for Applications for Contract Market Designation

COMMODITY FUTURES TRADING COMMISSION

17 CFR Parts 1, 5 and 31

RIN 3038-ZA00

Fees for Applications for Contract Market Designation

AGENCY: Commodity Futures Trading Commission.

ACTION: Proposed rulemaking.

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SUMMARY: The Commission has established fees for certain program

services, including applications for contract market designation. The

Commission is proposing to eliminate its fees for futures and option

contract market designation applications.

DATES: Comments must be received by December 27, 1999.

ADDRESSES: Comments should be mailed to Jean A. Webb, Secretary,

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

Street, NW, Washington, DC 20581; transmitted by facsimile to (202)

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

FOR FURTHER INFORMATION CONTACT: Paul Architzel, Chief Counsel,

Division of Economic Analysis , Commodity Futures Trading Commission,

Three Lafayette Center, 1155 21st Street, NW, Washington, DC 20581.

202-418-5160.

SUPPLEMENTARY INFORMATION:

Background Information

I. Computation of Fees

The Commission has established fees for certain activities and

functions it performs, including processing applications for contract

market designation for futures and option contracts.\1\ The fees for

contract market designations represent the average of the most recent

three-years' actual costs incurred for each of that activity. The

Commission first established a fee for contract market designations on

August 23, 1983. The fee was based upon a three-year moving average of

the actual costs expended and the number of contracts reviewed by the

Commission during that period of time.

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\1\ See Section 237 of the Futures Trading Act of 1982, 7 U.S.C.

16a and 31 U.S.C. 9701. For a broader discussion of the history of

Commission fees, see 52 FR 46070 (Dec. 4, 1987).

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In 1992, the Commission revised its fee structure by establishing

three separate fees--one for futures alone; one for options alone; and

one for combined futures and option contract applications. (57 FR 1372,

(January 14, 1992)).\2\ On June 8, 1999, the Commission further

modified its fee structure for a limited class of designation

applications submitted simultaneously where each proposed contract in

the filing is: (i) Cash settled based on an index of non-tangible

commodities; (ii) the cash-settlement procedure is the same for all

contracts in the filing; and (iii) all other terms and conditions of

the contracts are the same in all respects except in regard to a

specified temporal or spatial pricing characteristic or the multiplier

used to determine the size of each contract. (64 FR 30384, June 8,

1999).\3\

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\2\ The combined futures/option designation application fee was

set at a level that is less than the aggregate fee for separate

futures and option applications to reflect the fact that the cost

for review of an option was even lower when submitted simultaneously

with the underlying future and to create an incentive for contract

markets to submit simultaneously applications for futures and

options on that future.

\3\ The fees for designation applications currently in effect

are as follows:

Futures contracts alone--$6,800

Option contracts alone--$1,200

Futures contracts with options--$7,500

The reduced fees for simultaneous submission of multiple cash-

settled contracts are as follows:

for filings involving multiple cash-settled futures--

$6,800 for the first contract plus $680 for each additional

contract;

for filings involving multiple options on cash-settled

futures -- $1,200 for the first contract plus $120 for each

additional contract; and

for filings involving multiple combined cash-settled

futures and options on those futures--$7,500 for the first futures

and option contract plus $750 for each additional futures and option

contract.

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II. Recent Revisions to the Designation Process

In a companion notice published elsewhere in this edition of the

Federal Register, the Commission is adopting a final rule 5.3 that

would permit exchanges to list contracts for trading without Commission

approval. This is in response to continued expressions of industry

concern that the ability to list new contracts for trading without

delay is vital to the exchanges' continued competitiveness.

As explained in the notice of final rulemaking, boards of trade

will be permitted to list contracts for trading based only upon their

certification that the contract meets the requirements of the Commodity

Exchange Act and the Commission's rules thereunder and that they comply

with the other provisions of the rule. The exchange certification

procedure for listing new contracts is in lieu of the otherwise

required application for contract market designation. Under the rule,

contracts may be listed for trading indefinitely in reliance upon the

exchange's certification.

[[Page 66433]]

III. Proposed Amendments to the Designation Fees

The Commission is proposing to eliminate fees for contract market

designation applications. Otherwise there would be an economic

disincentive to submit proposed contracts for Commission approval under

the existing designation procedures. As greater experience is gained

with the use of the exchange certification listing procedures of Rule

5.3, the Commission may revisit this issue.

IV. Regulatory Flexibility Act

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

requires agencies to consider the impact of rules on small businesses.

The fees involved in this release affect contract markets (also

referred to as ``exchanges'') and registered futures associations. The

Commission has previously determined that contract markets are not

``small entities'' for purposes of the Regulatory Flexibility Act, 5

U.S.C. 601 et seq, 47 FR 18618 (April 30, 1982), and the requirements

of the Regulatory Flexibility Act therefore do not apply. Accordingly,

the Chairman, on behalf of the Commission, certifies that the proposed

rule does not have a significant economic impact on a substantial

number of small entities.

Issued in Washington, DC on November 17, 1999, by the

Commission.

Jean A. Webb,

Secretary of the Commission.

[FR Doc. 99-30511 Filed 11-24-99; 8:45 am]

BILLING CODE 6351-01-P