[Federal Register: July 1, 2002 (Volume 67, Number 126)]
[Rules and Regulations]
[Page 44036-44037]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01jy02-8]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Part 1
Fees for Reviews of the Rule Enforcement Programs of Contract
Markets and Registered Futures Association
AGENCY: Commodity Futures Trading Commission.
ACTION: Establish a new schedule of fees.
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SUMMARY: The Commission charges fees to designated contract markets and
the National Futures Association (NFA) to recover the costs incurred by
the Commission in the operation of a program which provides a service
to these entities. The fees are charged for the Commission's conduct of
its program of oversight of self-regulatory rule enforcement programs
(17 CFR part 1 Appendix B) (NFA and the contract markets are referred
to as SROs). Newly-designated contract markets are not being assessed
any fees for Fiscal 2001 because to date they have modest, if any,
volume.
The calculation of the fee amounts to be charged for the upcoming
year is based on an average of actual program costs incurred in the
most recent three full fiscal years, as explained below. The new fee
schedule is set forth in the SUPPLEMENTARY INFORMATION and information
is provided on the effective date of the fees and the due date for
payment.
EFFECTIVE DATES: The fees for Commission oversight of each SRO rule
enforcement program must be paid by each of the named SROs in the
amount specified by no later than August 30, 2002.
FOR FURTHER INFORMATION CONTACT: Madge A. Bolinger, Acting Executive
Director, Office of the Executive Director, Commodity Futures Trading
Commission, Three Lafayette Centre, 1155 21st Street, NW., Washington,
DC 20581, (202) 418-5160.
SUPPLEMENTARY INFORMATION:
I. General
This notice relates to fees for the Commission's review of the rule
enforcement programs at the registered futures associations and
contract markets regulated by the Commission.
II. Schedule of Fees
Fees for the Commission's review of the rule enforcement programs
at the registered futures associations and contract markets regulated
by the Commission:
------------------------------------------------------------------------
Entity Fee amount
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Cantor Financial Futures Exchange.......................... $5,606
Chicago Board of Trade..................................... 199,253
Chicago Mercantile Exchange................................ 192,731
Kansas City Board of Trade................................. 9,262
New York Mercantile Exchange/COMEX......................... 158,927
Minneapolis Grain Exchange................................. 6,978
National Futures Association............................... 206,046
New York Board of Trade.................................... 92,612
Philadelphia Board of Trade................................ 0
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Total.................................................. 871,415
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III. Background Information
A. General
The Commission recalculates the fees charged each year with the
intention of recovering the costs of operating this Commission
program.\1\ All costs are accounted for by the Commission's Management
Accounting Structure Codes (MASC) system, which records each employee's
time for each pay period. The fees are set each year based on direct
program costs, plus an overhead factor.
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\1\ See Section 237 of the Futures Trading Act of 1982, 7 USC
16a and 31 USC 9701. For a broader discussion of the history of
Commission fees, see 52 FR 46070 (Dec. 4, 1987).
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B. Overhead Rate
The fees charged by the Commission to the SROs are designed to
recover program costs, including direct labor costs and overhead. The
overhead rate is calculated by dividing total Commission-wide direct
program labor costs into the total amount of the Commission-wide
overhead pool. For this purpose, direct program labor costs are the
salary costs of personnel working in all Commission programs. Overhead
costs consist generally of the following Commission-wide costs:
indirect personnel costs (leave and benefits), rent, communications,
contract services, utilities, equipment, and supplies. This formula has
resulted in the following overhead rates for the most recent three
years (rounded to the nearest whole percent): 105 percent for fiscal
year 1999, and 105 percent for fiscal year 2000, and 117 percent for
fiscal year 2001. These overhead rates are applied to the direct labor
costs to calculate the costs of oversight of SRO rule enforcement
programs.
C. Conduct of SRO Rule Enforcement Reviews
Under the formula adopted in 1993 (58 FR 42643, Aug. 11, 1993)
which appears at 17 CFR part 1 appendix B, the Commission calculates
the fee to recover the costs of its review of rule enforcement
programs, based on a three-year average of the actual cost of
performing reviews at each SRO. The cost of operation of the
Commission's program of SRO oversight varies from SRO to SRO, according
to the size and complexity of each SRO's program. The three-year
averaging is intended to smooth out year-to-year variations in cost.
Timing of reviews may affect costs--a review may span two fiscal years
and reviews are not conducted at each SRO each year. Adjustments to
actual costs may be made to relieve the burden on an SRO with a
disproportionately large share of program costs.
The Commission's formula provides for a reduction in the assessed
fee if an SRO has a smaller percentage of United States industry
contract volume than its percentage of overall Commission oversight
program costs. This adjustment reduces the costs so that as a
percentage of total Commission SRO oversight program costs, they are in
line with the pro rata percentage for that SRO of United States
industry-wide contract volume.
The calculation made is as follows: The fee required to be paid to
the Commission by each contract market is equal to the lesser of actual
costs based on the three-year historical average of costs for that
contract market or one-half of average costs incurred by the Commission
for each contract market for the most recent three years, plus a pro
rata share (based on average trading volume for the most recent three
years) of the aggregate of average annual costs of all contract markets
for the most recent three years. The formula for calculating the second
factor is: 0.5a + 0.5 vt = current fee. In this formula, ``a'' equals
the average annual costs, ``v'' equals the percentage of total volume
across exchanges over the last three years, and ``t'' equals the
average annual cost for all exchanges. NFA, the only registered futures
association regulated by the Commission, has no contracts traded; hence
its fee is based simply on costs for the most recent three fiscal
years.
This table summarizes the data used in the calculations and the
resulting fee for each entity:
[[Page 44037]]
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Three-year
average Three-year Average
actual percentage year 2002
costs of volume fee
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Cantor Financial Futures Exchange $10,990 0.0286 $5,606
Chicago Board of Trade........... 199,253 39.0619 199.253
Chicago Mercantile Exchange...... 192,731 40.8601 192,731
NYMEX/COMEX...................... 191,576 16.3441 158,927
New York Board of Trade.......... 161,025 3.1319 92,612
Kansas City Board of Trade....... 15,396 .4047 9,262
Minneapolis Grain Exchange....... 12,645 .1696 6,978
Philadelphia Board of Trade...... 0 .0000 0
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Subtotal................... 772,627 100.0000 665,369
National Futures Association..... 206,046 N/A 206,046
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Total...................... 978,673 100.0000 871,415
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An example of how the fee is calculated for one exchange, the
Minneapolis Grain Exchange, is set forth here:
a. Actual three-year average costs equal $12,645.
b. The alternative computation is:
(.5)($12,645) + (.5)(.001696)($772,627) = $6,978.
c. The fee is the lesser of a or b; in this case $6,978.
As noted above, the alternative calculation based on contracts
traded, is not applicable to the NFA because it is not a contract
market and has no contracts traded. The Commission's average annual
cost for conducting oversight review of the NFA rule enforcement
program during fiscal years 1999 through 2001 was $206,046 (one-third
of $618,139). The fee to be paid by the NFA for the current fiscal year
is $206,046.
Regulatory Flexibility Act
The Regulatory Flexibility Act, 5 USC 601, et seq., requires
agencies to consider the impact of rules on small business. The fees
implemented in this release affect contract markets (also referred to
as exchanges) and registered futures associations. The Commission has
previously determined that contract markets and registered futures
associations are not ``small entities'' for purposes of the Regulatory
Flexibility Act. Accordingly, the Chairman on behalf of the Commission,
certifies pursuant to 5 USC 605(b), that the fees implemented here will
not have a significant economic impact on a substantial number of small
entities.
Issued in Washington, DC, on June 21, 2002, by the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 02-16201 Filed 6-28-02; 8:45 am]
BILLING CODE 6351-01-M