Proposed Amendments to the Contract Size and Other Provisions of the Chicago Mercantile Exchange Random Lengths Lumber Futures Contract, Submitted Under Fast Track Review Procedures

COMMODITY FUTURES TRADING COMMISSION

Proposed Amendments to the Contract Size and Other Provisions of

the Chicago Mercantile Exchange Random Lengths Lumber Futures Contract,

Submitted Under Fast Track Review Procedures

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice of availability of proposed contract market rule

amendments.

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

SUMMARY: The Chicago Mercantile Exchange (CME or Exchange) has proposed

amendments to the random lengths lumber futures contract to change the

contract size to 110,000 board feet from 80,000 board feet. Under the

proposal, the deliverable unit will range from 105,000 to 115,000 board

feet. The speculative position limits also would be decreased in

proportion to the increased size of the trading unit. The proposals

were submitted under the Commission's 45-day fast track procedures. The

Acting Director of the Division of Economic Analysis (Division) of the

Commission, acting pursuant to the authority delegated by Commission

Regulation 140.96, has determined that the proposals are of major

economic significance, and that publication for comment is in the

public interest, will assist the Commission in considering the views of

interested persons, and is consistent with the purpose of the Commodity

Exchange Act.\1\

\1\ Section 5a(a)(12) of the Act, which requires the Commission

to publish proposed rules of ``major economic significance,'' does

not define the meaning of the term. Moreover, section 5a(a)(12)

provides that the Commission's determination that proposed exchange

rules are of major economic significance under the section if final

and not subject to judicial review. The Commission staff has

interpreted the meaning of ``major economic significance'' broadly

as proposed rules which may have an effect on the pricing of a

contract, on the value of existing contracts, on a contract's

hedging or price basing utility, or on deliverable supplies. Section

5a(a)(12) does not define rules of ``major economic significance''

based upon a specific dollar impact on the economy or other such

measures used in other statutes, such as those used in determining

whether an agency rule is a ``major rule'' under 5 U.S.C. section

804(2).

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

DATES: Comments must be received on or before March 11, 1999.

ADDRESSES: Interested persons should submit their views and comments to

Jean A. Webb, Secretary, Commodity Futures Trading Commission, Three

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

addition, comments may be sent by a facsimile transmission to facsimile

number (202) 418-5521, or by electronic mail to [email protected].

Reference should be made to the amendments to the CME random lengths

lumber futures contract.

FOR FURTHER INFORMATION CONTACT: Please contact John Forkkio of the

Division of Economic Analysis, Commodity Futures Trading Commission,

Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581,

telephone (202) 418-5281. Facsimile number: (202) 418-5527. Electronic

mail: [email protected]

SUPPLEMENTARY INFORMATION: The CME justified the proposal by noting

that:

. . . railcars from 70 feet to 73 feet in length are now the

majority (51.7%) of all railcars used in originating shipments of

lumber from western areas. These railcars have a loading capacity

ranging from 110,000 bf to 115,000 bf. It is reported by the

carriers that railcars of this size are the only cars being built

because smaller cars are more costly to load and haul on a per-pound

basis. The current trading unit of 80,000 bf [board feet] is shipped

on the smallest cars of 78,000 -92,000 bf loading capacity. The

smallest cars are a declining portion of the railcar fleet in both

absolute and relative terms.

Allowing deliveries to be made in a range of 105,000 to 115,000

bf will permit shipments to be made on railcars that are between 67

feet and 73 feet in length. These cars make up an estimated 59% of

the railcar population used in hauling lumber. The largest cars (73

feet) are estimated to be 46.5% of this population. The variation

allowed in the delivered unit is less than 5% of the total trading

unit. Mills will have some flexibility in meeting their

transportation needs with this variation.

The speculative position limits have been lowered to account for

the increased size of the trading unit. On a total board-foot basis,

the position limits are unchanged.

The CME proposes to implement the amendments for application to

newly listed contracts only. The first month to be affected is the

January 2000 contract month.

The Division requests comment on the extent to which the proposed

changes to the random length lumber futures contract reflect current

and expected cash market practices.

The proposed amendments were submitted pursuant to the Commission's

fast tract procedures for streamlining the review of futures contract

rule amendments and new contract approvals (62 FR 10434). Under those

procedures, the proposals, absent any contract action by the

Commission, may be deemed approved at the close of business on March

25, 1999, 45 days after receipt of the proposals. In view of the

limited review period provided under the fast track procedures, the

Commission has determined to publish for public comment notice of the

availability of the terms and conditions for 15 days, rather than 30

days as provided for proposals submitted under the regular review

procedures.

Copies of the proposed amendments will be available for inspection

at the Office of the Secretariat, Commodity Futures Trading Commission,

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

Copies can be obtained through the Office of the Secretariat by mail at

the above address, by phone at (202) 418-5100, or via the internet on

the CFTC website at www.cftc.gov under ``What's New & Pending''.

Other materials submitted by the CME in support of the proposals

may be available upon request pursuant to the Freedom of Information

Act (5 U.S.C. 552) and the Commission's regulations thereunder (17 CFR

Part 145 (1997)), except to the extent they are entitled to

confidential treatment as set forth in 17 CFR 145.5 and 145.9. Requests

for copies of such materials should be made to the FOI, Privacy and

Sunshine Act Compliance Staff of the Office of Secretariat at the

Commission's headquarters in accordance with 17 CFR 145.7 and 145.8.

Any person interested in submitting written data, views, or

arguments on the proposals, or with respect to other materials

submitted by the CME, should send such comments to Jean A. Webb,

Secretary, Commodity Futures Trading Commission, Three Lafayette

Centre, 1155 21st Street NW, Washington, DC 10581 by the specified

date.

Issued in Washington, DC, on February 18, 1999.

John R. Mielke,

Acting Director.

[FR Doc. 99-4548 Filed 2-23-99; 8:45 am]

BILLING CODE 6351-01-M