[Federal Register: April 2, 2007 (Volume 72, Number 62)]
[Proposed Rules]
[Page 15637-15641]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02ap07-11]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
17 CFR Parts 1, 3, 4, 15 and 166
RIN 3038-AC26
Exemption From Registration for Certain Foreign Persons
AGENCY: Commodity Futures Trading Commission.
ACTION: Proposed rules.
-----------------------------------------------------------------------
SUMMARY: The Commodity Futures Trading Commission (``Commission'') is
proposing to amend Commission Regulation 3.10 regarding the
registration of firms located outside the U.S. that are engaged in
commodity interest activities with respect to trading on U.S.
designated contract markets (``DCMs'') and U.S. derivative transaction
execution facilities (``DTEFs'').\1\ The amended regulation would
codify past actions of the Commission or its staff permitting certain
foreign firms that limit their customers to foreign customers to submit
U.S. DCM and DTEF business on behalf of those customers for clearing on
an omnibus basis through a registered futures commission merchant
(``FCM''), without the foreign firm having to register as an FCM
pursuant to section 4d of the Commodity Exchange Act (``Act'').
---------------------------------------------------------------------------
\1\ Commission regulations referred to herein are found at 17
CFR Ch. I (2006). References to trading on U.S. DCMs or DTEFs shall
include trading that is subject to the rules of such entities as
well.
---------------------------------------------------------------------------
DATES: Comments must be received on or before May 2, 2007.
ADDRESSES: Comments may be submitted, identified by RIN 3038-AC26, by
any of the following methods:
Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov.
Follow the instructions for submitting comments.
E-mail: [email protected]. Include ``Exemption from
Registration for Certain Foreign Persons'' in the subject line of the
message.
Fax: 202/418-5521.
Mail or Courier: Send to Eileen A. Donovan, Acting
Secretary, Commodity Futures Trading Commission, Three Lafayette
Centre, 1155 21st St., NW., Washington, DC 20581.
All comments received will be posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.cftc.gov
, including any personal information provided.
FOR FURTHER INFORMATION CONTACT: Lawrence B. Patent, Deputy Director,
or Andrew V. Chapin, Special Counsel, at (202) 418-5430, Division of
Clearing and Intermediary Oversight, Commodity Futures Trading
Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington,
DC 20581. Electronic mail: [email protected] or [email protected].
SUPPLEMENTARY INFORMATION:
I. Background Information
A. Registration Requirements for Commodity Interest Activities on U.S.
Markets
Part 3 of the Commission's regulations governs the registration of
intermediaries engaged in the offer and sale of, and providing advice
concerning, futures and commodity options traded on U.S. markets,
including both DCMs and DTEFs. In particular, Regulation 3.10 sets
forth the manner in which FCMs, introducing brokers (``IBs''),
commodity trading advisors (``CTAs''), commodity pool operators
(``CPOs'') and leverage transaction merchants must apply for
registration with the Commission. Regulation 3.10(c) also provides an
exemption from registration for certain persons. Currently, the only
exemption from registration as an FCM is for any person trading solely
for proprietary accounts, as defined in Regulation 1.3(y).
With respect to registration, the Act does not distinguish between
an intermediary located within or outside the U.S., nor does that Act
distinguish between a firm conducting commodity interest \2\ activities
on behalf of U.S. persons and those conducting such activities solely
on behalf of persons located outside the U.S. For example, Section
1a(20) of the Act defines an FCM as a person that is
---------------------------------------------------------------------------
\2\ See discussion of proposed new Regulation 1.3(yy) defining
the term ``commodity interest,'' infra.
(A) Engaged in soliciting or accepting orders for the purchase
or sale of any commodity for future delivery on or subject to the
rules of any contract market or derivatives transaction execution
facility; and (B) in or in connection with such solicitation or
acceptance of orders, accepts any money, securities or property (or
extends credit in lieu thereof) to margin, guarantee, or secure any
trades or contracts that result or may result therefrom.\3\
---------------------------------------------------------------------------
\3\ 7 U.S.C. 1a(20) (2000). See also Regulation 1.3(p). The
definitions of CPO, CTA and IB similarly are applicable to
transactions entered into on U.S. markets without regard to the
location of the intermediary. See 7 U.S.C. 1a(5), (6) and (23),
respectively.
---------------------------------------------------------------------------
Section 4d(a) of the Act states that:
[I]t shall be unlawful for any person to engage as [an FCM] * *
* in soliciting or accepting orders for the purchase or sale of any
commodity for future delivery, or involving any contracts of sale of
any commodity for future delivery, on or subject to the rules of any
contract market or
[[Page 15638]]
derivatives transaction execution facility unless
(1) Such person shall have registered, under this Act, with the
Commission as such [FCM] * * * and such registration shall not have
expired nor been suspended nor revoked; * * * \4\
---------------------------------------------------------------------------
\4\ 7 U.S.C. 6d(a)(1) (2000).
Accordingly a person located outside the U.S. engaged in FCM-type
activity with respect to transactions entered into on a DCM or DTEF
would be required to register as an FCM even though such person
restricts its customer base to persons located outside of the U.S.
B. Foreign Broker Exemption
The term ``foreign broker'' never has been defined in the context
of the Part 3 registration requirements. Rather, the term ``foreign
broker'' has been defined solely in the context of the financial
surveillance reporting requirements set forth in Parts 15 to 21 of the
Commission's regulations. Specifically, Regulation 15.00(a)(1) defines
``foreign broker'' to mean ``any person located outside the U.S. or its
territories who carries an account in commodity futures or commodity
options on any contract market for any other person.'' In various
contexts, the Commission has indicated that it would not require
registration of a foreign broker that (1) limits its customers to
foreign customers, (2) submits the trades of such foreign customers
that are entered into on U.S. markets for clearing on an omnibus basis
through a registered FCM, and (3) does not solicit or accept orders
from U.S. customers for trading on U.S. markets. In contrast, the
Commission always has maintained that any commodity interest activities
undertaken by a foreign broker on behalf of any U.S. person for trading
on or subject to the rules of a U.S. market would have required
registration on the part of the foreign broker.
The genesis of the ``foreign broker exemption'' occurred in 1938
when the Commodity Exchange Authority (``CEA''), the Commission's
predecessor, issued an Administrative Determination stating that the
segregation requirements in Section 4d of the Act did not apply to
foreign, non-clearing member firms because that provision, despite
containing no express territorial limitation, was considered to be
``confined to the geographical area over which the law-making power has
jurisdiction.'' \5\ The Commission notes that the scope of the CEA's
determination was restricted to non-clearing activities.
---------------------------------------------------------------------------
\5\ Administrative Determination No. 51 (March 17, 1938).
---------------------------------------------------------------------------
In 1980, the Commission further addressed the participation of
foreign persons on U.S. markets in a Federal Register release amending
Part 15 of the Commission's regulations. The Commission stated that:
[F]oreign entities presently comprise a significant portion of
the traders in various commodities on domestic exchanges.
Nevertheless by engaging in futures trading in the United States,
foreign persons, like domestic market participants, become subject
to the regulatory scheme of the Commodity Exchange Act * * *.'' \6\
---------------------------------------------------------------------------
\6\ 45 FR 30426 (May 8, 1980). The 1980 Federal Register release
cited the Commission's decision in In the Matter of AWiscope, S.A.
CFTC Docket No. 79-114 [1977-1990 Transfer Binder] Comm. Fut. L.
Rep. (CCH) ] 20,785 at p. 23192, n. 12 (March 19, 1979), vacated on
other grounds, 604 F.2d 764 (2d Cir. 1979). In the Wiscope division,
the Commission stated that:
[A] foreign broker, like any other person or entity, is required
to place all orders to buy or sell futures contracts through a
registered futures commission merchant. Historically, futures
commission merchants have often carried foreign brokers' accounts as
`omnibus accounts' in which transactions for a broker's customers
are combined and carried in the name of the broker, rather than
being accounted for and separately identified by the customer.
As a consequence, the Commission promulgated market surveillance
reporting rules that contemplate that a foreign broker submits its
trades for clearing on an omnibus basis through an FCM.\7\
---------------------------------------------------------------------------
\7\ See, e.g., Regulations 15.05 and 17.04.
In 1983, the Commission unambiguously set forth its policy
regarding the registration of foreign brokers in a final rulemaking
establishing the registration requirements and procedures for
introducing brokers and other futures industry professionals. The
---------------------------------------------------------------------------
Commission stated that
Given this agency's limited resources, it is appropriate at this
time to focus [the Commission's] customer protection activities upon
domestic firms and upon firms soliciting or accepting orders from
domestic users of the futures markets and that the protection of
foreign customers of firms confining their activities to areas
outside this country, its territories, and possessions may best be
for local authorities in such areas.\8\
---------------------------------------------------------------------------
\8\ 48 FR 35247, 35261 (August 3, 1983). The Commission cited to
prior iterations of this policy concept dating back to 1980, as well
as to a staff letter on the topic issued in 1975. 45 FR 18356, 18360
(March 20, 1980); 45 FR 80490 (December 5, 1980); CFTC Staff Letter
75-12 [1975-1977 Transfer Binder] Comm. Fut. L. Rep. (CCH) ] 20,099
(October 6, 1975).
Accordingly, the Commission concluded that ``a foreign broker would
generally not need to register as an introducing broker.'' \9\
---------------------------------------------------------------------------
\9\ Id. An introducing broker is defined as a person engaged in
soliciting or in accepting orders for futures and options contracts
listed on any contract market or derivatives transaction execution
facility that does not accept any money, securities, or property to
margin any trades that result from such orders. See Section 1a(23)
of the Act; see also Regulation 1.3(mm).>
---------------------------------------------------------------------------
The Commission's staff has taken action consistent with the
Commission's policy regarding the participation of foreign persons on
U.S. markets. For example, in CFTC Staff Letter 89-07, Commission staff
state that
The Commission has not required a person located outside the
United States which engages in the conduct described in section
2(a)(1)(A) of [the Act] for or on behalf of foreign customers
through a U.S. FCM to register as an FCM. Specifically, the
Commission has not required a foreign broker as that term is defined
in rule 15.00(a)(1) to register as an FCM.\10\
---------------------------------------------------------------------------
\10\ CFTC Staff Letter 89-07, [1987-1990 Transfer Binder] Comm.
Fut. L. Rep. (CCH) ] 24,479 at 36,096-97 (June 22, 1989); see also,
CFTC Staff Letter 98-80, [1998-1999 Transfer Binder] Comm. Fut. L.
Rep. (CCH) ] 27,503 (November 25, 1998); CFTC Staff Letter 93-113,
[1992-1994 Transfer Binder] Comm. Fut. L. Rep. (CCH) ] 25,930
(October 29, 1993); CFTC Staff Letter 92-19, [1992-1994 Transfer
Binder] Comm. Fut. L. Rep. (CCH) ] 25,516 (October 9, 1992).
The Commission notes that, by limiting the exemptive relief to
activities conducted ``through a U.S. FCM,'' staff did not extend the
exemptive relief available to a foreign broker to include the
submission of trades executed for its customer and non-customer
accounts directly to a clearing organization for a U.S. market.\11\
---------------------------------------------------------------------------
\11\ A non-customer account would include accounts carried for
persons closely related to the foreign broker such as a parent or
subsidiary company, a director or a major shareholder. See 17 CFR
1.17(b)(4).
---------------------------------------------------------------------------
In addition, the Commission's Office of General Counsel (``OGC'')
issued an interpretative letter in 1976 addressing the participation of
foreign-based CPOs and CTAs on U.S. markets. In its letter, OGC stated
that a person who operates commodity pools outside of the territorial
U.S. is not required to register as a CPO when such a person confines
the pool activities to areas outside the territorial U.S., none of the
participation in the pool is a resident or citizen of the U.S., and
none of the funds or capital contributed to the pools are from U.S.
sources.\12\ The OGC interpretative letter also stated that a trading
advisor located outside the territorial U.S. who provides advice as to
the advisability of trading futures contracts on domestic and foreign
exchanges is not required to register when such a person confines its
advisory services to areas outside of the
[[Page 15639]]
territorial U.S., and none of its clients is a citizen or resident of
the U.S.\13\
---------------------------------------------------------------------------
\12\ CFTC Staff Letter 76-21, [1975-1977 Transfer Binder] Comm.
Fut. L. Rep. (CCH) ] 20,222 (August 15, 1976). OGC further noted
that ``[t]he pools trade through the London office of your company,
which is a futures commission merchant registered with the
Commission.'' Id.
\13\ Id.
---------------------------------------------------------------------------
The Commission believes that it is appropriate at this time to
codify the ``foreign broker exemption'' as a means to provide greater
legal certainty with respect to the commodity interest activities
undertaken by those persons located outside the U.S. on U.S. markets.
Accordingly, the Commission is proposing to amend Regulation 3.10(c) to
exempt from registration as an FCM any person that (1) limits its
customers to customers located outside the U.S.\14\ (2) confines its
commodity interest activities to areas outside the U.S. and (3) submits
its trades for clearing on an omnibus basis through a registered FCM.
---------------------------------------------------------------------------
\14\ The limitation applies to solicitation as well as
acceptance of orders. Accordingly, if a person located outside of
the U.S. were to solicit prospective customers located in the U.S.
as well as outside the U.S., this exemption would not be available,
even if the only customers resulting from the efforts were located
outside of the U.S.
---------------------------------------------------------------------------
II. Proposed Regulations
The Commission proposes to amend Regulation 3.10(c) to provide a
limited exemption from registration to certain persons located outside
the U.S. that engage in brokerage activities on domestic markets on
behalf of customers located outside the U.S. Specifically, the
Commission proposes to codify the ``foreign broker exemption''
previously articulated by the Commission and its staff by amending
Regulation 1.3 to include a new definition of ``foreign broker.'' The
existing definition of ``foreign broker'' in Regulation 15.00(g) is
limited in context to the market surveillance reporting requirements
set forth in Parts 15 to 21 of the Commission's regulations. Proposed
Regulation 1.3(xx) would define ``foreign broker'' as a person located
outside the U.S.\15\ who acts in the capacity of an FCM, as described
in Regulation 1.3(p), and who solicits or accepts orders for execution
on or subject to the rules of U.S. markets from persons outside the
U.S. Unlike the Regulation 15.00(g) definition, the application of
Proposed Regulation 1.3(xx) would not be restricted to a particular
part of the Commission's regulations. In conjunction with the
provisions to Regulation 3.10(c) described below, the new definition of
``foreign broker'' would clarify that the commodity interest activities
undertaken on U.S. markets by a person located outside the U.S. are
subject to general Commission oversight, and not limited to the market
surveillance activities described in Parts 15 to 21 of the Commission's
regulations.
---------------------------------------------------------------------------
\15\ Consistent with existing Commission regulations, the
proposed regulations refer to the United States, its territories and
possessions.
---------------------------------------------------------------------------
The Commission also is proposing to amend Regulation 1.3 to add new
paragraph (yy) to provide a definition of the term ``commodity
interest.'' Regulation 4.10(a)(1) currently defines ``commodity
interest'' to mean: (1) any contract for the purchase or sale of a
commodity for future delivery; and (2) any contract, agreement or
transaction subject to Commission regulation under Section 4c or 19 of
the Act. This definition of ``commodity interest.'' includes not only
futures contracts, but options on futures and cash commodities traded
on U.S. markets. Regulation 4.10(a)(1), however, applies only to Part 4
of the Commission's regulations governing CPOs and CTAs. Rather than
address the commodity interest activities of foreign brokers and other
persons located outside the U.S. by reference to Regulation 4.10(a)(1),
the Commission is proposing to promulgate new Regulation 1.3(yy) to
clarify that these activities are subject to the Commission's general
oversight, including the registration requirements set forth in Part 3
of the Commission's regulations. In order to eliminate any confusion
resulting from duplicate regulations, the Commission proposes further
to remove the existing definition of ``foreign broker'' from Regulation
15.00(g), and the existing definitions of ``commodity interest'' from
1.56(a), 3.1(f), 4.10(a), and 166.1(a), respectively.
In addition to the proposed changes to Part 1 of the Commission's
regulations, the Commission proposes to amend Regulation 3.10(c) to
exempt from FCM registration any foreign broker, as defined in new
Regulation 1.3(xx), that submits customer or proprietary trades
executed on or subject to the rules of U.S. markets for clearing on an
omnibus basis through a fully registered FCM. Any foreign broker
eligible for such relief would be required to continue to comply with
all other provisions of the Act and of the rules, regulations and
orders thereunder, including the reporting requirements set forth in
Parts 15 to 21 of the Commission's regulations.
The Commission has not proposed to extend the exemption from FCM
registration to permit a foreign broker to become a remote clearing
member of a derivatives clearing organization (``DCO'') without having
to register as an FCM. A firm routinely submitting customer positions
for clearing by a DCO is not confining its activities to areas located
outside this country.\16\ As a result, the proposal would require the
foreign broker to submit all of its trades, both customer and
proprietary, for clearing through a registered FCM. In addition, the
Commission notes that it always has been concerned about oversight of
clearing member firms because of the potential for systemic risk.
---------------------------------------------------------------------------
\16\ See Quill Corp. v. North Dakota, 504 U.S. 298, 307-308
(1992) (holding that if a foreign corporation purposefully avails
itself of the benefits of an economic market in the forum State, it
may subject itself to the in personam jurisdictiion even if it has
no physical presence in the State); Burger King Corp. v. Rudzewicz,
471 U.S. 462, 476 (1985) (``it is an inescapable fact of modern
commercial life that a substantial amount of business is transacted
solely by mail and wire communications across state lines, thus
obviating the need for physical presence within a State in which
business is conducted.'').
---------------------------------------------------------------------------
The Commission also believes that remote clearing raises material
policy issues with respect to both the financial integrity of the
markets and customer protection. For example, FCM registrants are
subject to requirements concerning fitness, capital, treatment of
funds, recordkeeping, and ongoing reporting, and FCM compliance and
these standards are monitored by the Commission, and the relevant self-
regulatory organization. Exemption from registration would relinquish
those safeguards.\17\
---------------------------------------------------------------------------
\17\ The Commission is not aware that this type of arrangement
has caused hardship for registered FCMs located in the U.S., such as
any requirement imposed upon them by foreign regulators because they
submit for clearing by a DCO transactions for persons located
outside of the U.S. The Commission similarly permits a firm located
outside of the U.S. whose only contact with U.S. customers consists
of acting as the clearing firm for transactions executed on or
subject to the rules of a foreign board of trade on an omnibus basis
to do so without being registered as an FCM. 17 CFR 30.4(a).
---------------------------------------------------------------------------
Comments regarding the proposed amendment to Regulation 3.10(c) and
the corresponding amendments to related regulations should not be
limited to the areas cited above, but rather should address all aspects
of the Commission's regulatory program, including its goals to protect
investors and the public interest; to promote fair competition, market
efficiency, innovation and the expansion of investment opportunities;
and to maintain fair and orderly markets.
III. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-611,
requires that agencies, in proposing regulations, consider the impact
of those regulations on small businesses. The Commission has previously
established certain definition of ``small entities'' to be used
[[Page 15640]]
by the Commission in evaluating the impact of its regulations on such
entities in accordance with the RFA.\18\ The Commission previously has
determined that registered FCMs are not small entities for the purpose
of the RFA because each FCM has an underlying fiduciary relationship
with its customers, regardless of the size of the FCM.\19\ The
Commission notes that the foreign persons affected by the proposed
changes to the Commission's regulations would be registered as FCMs if
not for the exemption provided therein and, as such, would maintain a
fiduciary relationship with customers similar to the relationship
maintained by each registered FCM. Therefore, the Chairman, on behalf
of the Commission, hereby certifies, pursuant to 5 U.S.C. 605(b), that
these proposed regulations will not have a significant economic impact
on a substantial number of small entities. Nonetheless, the Commission
specifically requests comment on the impact these proposed rules may
have on small entities.
---------------------------------------------------------------------------
\18\ 47 FR 18618-18621 (April 30, 1982).
\19\ 47 FR 18619-18620.
---------------------------------------------------------------------------
B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (``PRA'') (44 U.S.C. 3501 et
seq. (Supp. I 1995)) imposes certain requirements on federal agencies
(including the Commission) in connection with their conducting or
sponsoring any collection of information as defined by the PRA.
While the proposed rule discussed herein has no burden, the group
of rules (3038-0023, Rules, Regulations and Forms for Domestic and
Foreign Futures and Options Related to Registration with the
Commission) of which it is a part has the following burden:
Average Burden Hours Per Response: 18.11
Number of Respondents: 76,750.
Frequency of Response: Annually and On Occasion.
The Office of Management and Budget (``OMB'') approved the collection
of information associated with the group of rules on August 17, 2004.
Copies of the OMB-approved information collection submission are
available from the CFTC Clearance Officer, 1155 21st Street, NW.,
Washington, DC, 20581 (202) 418-5160.
C. Costs and Benefits of the Proposed Rules
Section 15(a) of the Act requires the Commission to consider the
costs and benefits of its actions before issuing new regulations under
the Act. By its terms, Section 15(a) does not require the Commission to
quantify the costs and benefits of new regulations or to determine
whether the benefits of the proposed regulations outweigh their costs.
Rather, Section 15(a) requires the Commission to ``consider the cost
and benefits'' of the subject regulations.
Section 15(a) further specifies that the costs and benefits of the
proposed regulations shall be evaluated in light of five broad areas of
market and public concern: (1) Protection of market participants and
the public; (2) efficiency, competitiveness, and financial integrity of
futures markets; (3) price discovery; (4) sound risk management
practices; and (5) other public interest considerations. The Commission
may, in its discretion, give greater weight to any one of the five
enumerated areas of concern and may, in its discretion, determine that,
notwithstanding its costs, a particular regulation is necessary or
appropriate to protect the public interest or to effectuate any of the
provisions or to accomplish any of the purposes of the Act.
The proposed regulations should foster the protection of market
participants and the public by providing greater legal certainty to the
commodity interest activities of persons located outside the U.S. As
the activity set forth in the proposed regulations presently is
permitted under staff interpretation and no-action, the proposed
regulations should have no material impact from the standpoint of
imposing costs or creating benefits, on efficiency, competitiveness and
financial integrity of financial markets, price discovery, sound risk
management practices, or any other public interest considerations.
List of Subjects
17 CFR Part 1
Definitions, Registration, Minimum financial and reported
requirements, Prohibited transactions in commodity options, Customers'
money, securities and property, Miscellaneous.
17 CFR Part 3
Definitions, Foreign futures, Consumer protection, Foreign options,
Registration requirements.
17 CFR Part 4
Advertising, Commodity futures, Consumer Protection, Recordkeeping
and reporting requirements.
17 CFR Part 5
Brokers, Reporting and recordkeeping requirements.
17 CFR Part 166
Authorization to trade, Customer protection.
In consideration of the foregoing, and pursuant to the authority
contained in the Commodity Exchange Act and, in particular, Sections
2(a)(1), 4(b), 4c and 8a thereof, 7 U.S.C. 2, 6(b), 6c and 12a (1982),
and pursuant to the authority contained in 5 U.S.C. 552 and 552b
(1982), the Commission hereby proposes to amend Chapter I of Title 17
of the Code of Federal Regulations as follows:
PART 1--DEFINITIONS
1. The authority citation for part 1 continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 5, 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, unless otherwise noted.
2. Section 1.3 is amended by adding paragraphs (xx) and (yy) to
read as follows:
Sec. 1.3 Definitions.
* * * * *
(xx) Foreign Broker. This term means any person located outside the
United States, its territories or possessions who is engaged in
soliciting or in accepting orders only from persons located outside the
United States, its territories or possessions for the purchase or sale
of any commodity interest transaction on or subject to the rules of any
designated contract market or derivatives transaction execution
facility and that, in or in connection with such solicitation or
acceptance of orders, accepts any money, securities or property (or
extends credit in lieu thereof) to margin, guarantee, or secure any
trades or contracts that result or may result therefrom.
(yy) Commodity Interest. This term means: (1) Any contract for the
purchase or sale of a commodity for future delivery; and (2) any
contract, agreement or transaction subject to Commission regulation
under section 4c or 19 of the Act.
Sec. 1.56 [Amended]
Section 1.56 is amended by removing and reserving paragraph (a).
PART 3--REGISTRATION
4. The authority citation for part 3 continues to read as follows:
Authority: 5 U.S.C. 522, 522b; 7 U.S.C. 1a, 2, 4, 6, 6a, 6b, 6c,
6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 8, 9, 9a, 12, 12a, 13b,
13c, 16a, 18, 19, 21, 23, unless otherwise noted.
Sec. 3.1 [Amended]
5. Section 3.1 is amended by removing and reserving paragraph (f).
6. Section 3.10 is amended by revising paragraph (c) to read as
follows:
[[Page 15641]]
Sec. 3.10 Registration of futures commission merchants, introducing
brokers, commodity trading advisors, commodity pool operators and
leverage transaction merchants.
* * * * *
(c) Exemption from registration for certain persons. (1) A person
trading solely for proprietary accounts, as defined in Sec. 1.3(y) of
this chapter, is not required to register as a futures commission
merchant: Provided, that such a person remains subject to all other
provisions of the Act and of the rules, regulations and orders
thereunder.
(2)(i) A foreign broker, as defined in Sec. 1.3(xx) of this
chapter, is not required to register as a futures commission merchant
if it submits any commodity interest transactions executed on or
subject to the rules of designated contract market or derivatives
transaction execution facility for clearing on an omnibus basis through
a futures commission merchant registered in accordance with section 4d
of the Act.
(ii) A foreign broker acting in accordance with paragraph (c)(2)(i)
of this section remains subject to all other provisions of the Act and
of the rules, regulations and orders thereunder.
PART 4--COMMODITY POOL OPERATORS AND COMMODITY TRADING ADVISORS
7. The authority citation for part 4 continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 4, 6(c), 6b, 6c, 6l, 6m, 6n, 6o, 12a
and 23.
Sec. 4.10 [Amended]
8. Section 4.10 is amended by removing and reserving paragraph (a).
PART 15--REPORTS--GENERAL PROVISIONS
9. The authority citation for part 15 continues to read as follows:
Authority: 7 U.S.C. 2, 5, 6(c), 6a, 6c(a)-(d), 6f, 6g, 6i, 6k,
6m, 6n, 7, 9, 12a, 19 and 21, as amended by the Commodity Futures
Modernization Act of 2000, Appendix E of Pub. L. 106-554, 114 Stat.
2763 (2000).
Sec. 15.00 [Amended]
10. Section 15.00 is amended by removing and reserving paragraph
(g).
PART 166--CUSTOMER PROTECTION RULES
11. The authority citation for part 166 continues to read as
follows:
Authority: 7 U.S.C. 1a, 2, 6b, 6c, 6d, 6g, 6h, 6k, 6l, 6o, 7,
12a, 21, and 23, as amended by the Commodity Futures Modernization
Act of 2000, Appendix E of Pub. L. 106-554, 114 Stat. 2763 (2000).
Sec. 166.1 [Amended]
12. Section 166.1 is amended by removing and reserving paragraph
(b).
Dated: March 23, 2007.
By the Commission.
Eileen A. Donovan,
Acting Secretary of the Commission.
[FR Doc. 07-1522 Filed 3-30-07; 8:45 am]
BILLING CODE 6351-01-M
Last Updated: June 27, 2007