Commission Rulemaking Explained

The CFTC’s mission is to promote the integrity, resilience, and vibrancy of the U.S. derivatives markets through sound regulation.  The Commission pursues that mission through rulemaking.  The Commission may promulgate, amend, or repeal rules based on statutory directives, discretionary objectives, or petitions for rulemaking submitted by the public.[1]   The Commission’s authority to issue rules derives part from the Commodity Exchange Act and the Dodd-Frank Act. 

The Administrative Procedure Act (APA) sets forth the process for an agency to promulgate, amend, or repeal a rule.  The Commission follows the APA rulemaking process, which generally requires the Commission to provide notice to the public and seek comment before promulgating, amending, or repealing a rule.  As a result, in the normal course, the Commission proposes a rule in the form of a Notice of Proposed Rulemaking (NPRM), publishes it in the Federal Register for notice and comment, and then, as appropriate, issues a final rule that takes into account comments received.  In certain limited instances, the Commission may promulgate, amend, or repeal a rule without advance notice and request for comment, such as where an emergency exists or if the rule pertains to internal agency operations.  It is the Commission’s policy to make public on the Commission’s website substantive ex parte communications, both written and oral, that provide significant, material information addressed to the merits of a proposed rule.  It is also the Commission’s practice to make public on its website all ex parte meetings held on proposed rules, including the names and affiliations of attendees.  Details on how rulemakings may proceed are as follows:

Advance Notice of Proposed Rulemaking (ANPRM); Request for Comment; Concept Release.  Before issuing an NPRM, the Commission sometimes conducts informational meetings and/or votes to publish an Advance Notice of Proposed Rulemaking (ANPRM), Request for Comment, or Concept Release in the Federal Register to obtain preliminary information and views about an issue.  These documents typically outline the issues of concern, potential approaches to addressing these issues, and ask a series of questions related to these issues for the public to comment on.  The Commission would take the public’s comments on an ANPRM, Request for Comment, or Concept Release into consideration to determine whether and how to proceed with an NPRM. 

NPRM.  An NPRM sets forth the text of the proposed new or amended rules, along with an explanation of the issues or problems the NPRM is trying to address.  Once approved by the Commission, the Commission publishes the NPRM in the Federal Register with a request for comments on the issues addressed in the NPRM.  This gives members of the public an opportunity to provide views, data, or arguments regarding an agency’s proposed rule or rule amendments.  The comment period generally lasts between 30 and 60 days.  The public input on the NPRM is considered in determining whether and how to formulate a Final Rule. 

Final Rule.  After the comment period for the NPRM ends, the Commission may issue a Final Rule that reflects the Commission’s consideration of the public comments.  The Final Rule may make changes to the NPRM based on commenters’ feedback.  Once approved by the Commission, the Commission publishes the Final Rule in the Federal Register with a date that the Final Rule becomes effective.  The effective date is the date when the public must comply with the new or amended rule; it is generally between 30 and 60 days from the date of publication in the Federal Register.  A Final Rule may also provide for delayed or phased-in compliance dates, to allow for a smooth transition to the new or amended rule.