Performance of Certain Functions by National Futures Association With Respect to Those Foreign Firms Acting in the Capacity of a Futures Commission Merchant, 2621-2624 [05-814]

Agencies

• Commodity Futures Trading Commission

[Federal Register Volume 70, Number 10 (Friday, January 14, 2005)]
[Notices]
[Pages 2621-2624]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-814]



[[Page 2621]]

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COMMODITY FUTURES TRADING COMMISSION


Performance of Certain Functions by National Futures Association 
With Respect to Those Foreign Firms Acting in the Capacity of a Futures 
Commission Merchant

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice and Order.

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SUMMARY: The Commodity Futures Trading Commission (``Commission'') is 
authorizing the National Futures Association (``NFA'') to confirm 
exemptive relief to certain firms acting in the capacity of a futures 
commission merchant (``FCM'') that are subject to regulation by a 
foreign futures authority or that are members of a foreign self-
regulatory organization (``SRO'') in a particular jurisdiction to which 
an order under Commission Rule 30.10 has been issued, notwithstanding 
that such firms may be subject, in part, to joint regulation by a 
second regulator or SRO in another jurisdiction. The Commission 
previously authorized NFA to confirm exemptive relief solely to firms 
subject to regulation by a single foreign futures authority or that are 
members of a foreign SRO. This Order extends the scope of that 
authority. The Commission also is authorizing NFA to maintain records 
pertaining to the functions described in this Order and to serve as the 
official custodian of those Commission records.

EFFECTIVE DATES: February 14, 2005.

FOR FURTHER INFORMATION CONTACT: Lawrence B. Patent, Deputy Director, 
or Andrew V. Chapin, Special Counsel, Division of Clearing and 
Intermediary Oversight, Commodity Futures Trading Commission, 1155 21st 
Street, NW., Washington, DC 20581. Telephone: (202) 418-5430. E-mail: 
lpatent@cftc.gov or achapin@cftc.gov.

    United States of America, Before the Commodity Futures Trading 
Commission, Order Authorizing the Performance of Certain Functions 
by National Futures Association With Respect to Firms Seeking 
Confirmation of Rule 30.10 Relief.

I. Authority

    Section 8a(10) of the Commodity Exchange Act \1\ (``Act'') provides 
that the Commission may authorize any person to perform any portion of 
the registration functions under the Act, notwithstanding any other 
provision of law, in accordance with rules adopted by such person and 
submitted to the Commission for approval or, if applicable, for review 
pursuant to section 17(j) of the Act \2\ and subject to the provisions 
of the Act applicable to registrations granted by the Commission. NFA 
has confirmed its willingness to perform certain functions now 
performed by the Commission.\3\
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    \1\ 7 U.S.C. 12a(10) (2004).
    \2\ 7 U.S.C. 21(j) (2004).
    \3\ Letter from Robert K. Wilmouth, President, NFA, to Brooksley 
Born, Chairperson, dated August 27, 1997; Letter from Daniel J. 
Roth, President, NFA, to Sharon Brown-Hruska, Acting Chairperson, 
dated December 22, 2004.
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    On September 11, 1997, the Commission authorized NFA to receive 
requests for confirmation of Rule 30.10 relief (described in greater 
detail in Part II below) on behalf of particular firms, to verify such 
firms' fitness and compliance with the conditions of the appropriate 
Rule 30.10 Order, and to grant exemptive relief from registration to 
qualifying firms pursuant to Rule 30.10.\4\ The Commission stated that, 
after it had examined the foreign jurisdiction's regulatory structure 
and issued an Order under Rule 30.10, granting general relief based 
upon the comparability of that structure to the regulatory framework 
under the Act, the steps needed to determine if relief is appropriate 
for particular firms are similar to those undertaken in the course of 
fitness checks performed by NFA with respect to applicants under the 
Act.\5\ The Commission subsequently authorized NFA to revoke the 
confirmation of Rule 30.10 relief for any firm that fails to comply 
with the terms and conditions on which relief was confirmed, and to 
withdraw the confirmation of Rule 30.10 relief from any firm that 
notifies NFA of its decision to forfeit such relief.\6\
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    \4\ 62 FR 47792-47793 (September 11, 1997). The Commission also 
authorized NFA to serve as the official custodian for records 
produced pursuant to this undertaking. Id.
    \5\ Id. at 47793.
    \6\ 64 FR 30489 (June 8, 1999).
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    Upon consideration, the Commission has determined to authorize NFA 
to confirm exemptive relief from FCM registration to certain firms 
organized in one foreign jurisdiction and engaging in cross-border 
activities from a branch location in another jurisdiction, and that, as 
a consequence, may be subject, in part, to regulation by a foreign 
regulator or SRO that has not been issued an order under Rule 30.10. As 
discussed below, this function involves the registration or exemption 
from registration of non-U.S. persons and is related to trading by 
persons located in the U.S. on non-U.S. markets.

II. Background

    In 1987, the Commission adopted a new Part 30 to its regulations to 
govern the offer and sale to U.S. persons of futures and option 
contracts entered into on or subject to the rules of a foreign board of 
trade.\7\ These rules were promulgated pursuant to sections 2(a)(1)(A), 
4(b) and 4c of the Act, which vest the Commission with exclusive 
jurisdiction over the offer and sale, in the U.S., of futures and 
options contracts traded on or subject to the rules of a board of 
trade, exchange or market located outside of the U.S.\8\ Part 30 of the 
Commission's rules sets forth regulations governing foreign futures \9\ 
and foreign option \10\ transactions executed on behalf of foreign 
futures or foreign options customers.\11\ Specifically, Part 30 imposes 
requirements in the following areas: registration, disclosure, 
protection of customer funds, recordkeeping, reporting, sales practices 
and compliance procedures.\12\
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    \7\ 52 FR 28980 (August 5, 1987).
    \8\ Commission rules referred to herein can be found at 17 CFR 
Ch. I (2004).
    \9\ ``Foreign futures'' as defined in Part 30 means ``any 
contract for the purchase or sale of any commodity for future 
delivery made, or to be made, on or subject to the rules of any 
foreign board of trade.'' Commission Rule 30.1(a).
    \10\ ``Foreign option'' as defined in Part 30 means ``any 
transaction or agreement which is or is held out to be of the 
character of, or is commonly known to the trade as, an `option', 
`privilege', `indemnity', `bid', `offer', `put', `call', `advance 
guaranty', or `decline guaranty', made or to be made on or subject 
to the rules of any foreign board of trade.'' Commission Rule 
30.1(b).
    \11\ Pursuant to Rule 30.1(c), ``Foreign futures or foreign 
options customer'' means ``any person located in the U.S., its 
territories or possessions who trades in foreign futures or foreign 
options: Provided, That an owner or holder of a proprietary account 
as defined in paragraph (y) of Sec.  1.3 of [the Commission's rules] 
shall not be deemed to be a foreign futures or foreign options 
customer within the meaning of Sec. Sec.  30.6 and 30.7 of this 
part.''
    \12\ See generally Commission Rules 30.1 through 30.9.
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    Rule 30.10 allows the Commission, among other things, to exempt a 
foreign firm acting in the capacity of an FCM from compliance with 
certain rules based upon the firm's compliance with comparable 
regulatory requirements imposed by the firm's home-country regulator. 
The Commission has established a process whereby a foreign regulator or 
SRO can petition on behalf of its regulatees or members, respectively, 
for such an exemption based upon the comparability of the regulatory 
structure in the foreign jurisdiction to that under the Act. The 
specific elements examined in evaluating whether the particular foreign 
regulatory program provides a basis for permitting substituted 
compliance for purposes of exemptive relief pursuant to Rule 30.10 are 
set forth in Appendix A to Part 30

[[Page 2622]]

(``Appendix A'').\13\ If the Commission determines that the foreign 
jurisdiction's regulatory structure offers comparable regulatory 
oversight, it may issue an order, referred to as a ``Rule 30.10 
Order,'' granting general relief subject to certain conditions.\14\ 
Firms seeking confirmation of relief must make certain representations 
set forth in the Rule 30.10 Order issued to the regulator or SRO from 
the firm's home country.\15\ A foreign firm that has obtained 
confirmation of relief pursuant to a Rule 30.10 Order generally is 
exempt from compliance with the Act and Commission rules regarding 
registration (including the registration of its representatives), 
minimum capital, recordkeeping, and, in some circumstances, the 
treatment of customer funds and disclosure, based upon the substituted 
compliance with the applicable local statutes and regulations. The 
Commission issued its first Rule 30.10 Order in 1988 and has issued a 
total of eighteen Orders to foreign regulators and SROs in ten 
countries.\16\
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    \13\ See 52 28990, 29001 (August 5, 1987).
    \14\ These conditions require the regulator or SRO responsible 
for monitoring the compliance of its regulatees or member firms with 
the regulatory requirements described in the Rule 30.10 petition to 
make certain representations regarding the fitness of each firm 
seeking to receive confirmation of Rule 30.10 relief, the 
protections to be afforded to U.S. customers, and the exchange of 
information with the Commission. See 62 FR 47792, 47793, n.7 
(September 11, 1997).
    \15\ A firm seeking confirmation of Rule 30.10 relief is 
generally required to:
    (1) Consent to jurisdiction in the U.S. and designate an agent 
for service of process in the U.S. in accordance with the 
requirements set forth in Rule 30.5;
    (2) Agree to make its books and records available upon the 
request of any representative of the Commission or the U.S. 
Department of Justice;
    (3) Agree that all futures or regulated option transactions with 
respect to U.S. customers will be made on or subject to the rules of 
the applicable exchanges and will be undertaken consistent with rule 
and codes under which such firm operates;
    (4) Represent that no principal of the firm would be 
disqualified under Section 8a(2) of the Act from registering to do 
business in the U.S. and notify the Commission promptly of any 
change in that representation;
    (5) Disclose the identity of each U.S. affiliate or subsidiary;
    (6) Agree to be subject to NFA arbitration;
    (7) Consent to the release of certain financial information;
    (8) Segregate customer funds from the firm's proprietary funds, 
even if the ability to opt out is generally available under local 
law; and
    (9) Undertake to comply with the provisions of law and rules 
which form the basis for granting the exemption.
    62 FR 47792, 47793, n.8. The terms and conditions vary from 
order to order depending upon the regulatory structure of the firm's 
home country. See e.g., 68 FR 58583, 58587 (October 10, 
2003)(permitting eligible contract participants, as defined in 
section 1a(12) of the Act, to opt out of the segregation provisions 
set forth under the U.K. Financial Services Act, as implemented by 
the Financial Services Authority (``FSA'')).
    \16\ The first Rule 30.10 Order was issued to the Sydney Futures 
Exchange in Australia. 53 FR 44856 (November 7, 1988). The most 
recent Rule 30.10 Order was issued to ASX Futures Proprietary 
Limited, also located in Australia. 68 FR 39006 (July 1, 2003). For 
a list of all Rule 30.10 Orders issued by the Commission, please 
refer to the Commission's Web site: https://www.cftc.gov.
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    At the time the Commission adopted Appendix A, firms conducting 
business in a particular jurisdiction were fully supervised by the 
regulatory authority in that jurisdiction. Accordingly, the Commission 
contemplated that, when it issued a Rule 30.10 Order, firms applying 
for confirmation of relief would substitute compliance with the 
applicable statutes and regulations in effect in the recipient's 
jurisdiction in lieu of compliance with the applicable Commission 
rules. Further, each Rule 30.10 Order provided that the eligibility of 
any firm applying for confirmation of the relief provided by the order 
would be subject to, among other things, the condition that the 
recipient regulator or SRO represent in writing to the Commission that 
it will monitor such substituted compliance by the firm.
    As a result of general trends towards increased global trading, the 
business model for brokerage firms has progressed from the operation of 
a firm within the borders of a single country to having a firm 
organized in one country, but operating one or more other countries 
through a branch or branches. The firms are referred to herein as 
cross-border futures brokers (``CBFBs''). CBFBs, by their nature, are 
subject to regulation in multiple jurisdictions. The multi-
jurisdictional regulation of such activity is facilitated my memoranda 
of understanding entered into by governing regulatory authorities, and 
changes to the law promoting cross-border activities. In particular, 
the European Union (``E.U.'') \17\ has created a unitary market whereby 
a firm organized and recognized in one country need not obtain separate 
recognition before conducting brokerage activities in another country. 
This arrangement, commonly referred to as the ``European Passport,'' is 
the product of various Directives issued by the Council for the 
European Union.\18\ The primary Directive underlying the European 
Passport is the Investment Services Directive (``IDS''). The ISD 
creates an authorization within the European Economic Area (``EEA''), 
i.e., the European Passport, which enables firms to engage in 
investment services anywhere in the EEA without separate authorization 
by the host country. Under the ISD, the home country regulator (the 
regulator or SRO in the country in which the firm maintains its head 
office) supervises the CBFB with regard to the prudential aspects of 
the broker's business, such as minimum capital requirements and the 
segregation of customer funds, while the host country regulator (the 
regulator or SRO in the country where the branch is located) is 
responsible for the remaining aspects of the broker's business, 
including fitness, sales practices and recordkeeping.\19\ Relief 
pursuant to the European Passport is only available to branches, and 
not subsidiaries, of E.U. firms. Minimum capital requirements for firms 
covered by the ISD are set by the Capital Adequacy Directive and are 
consistent with the Basel Capital Accord.
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    \17\ The E.U. is composed of 25 member states that have agreed 
to delegate some sovereignty on specific matters of joint interest 
to European regulatory bodies. For example, the Council for the 
European Union represents the governments for each member state and 
enacts legislation in the form of Directives. Each member is 
obligated to enact local legislation consistent with these 
Directives.
    \18\ The Commission relied on the operation of the European 
Passport when it issued a Rule 30.10 Order to Eurex Deutschland. 67 
FR 30785 (May 8, 2002).
    \19\ On April 21, 2004, the Council for the European Union 
adopted the Directive on Markets in Financial Instruments 
(``MIFID'') as part of its Financial Services Action Plan. The MIFID 
will amend the Capital Adequacy Directive and completely replace the 
ISD, and must be implemented by E.U. member states no later than 
April 30, 2006. The purpose of the MIFID is to extend the scope of 
the ISD (and thus the European Passport) in terms of both financial 
services and instruments covered. The MIFID does not alter the 
premise underlying the existing ISD that the home country regulator 
shall be responsible for supervising the prudential aspects of a 
firm's business, while the host country regulator shall be 
responsible for ensuring that the services provided by the branch 
comply with E.U.-wide standards for conduct of business.
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    With respect to Rule 30.10 relief, the Commission may have issued a 
Rule 30.10 Order to both the host and home country regulator. However, 
the original Orders and representations made by the CBFB and each 
regulator did not contemplate a firm receiving confirmation of Rule 
30.10 relief under either Order when it was not fully regulated by a 
single regulator.
    In recent years, Commission policy has evolved toward acceptance of 
Rule 30.10 entities subject to multi-jurisdictional regulation. For 
example, the Commission has confirmed Rule 30.10 relief to non-U.K. 
entities operating a branch in the U.K. pursuant to the Rule 30.10 
Order issued to FSA. Where each of the two regulators were recipients 
of Rule 30.10 Orders, the Commission confirmed relief to the firm in 
question based upon additional representations from the home country

[[Page 2623]]

(i.e., non-U.K.) regulator and the FSA that the branch's activities 
would be regulated, in the aggregate, consistent with the terms of the 
Rule 30.10 Order issued to each regulator, including a representation 
from each regulator that it would provide the Commission with the 
information regarding the branch's activities. In the circumstances 
where the home country regulator was not the recipient of a Rule 30.10 
Order, the Commission confirmed relief after undertaking a review of 
the prudential requirements implemented by the home country regulator 
and upon receipt of the additional representations regarding the 
division of responsibilities for the supervision of the firm and 
information sharing.

III. Procedural Requirements

    The Commission believes that the Act's customer protection mandate 
can be effectively maintained by authorizing NFA to confirm Rule 30.10 
relief to an CBFB subject to combined regulation by authorities located 
in two different jurisdictions under certain, pre-defined 
circumstances. Specifically, the two regulators or SROs, in the 
aggregate, must regulate the CBFB consistent with the provisions of 
Appendix A as outlined in the Rule 30.10 Order issued to each regulator 
or SRO. Moreover, each regulator or SRO must be willing and able to 
share relevant information with each other and with the Commission. 
Accordingly, the Commission is authorizing NFA to confirm Rule 30.10 
relief to any CBFB that solicits or accepts orders (and accepts money, 
securities or property to margin the trades that result or may result 
therefrom) from U.S foreign futures and options customers and that is 
fully regulated, in the aggregate, by a host and home country 
regulator, each of which has received a Rule 30.10 Order from the 
Commission (hereafter, ``modified relief''). For a CBFB to receive 
confirmation of modified relief, the CBFB: (1) Must apply for 
confirmation of relief in accordance with the provisions set forth in 
the host country regulator's or SRO's Rule 30.10 Order; (2) represent 
that it will comply with the relevant provisions of each Rule 30.10 
Order; (3) and agree to provide to each regulator or SRO any 
information regarding transactions arising from such relief. In 
addition, each regulator or SRO must confirm that it will monitor the 
CBFB for compliance with the local laws, rules and regulations 
governing those aspects of the broker's business subject to regulation 
in its respective jurisdiction, and state that it will share 
information with the Commission in accordance with the terms and 
conditions of the applicable Rule 30.10 Order.
    The Commission also is authorizing NFA to confirm modified Rule 
30.10 relief to a CBFB that is organized and operating pursuant to the 
European Passport (as described herein) from a branch location in a 
jurisdiction whose regulator or SRO has received Rule 30.10 relief, 
notwithstanding that the Commission has not issued a Rule 30.10 Order 
issued to the home country regulator. As set forth above, the 
Commission has determined that, in the aggregate, the regulatory 
program governing the cross-border activity of any firm operating 
pursuant to the European Passport from a branch located within a 
jurisdiction whose regulator or SRO has received Rule 30.10 relief 
provides a basis for permitting substituted compliance for purposes of 
exemptive relief pursuant to Rule 30.10. Therefore, the Commission 
believes that it is appropriate to no longer require a CBFB operating 
pursuant to the European Passport to petition the Commission for 
confirmation of relief when NFA already has been authorized to confirm 
other standardized requests for relief.
    The CBFB seeking the alternative modified Rule 30.10 relief under 
this scenario must: (1) Apply for confirmation of relief in accordance 
with the provisions set forth in the host country regulator's or SRO's 
Rule 30.10 Order; (2) represent that it will be operating from a branch 
located in the host country pursuant to the European Passport, and will 
comply with the applicable provisions of the host country's Rule 30.10 
Order and the applicable laws and regulations of its country of origin, 
as well as all current and future Directives and other legislation 
underlying the European Passport; and (3) agree to provide to the host 
and home country regulator or SRO any information regarding 
transactions made in accordance with such relief. In addition, both the 
host and home country regulator, respectively, must confirm that they 
will monitor the CBFB for compliance with the local laws, rules and 
regulations governing those aspects of the broker's business subject to 
regulation in its respective jurisdiction, and state that they will 
share information with the Commission, either in accordance with the 
terms and conditions of the applicable Rule 30.10 Order (host country 
regulator) or pursuant to a separate written undertaking (home country 
regulator). Prior to confirming modified Rule 30.10 relief under this 
alternative method, NFA shall consult with Commission staff to ensure 
that the information-sharing arrangement between the Commission and the 
home country regulator is sufficient.
    The Commission has determined, for the time being, to retain the 
authority to determine whether Rule 30.10 relief is appropriate in 
other circumstances, including those where a firm is organized in a 
country whose home country regulator is the recipient of a Rule 30.10 
order and seeks to conduct brokerage activities pursuant to the 
European Passport through a branch from a location where the host 
country regulator is not the recipient of a Rule 30.10 order. NFA shall 
continue to forward to the appropriate Commission staff in accordance 
with existing procedures those applications not addressed in this or 
prior Orders granting NFA the authority to act on the Commission's 
behalf with respect to the confirmation of relief under Rule 30.10.
    By prior orders, the Commission, in accordance with section 8a(10) 
of the Act, has authorized NFA to maintain various other Commission 
registration records and certified NFA as the official custodian of 
such records for this agency.\20\ Consistent with those orders, the 
Commission has determined to authorize NFA to maintain and to serve as 
the official custodian of records for filings made pursuant to the 
relief set forth herein. This determination is based upon NFA's 
continued representations regarding the implementation of rules and 
procedures for maintaining and safeguarding all such records. In 
maintaining the Commission's records pursuant to this Order, NFA shall 
be subject to all other requirements and obligations imposed upon it by 
the Commission in existing and future orders or regulations. In this 
regard, NFA shall also implement such additional procedures (or modify 
existing procedures) as are necessary to ensure the security and 
integrity of the records in NFA's custody and acceptable to the 
Commission; to facilitate prompt access to those records by Commission 
and its staff, particularly as described in other Commission orders or 
rules; to facilitate disclosure of public or nonpublic information in 
those records when permitted by Commission orders or rules and to keep 
logs as required by the Commission concerning disclosure of nonpublic 
information; and otherwise to safeguard the confidentiality of the 
records.
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    \20\ 49 FR 39593 (October 9, 1984); 50 FR 34885 (August 28, 
1995); 51 FR 25929 (July 17, 1986); 54 FR 19594 (May 8, 1989); 54 
41133 (October 5, 1989); 58 FR 19657 (April 15, 1993); 62 FR 47792 
(September 11, 1997).

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[[Page 2624]]

IV. Conclusion

    The Commission has determined, in accordance with section 8a(10) of 
the Act, to authorize NFA to grant exemptive relief to any CBFB that 
solicits or accepts orders (and accepts money, securities or property 
to margin the trades that result or may result therefrom) from U.S. 
foreign futures and options customers and that: (1) Is fully regulated, 
in the aggregate, by a host and home country regulator, each of which 
has received a Rule 30.10 Order from the Commission; or (2) is 
organized in a home country and operating pursuant to the European 
Passport (as described herein) from a branch located in a host country 
where the regulator or SRO has received a Rule 30.10 Order, 
notwithstanding that the Commission has not issued a Rule 30.10 Order 
to the home country regulator. The Commission has determined further to 
authorize NFA to maintain records pertaining to the functions described 
in this Order and to serve as the official custodian of those 
Commission records. The Commission's authorization concerning records 
is subject to the terms and conditions set forth above.
    The Commission notes that confirmation of rule 30.10 relief 
pursuant to this Order extends solely to conduct by the firm's branch 
in its capacity as a member or regulatee of the host country regulator 
from a location in the host country, subject to the Commission's 
Limited Marketing Orders.\21\ As such, the Rule 30.10 relief would not 
extend to conduct undertaken from any other office or affiliate of the 
firm involving U.S. customers under the Act, including any office or 
branch located within the home country.
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    \21\ In 1992, the Commission issued an order commonly referred 
to as the Limited Marketing Order. 57 FR 49644 (November 3, 1992). 
The Limited Marketing Order permits firms that have received 
confirmation of Rule 30.10 relief, without prior notice to the 
Commission, to engage in limited marketing conduct with respect to 
foreign futures or option contracts within the U.S. through their 
employees or other representatives, subject to the terms and 
conditions set forth therein. In 1994, the Commission expanded the 
category of persons to whom qualified firms may direct limited 
marketing conduct. 59 FR 42156 (August 17, 1994).
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    NFA shall perform this function in accordance with the standards 
established by the Act and the regulations and Commission orders, 
including the procedural requirements set forth in Part III of this 
Order, issued thereunder and shall provide the Commission with such 
summaries and periodic reports as the Commission may determine are 
necessary for the effective oversight of this program.
    This determined is based upon the Congressional intent expressed in 
Section 8a(10) of the Act that the Commission have the authority to 
authorize NFA to perform any portion of the Commission's registration 
responsibilities under the Act for purposes of carrying out these 
responsibilities in the most efficient and cost-effective manner and 
upon NFA's representations concerning the standards and procedures to 
be followed and the reports to be generated in administering these 
functions. This Order does not, however, authorize NFA to render ``no-
action'' positions, exemptions or interpretations with respect to 
applicable disclosure, reporting, recordkeeping and registration 
requirements. In addition, nothing in this Order shall affect the 
Commission's authority to review NFA's performance of the Commission 
functions listed above.
    NFA is authorized to perform the functions specified herein until 
such time as the Commission orders otherwise. Nothing in this Order 
shall prevent the Commission from exercising the authority described 
herein. NFA may submit to the Commission for decision any specific 
matters that NFA has been authorized to perform, and Commission staff 
will be available to discuss with NFA staff issues relating to the 
implementation of this Order. Nothing in this Order affects the 
applicability of previous orders issued by the Commission under Part 
30.

V. Cost-Benefit Analysis

    Section 15(a) of the Act requires the Commission to consider the 
costs and benefits of its action before issuing a new regulation under 
the Act. By its terms, Section 15(a) does not require the Commission to 
quantify the costs and benefits of a new regulation or to determine 
whether the benefits of the regulation outweigh the costs. Rather, 
Section 15(a) simply requires the Commission to ``consider the costs 
benefits'' of its action.
    Section 15(a) further specifies that costs and benefits shall be 
evaluated in light of five broad areas of market and public concern: 
Protection of market participants and the public; efficiency, 
competitiveness, an financial integrity of futures markets; price 
discovery; sound risk management practices; and other public interest 
considerations. Accordingly, the Commission could in its discretion 
give greater weight to any one of the five enumerated areas and could 
in its discretion determine that, notwithstanding its costs, a 
particular rule was 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. This Order is intended to create an expedited 
process to confirm exemptive relief to a class of qualified foreign 
brokers that would otherwise be required to seek relief through a more 
time-consuming procedure.
    1. Protection of market participants and the public. The Order does 
not change the requirements to qualify for relief under Rule 30.10. 
Accordingly, the Order has not effect on the Commission's ability to 
protect market participants and the public.
    2. Efficiency and competition. The Order should permit a firm 
engaged in cross-border activities to more quickly secure exemptive 
relief under Rule 30.10, and thus provides a benefit of greater 
efficiency.
    3. Financial integrity of futures markets and price discovery. The 
Order does not have any effect, from the standpoint of imposing costs 
or creating benefits, on the financial integrity of futures markets and 
price discovery.
    4. Sound risk management practices. The Order does not impact the 
risk management practices of the futures and options industry.
    5. Other public interest considerations. The performance of the 
functions described herein by NFA will significantly reduce the amount 
of Commission and staff resources dedicated to the Part 30 program.
    Upon consideration of these factors, the Commission has determined 
to issue this Order.

    Issued in Washington, DC, on January 11, 2005, by the 
Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 05-814 Filed 1-13-05; 8:45 am]
BILLING CODE 8351-01-M