Distribution of “Risk Disclosure Statement” by Futures Commission Merchants and Introducing Brokers, 5923-5925 [05-1906]
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Federal Register / Vol. 70, No. 23 / Friday, February 4, 2005 / Rules and Regulations
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[FR Doc. 05–1931 Filed 2–3–05; 8:45 am]
BILLING CODE 4910–13–P
COMMODITY FUTURES TRADING
COMMISSION
17 CFR Parts 1 and 155
RIN 3038–AC16
Distribution of ‘‘Risk Disclosure
Statement’’ by Futures Commission
Merchants and Introducing Brokers
Commodity Futures Trading
Commission.
ACTION: Final rule.
AGENCY:
SUMMARY: The Commodity Futures
Trading Commission (‘‘Commission’’ or
‘‘CFTC’’) is amending Rule 1.55 to
provide that non-institutional customers
may indicate with a single signature, in
addition to the acknowledgment of
receipt of various disclosures and the
making of certain elections, the consent
referenced in Rules 155.3(b)(2) and
155.4(b)(2) and 155.4(b)(2) concerning
customer permission for futures
commission merchants (‘‘FCMs’’) and
introducing brokers (‘‘IBs’’) to take the
opposite side of an order. The
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Commission is also amending Rule
1.55(f) to specify that the
acknowledgments required by Rules
155.3(b)(2) and 155.4(b)(2) are not
required of institutional customers
when they open an account.
DATES: Effective March 7, 2005.
FOR FURTHER INFORMATION CONTACT:
Lawrence B. Patent, Deputy Director, or
Susan A. Elliott, Special Counsel,
Compliance and Registration Section,
Division of Clearing and Intermediary
Oversight, Commodity Futures Trading
Commission. Three Lafayette Centre,
1155 21st Street, NW., Washington, DC
20581. Telephone: (202) 418–5439 or
(202) 418–5464, or electronic mail:
lpatent@cftc.gov or selliott@cftc.gov.
SUPPLEMENTARY INFORMATION:
I. Background
On November 9, 2004 (69 FR 64873),
the commission published a proposed
amendment to Rule 1.55 to provide that
the single signature by which noninstitutional customers acknowledge
receipt of basic risk disclosures of
futures and option trading, and elect
how hedging positions shall be handled
in the event of a commodity broker
bankruptcy, may also reflect the consent
referenced in Rules 155.3(b)(2) and
155.4(b)(2) concerning customer
permission for FCMs and IBs to take the
opposite side of an order. The
Commission adopted a similar rule
amendment in November 2000,1 but
withdrew it the following month upon
passage of the Commodity Futures
Modernization Act of 2000.2 Most of the
rules adopted and withdrawn in 2000
were reproposed and re-adopted in
2001,3 but this one was not. Because
Commission staff received an inquiry
about this issue, the Commission
reproposed the rule amendment and
sought comments.
II. Rule Amendments
Three comments were received, from
the National Futures Association
(‘‘NFA’’), the Futures Industry
Association (‘‘FIA’’) and an FCM,
Goldman Sachs & Co. All comments
supported adoption of the proposed
amendment to Rule 1.55(d)(1). In
addition, the three commenters were
unanimous in their recommendation
that the Commission adopt another rule
amendment that clarifies, in Rule
1.55(f), that acknowledgment to consent
for an FCM or IB to take the opposite
side of an order is not required of
FR 77993 at 78013 (December 13, 2000).
FR 82272 (December 28, 2000).
3 66 FR 45221 at 45226 (August 28, 2001)
(proposed rules) and 66 FR 53510 at 53513 (October
23, 2001) (final rules).
PO 00000
1 65
2 65
Frm 00009
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5923
institutional customers when they open
an account.
The commenters requested that Rule
1.55(f) also be amended to add the
consent required under Commission
Rules 115.3(b)(2) and 155.4(b)(2) to the
prescribed disclosures, consents and
elections that institutional customers
are not required to acknowledge in
opening an account with an FCM. The
Commission believes that such a further
amendment is consistent with the
proposal and with the general structure
of Rule 1.55 and that it is appropriate to
clarify Rule 1.55(f) as the commenters
suggest. The Commission emphasizes
the point by cross-referencing Rule 1.55
in Rules 1.55.3 and 155.4.4
As the Commission emphasized in its
proposal, the single signature
acknowledgment format was first
adopted in 1993 based on a rationale of
customer sophistication. If, with the
Commission’s proposed rule
amendment, non-institutional
customers are now deemed sufficiently
sophisticated to have their consents
acknowledged with a single signature, it
is certainly appropriate to assume that
more sophisticated institutional
customers understand that they are
consenting to the trade practices
described in Rule 155.3(b)(2) and
155.4(b)(2) without a separate
acknowledgment when an account is
opened.
Section 4b of the Act 5 nonetheless
requires intermediaries to have the prior
consent of the customer before
knowingly taking, directly or indirectly,
the opposite side of a customer’s order.
Thus, as one of the commenters pointed
out, it is still the responsibility of the
entity opening the account to ensure
that prospective customers give ‘‘the
consent required under this rule,’’ even
when the customer is an institutional
customer.6 The amendment of Rule
1.55(f) permits an entity to choose the
most appropriate means to accomplish
that objective. Finally, Rules 155.3(b)(2)
and 155.4(b)(2) are amended to crossreference Rule 1.55(d)(1).
4 The Commission took a similar approach when
it amended Rule 1.55 as well as Rule 1.33
concerning electronic transmission of customer
account statements. See 66 FR 53517 (Oct. 23,
2001).
5 Commodity Exchange Act § 4b(a)(2)(iv)
(‘‘unlawful * * * to fill such order by offset against
the order or orders of any other person, or willfully
and knowingly and without the prior consent of
such person to become the buyer in respect to any
selling order of such person, or become the seller
in respect to any buying order of such person’’), 7
U.S.C. 4b(2)(C)(iv) (2003).
6 Comment letter of Goldman Sachs & Co.,
December 9, 2004 at p. 2.
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04FER1
5924
Federal Register / Vol. 70, No. 23 / Friday, February 4, 2005 / Rules and Regulations
III. Related Matters
List of Subjects
A. Regulatory Flexibility Act
17 CFR Part 1
The Regulatory Flexibility Act
(‘‘RFA’’), 5 U.S.C. 601–611, requires that
agencies, in proposing rules, consider
the impact of those rules on small
business. The Commission has
previously established certain
definitions of ‘‘small entities’’ to be used
by the Commission in evaluating the
impact of its rules on such entities in
accordance with the RFA.7 The
Commission previously has determined
that, based upon the fiduciary nature of
the FCM/customer relationships, as well
as the requirement that FCMs meet
minimum financial requirements. FCMs
should be excluded from the definition
of small entities. With respect to IBs, the
CFTC has stated that it is appropriate to
evaluate within the context of a
particular rule proposal whether some
or all of the affected entities should be
considered small entities and, if so, to
analyze the economic impact on them of
any rule.8 In the regard, the amendment
to Rule 1.55(d)(1) adopted herein does
not require any IB to change its current
method of doing business, and in fact
eases a regulatory burden by permitting
a single signature of the customer to
represent an additional consent required
by Commission regulations. The
amendments to Rules 1.55(f) and
155.3(b)(2) and 155.4(b)(2) clarify
existing rules. No comments were
received on this issue.
Brokers, Commodity futures,
Consumer protection, Disclosure,
Reporting and recordkeeping
requirements.
B. Paperwork Reduction Act
The Paperwork Reduction Act of
1995 9 imposes certain requirements on
federal agencies (including the
Commission) in connection with their
conducting or sponsoring any collection
of information as defined by the
Paperwork Reduction Act (‘‘PRA’’). The
amendments to Rules 1.55(d) and 155(f)
that are the subject of this rulemaking
do not alter the paperwork burden
associated with the OMB Collection of
Information submission, OMB Control
Number 3038–0022, Rules Pertaining to
Contract Markets and Their Members,
where the Commission most recently
described the paperwork burden
associated with the 2001 rulemaking
amendments.10 Thus, there is no need
for an additional submission pursuant
to the PRA.
7 47
FR 18618–18621 (April 30, 1982).
8 Id.
9 Pub.
10 See
L. 104–13 (May 13, 1995).
66 FR 45221, 45228 (August 28, 2001).
VerDate jul<14>2003
14:01 Feb 03, 2005
Jkt 205001
17 CFR Part 155
Brokers, Commodity futures,
Reporting and recordkeeping
requirements.
I In consideration of the foregoing, and
pursuant to the authority contained in
the Commodity Exchange Act and, in
particular, Sections 4b, 4c(b), and 8a(5)
thereof, 7 U.S.C. 6b, 6c(b), and 12a(5)
(2000), and pursuant to the authority
contained in 5 U.S.C. 552 and 552b
(2003), the Commission hereby amends
Chapter I of Title 17 of the Code of
Federal Regulations as follows:
PART 1—GENERAL REGULATIONS
UNDER THE COMMODITY EXCHANGE
ACT
1. The authority citation for part 1
continues to read as follows:
I
Authority: 7 U.S.C. 1a, 2, 4, 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, as amended by
the Commodity Futures Modernization Act of
2000, appendix E of Pub. L. 106–554, 114
Stat. 2763 (2000).
2. Section 1.55 is amended by revising
paragraphs (d)(1) and (f) to read as
follows:
I
§ 1.55 Distribution of ‘‘Risk Disclosure
Statement’’ by futures commission
merchants and introducing brokers.
*
*
*
*
*
(d) * * *
(1) Prior to the opening of such
account, the futures commission
merchant or introducing broker obtains
an acknowledgement from the customer,
which may consist of a single signature
at the end of the futures commission
merchant’s or introducing broker’s
customer account agreement, or on a
separate page, of the disclosure
statements, consents and elections
specified in this section and § 1.33(g),
and in §§ 33.7, § 155.3(b)(2),
§ 155.4(b)(2), and § 190.06 of this
chapter, and which may include
authorization for the transfer of funds
from a segregated customer account to
another account of such customer, as
listed directly above the signature line,
provided the customer has
acknowledged by check or other
indication next to a description of each
specified disclosure statement, consent
or election that the customer has
received and understood such
PO 00000
Frm 00010
Fmt 4700
Sfmt 4700
disclosure statement or made such
consent or election; and
* * *
(f) A futures commission merchant or,
in the case of an introduced account, an
introducing broker, may open a
commodity futures account for an
‘‘institutional customer’’ as defined in
§ 1.3(b) without furnishing such
institutional customer the disclosure
statements or obtaining the
acknowledgments required under
paragraph (a) of this section, §§ 1.33(g)
and 1.65(a)(3), and §§ 30.6(a), 33.7(a),
155.3(b)(2), 155.4(b)(2) and 190.10(c) of
this chapter.
*
*
*
*
*
PART 155—TRADING STANDARDS
3. The authority citation for part 155
continues to read as follows:
I
Authority: U.S.C. 6b, 6c, 6g, 6j and 12a,
unless otherwise noted.
4. Section 155.3 is amended by
revising paragraph (b)(2) as follows:
I
§ 155.3 Trading standards for futures
commission merchants.
*
*
*
*
*
(b) * * *
(2)(i) Knowingly take, directly or
indirectly, the other side of any order of
another person revealed to the futures
commission merchant or any of its
affiliated persons by reason of their
relationship to such other person,
except with such other person’s prior
consent and in conformity with contract
market rules approved by or certified to
the Commission.
(ii) In the case of a customer who does
not qualify as an ‘‘institutional
customer’’ as defined in § 1.3(g) of this
chapter, a futures commission merchant
must obtain the customer’s prior
consent through a signed
acknowledgment, which may be
accomplished in accordance with
§ 1.55(d) of this chapter.
*
*
*
*
*
I 5. Section 155.4 is amended by
revising paragraph (b)(2) as follows:
§ 155.4 Trading standards for introducing
brokers.
*
*
*
*
*
(b) * * *
(2)(i) Knowingly take, directly or
indirectly, the other side of any order of
another person revealed to the
introducing broker or any of its
affiliated persons by reason of their
relationship to such other person,
except with such other persons’s prior
consent and in conformity with contract
market rules approved by or certified to
the Commission.
E:\FR\FM\04FER1.SGM
04FER1
Federal Register / Vol. 70, No. 23 / Friday, February 4, 2005 / Rules and Regulations
(ii) In the case of a customer who does
not qualify as an ‘‘institutional
customer’’ as defined in § 1.3(g) of this
chapter, an introducing broker must
obtain the customer’s prior consent
through a signed acknowledgment,
which may be accomplished in
accordance with § 1.55(d) of this
chapter.
*
*
*
*
*
Dated: January 27, 2005.
By the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 05–1906 Filed 2–3–05; 8:45 am]
BILLING CODE 6351–01–M
DEPARTMENT OF JUSTICE
Drug Enforcement Administration
21 CFR Parts 1310 and 1313
[Docket No. DEA–137N]
RIN 1117–AA31
Chemical Mixtures; Temporary Waiver
of Import/Export Requirements
Drug Enforcement
Administration (DEA), Justice.
ACTION: Temporary waiver of import/
export requirements.
AGENCY:
SUMMARY: On December 15, 2004, the
Drug Enforcement Administration
(DEA) published a final rule that
implemented regulations pertaining to
chemical mixtures that contain any of
27 listed chemicals regulated under the
Controlled Substances Act (21 U.S.C.
801 et seq.). That rulemaking became
effective on January 14, 2005.
Following publication of the final
rule, certain segments of the chemical
industry expressed concerns to DEA
regarding difficulty in fully complying
with DEA import/export notification
requirements as specified in 21 CFR part
1313 by this deadline. Therefore, in
order to avoid interruption of legitimate
import/export distributions, DEA is
providing a waiver of the import/export
reporting requirements as specified in
21 CFR part 1313 until May 14, 2005.
As such, regulated persons will
temporarily not be required to submit
advance notification for import, export
and transshipment transactions for
chemical mixtures regulated solely due
to the presence of these 27 listed
chemicals until May 14, 2005. This
temporary waiver applies only to
import, export and transshipment
notification requirements; all other
chemical control requirements set forth
in the final rulemaking published on
VerDate jul<14>2003
14:01 Feb 03, 2005
Jkt 205001
December 15, 2004, shall remain in full
force and effect.
DATES: Effective February 4, 2005. The
new deadline for providing import,
export and transshipment notification
for regulated chemical mixtures
containing these 27 listed chemicals
will be May 14, 2005.
FOR FURTHER INFORMATION CONTACT:
Christine A. Sannerud, Ph.D., Chief,
Drug & Chemical Evaluation Section,
Office of Diversion Control, Drug
Enforcement Administration,
Washington, DC 20537, telephone (202)
307–7183
SUPPLEMENTARY INFORMATION: On
December 15, 2004, the Drug
Enforcement Administration (DEA)
published a final rule (69 FR 74957) that
implemented regulations pertaining to
chemical mixtures that contain any of
27 listed chemicals regulated under the
Controlled Substances Act (CSA). That
rulemaking became effective on January
14, 2005.
Following publication of the final rule
concerns were raised by various
segments of the chemical industry
regarding their difficulty in fully
complying with DEA import/export
notification requirements as specified in
21 CFR part 1313 by this deadline. DEA
received correspondence from two
national chemical associations and from
one major chemical producer.
Additionally, DEA received verbal
communication from industry that
expressed concerns regarding the large
number of potentially affected mixtures
and the difficulty industry was having
in meeting deadlines for submitting
import/export notification. After
carefully considering the concerns
expressed by industry, DEA has decided
to postpone the implementation of the
import/export notification requirements
as specified in 21 CFR part 1313 until
May 14, 2005. This temporary waiver
shall apply only to chemical mixtures
which became regulated under the
December 15, 2004 final rule (69 FR
74957).
While the submission of import,
export and transshipment information
to DEA is an important provision in
countering the potential diversion of
these materials, this temporary waiver is
being provided to allow industry ample
time to ensure their full compliance
with CSA import/export regulatory
requirements as specified in 21 CFR part
1313. As such, DEA will be temporarily
waiving the requirement for regulated
persons to submit advance notification
for import, export and transshipment
transactions for chemical mixtures
which are regulated solely due to the
presence of the 27 listed chemicals
PO 00000
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Fmt 4700
Sfmt 4700
5925
which were the subject of the December
15, 2004 final rule. This temporary
waiver applies only to import, export
and transshipment notification
requirements. All other chemical
control requirements set forth in the
final rulemaking published on
December 15, 2004 (69 FR 74957) shall
remain in full force and effect.
The new deadline for providing
import, export and transshipment
notification for regulated chemical
mixtures containing these 27 listed
chemicals will be May 14, 2005.
Provisions of December 15, 2004 Final
Rule (69 FR 74957) Which Do Not
Change
For any person distributing,
importing, or exporting any amount of
a regulated mixture containing a List I
chemical, the CSA requires that person
to obtain a DEA registration. DEA
recognizes that it is not possible for
persons who are subject to the
registration requirement to immediately
complete and submit an application for
registration and for DEA to immediately
issue registrations for those activities.
Therefore, in order to allow continued
legitimate commerce in regulated
mixtures, the December 15, 2004 final
rule established a temporary exemption
from the registration requirement (in 21
CFR 1310.09) for persons desiring to
engage in activities with regulated
mixtures that are subject to registration
requirements, provided that DEA
receives a properly completed
application for registration or an
application for exemption (pursuant to
21 CFR 1310.13) for their chemical
mixture(s) on or before February 14,
2005. The temporary exemption from
registration for such persons will remain
in effect until DEA takes final action on
their application(s).
Any person whose application for
exemption is subsequently rejected by
DEA must obtain a registration with
DEA. A temporary exemption from the
registration requirement will also be
provided for these persons, if DEA
receives a properly completed
application for registration on or before
30 days following the date of official
DEA notification that the application for
exemption has not been approved. The
deadline for submission of an
application for registration, or an
application for exemption, remains
February 14, 2005 in order to obtain the
temporary exemption from registration.
None of the temporary exemptions
discussed in this rulemaking suspend
applicable federal criminal laws relating
to the regulated mixtures, nor does it
supersede state or local laws or
regulations. All handlers of a regulated
E:\FR\FM\04FER1.SGM
04FER1
]]>Agencies
[Federal Register Volume 70, Number 23 (Friday, February 4, 2005)]
[Rules and Regulations]
[Pages 5923-5925]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-1906]
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
17 CFR Parts 1 and 155
RIN 3038-AC16
Distribution of ``Risk Disclosure Statement'' by Futures
Commission Merchants and Introducing Brokers
AGENCY: Commodity Futures Trading Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Commodity Futures Trading Commission (``Commission'' or
``CFTC'') is amending Rule 1.55 to provide that non-institutional
customers may indicate with a single signature, in addition to the
acknowledgment of receipt of various disclosures and the making of
certain elections, the consent referenced in Rules 155.3(b)(2) and
155.4(b)(2) and 155.4(b)(2) concerning customer permission for futures
commission merchants (``FCMs'') and introducing brokers (``IBs'') to
take the opposite side of an order. The Commission is also amending
Rule 1.55(f) to specify that the acknowledgments required by Rules
155.3(b)(2) and 155.4(b)(2) are not required of institutional customers
when they open an account.
DATES: Effective March 7, 2005.
FOR FURTHER INFORMATION CONTACT: Lawrence B. Patent, Deputy Director,
or Susan A. Elliott, Special Counsel, Compliance and Registration
Section, Division of Clearing and Intermediary Oversight, Commodity
Futures Trading Commission. Three Lafayette Centre, 1155 21st Street,
NW., Washington, DC 20581. Telephone: (202) 418-5439 or (202) 418-5464,
or electronic mail: lpatent@cftc.gov or selliott@cftc.gov.
SUPPLEMENTARY INFORMATION:
I. Background
On November 9, 2004 (69 FR 64873), the commission published a
proposed amendment to Rule 1.55 to provide that the single signature by
which non-institutional customers acknowledge receipt of basic risk
disclosures of futures and option trading, and elect how hedging
positions shall be handled in the event of a commodity broker
bankruptcy, may also reflect the consent referenced in Rules
155.3(b)(2) and 155.4(b)(2) concerning customer permission for FCMs and
IBs to take the opposite side of an order. The Commission adopted a
similar rule amendment in November 2000,\1\ but withdrew it the
following month upon passage of the Commodity Futures Modernization Act
of 2000.\2\ Most of the rules adopted and withdrawn in 2000 were
reproposed and re-adopted in 2001,\3\ but this one was not. Because
Commission staff received an inquiry about this issue, the Commission
reproposed the rule amendment and sought comments.
---------------------------------------------------------------------------
\1\ 65 FR 77993 at 78013 (December 13, 2000).
\2\ 65 FR 82272 (December 28, 2000).
\3\ 66 FR 45221 at 45226 (August 28, 2001) (proposed rules) and
66 FR 53510 at 53513 (October 23, 2001) (final rules).
---------------------------------------------------------------------------
II. Rule Amendments
Three comments were received, from the National Futures Association
(``NFA''), the Futures Industry Association (``FIA'') and an FCM,
Goldman Sachs & Co. All comments supported adoption of the proposed
amendment to Rule 1.55(d)(1). In addition, the three commenters were
unanimous in their recommendation that the Commission adopt another
rule amendment that clarifies, in Rule 1.55(f), that acknowledgment to
consent for an FCM or IB to take the opposite side of an order is not
required of institutional customers when they open an account.
The commenters requested that Rule 1.55(f) also be amended to add
the consent required under Commission Rules 115.3(b)(2) and 155.4(b)(2)
to the prescribed disclosures, consents and elections that
institutional customers are not required to acknowledge in opening an
account with an FCM. The Commission believes that such a further
amendment is consistent with the proposal and with the general
structure of Rule 1.55 and that it is appropriate to clarify Rule
1.55(f) as the commenters suggest. The Commission emphasizes the point
by cross-referencing Rule 1.55 in Rules 1.55.3 and 155.4.\4\
---------------------------------------------------------------------------
\4\ The Commission took a similar approach when it amended Rule
1.55 as well as Rule 1.33 concerning electronic transmission of
customer account statements. See 66 FR 53517 (Oct. 23, 2001).
---------------------------------------------------------------------------
As the Commission emphasized in its proposal, the single signature
acknowledgment format was first adopted in 1993 based on a rationale of
customer sophistication. If, with the Commission's proposed rule
amendment, non-institutional customers are now deemed sufficiently
sophisticated to have their consents acknowledged with a single
signature, it is certainly appropriate to assume that more
sophisticated institutional customers understand that they are
consenting to the trade practices described in Rule 155.3(b)(2) and
155.4(b)(2) without a separate acknowledgment when an account is
opened.
Section 4b of the Act \5\ nonetheless requires intermediaries to
have the prior consent of the customer before knowingly taking,
directly or indirectly, the opposite side of a customer's order. Thus,
as one of the commenters pointed out, it is still the responsibility of
the entity opening the account to ensure that prospective customers
give ``the consent required under this rule,'' even when the customer
is an institutional customer.\6\ The amendment of Rule 1.55(f) permits
an entity to choose the most appropriate means to accomplish that
objective. Finally, Rules 155.3(b)(2) and 155.4(b)(2) are amended to
cross-reference Rule 1.55(d)(1).
---------------------------------------------------------------------------
\5\ Commodity Exchange Act Sec. 4b(a)(2)(iv) (``unlawful * * *
to fill such order by offset against the order or orders of any
other person, or willfully and knowingly and without the prior
consent of such person to become the buyer in respect to any selling
order of such person, or become the seller in respect to any buying
order of such person''), 7 U.S.C. 4b(2)(C)(iv) (2003).
\6\ Comment letter of Goldman Sachs & Co., December 9, 2004 at
p. 2.
---------------------------------------------------------------------------
[[Page 5924]]
III. Related Matters
A. Regulatory Flexibility Act
The Regulatory Flexibility Act (``RFA''), 5 U.S.C. 601-611,
requires that agencies, in proposing rules, consider the impact of
those rules on small business. The Commission has previously
established certain definitions of ``small entities'' to be used by the
Commission in evaluating the impact of its rules on such entities in
accordance with the RFA.\7\ The Commission previously has determined
that, based upon the fiduciary nature of the FCM/customer
relationships, as well as the requirement that FCMs meet minimum
financial requirements. FCMs should be excluded from the definition of
small entities. With respect to IBs, the CFTC has stated that it is
appropriate to evaluate within the context of a particular rule
proposal whether some or all of the affected entities should be
considered small entities and, if so, to analyze the economic impact on
them of any rule.\8\ In the regard, the amendment to Rule 1.55(d)(1)
adopted herein does not require any IB to change its current method of
doing business, and in fact eases a regulatory burden by permitting a
single signature of the customer to represent an additional consent
required by Commission regulations. The amendments to Rules 1.55(f) and
155.3(b)(2) and 155.4(b)(2) clarify existing rules. No comments were
received on this issue.
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\7\ 47 FR 18618-18621 (April 30, 1982).
\8\ Id.
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B. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 \9\ imposes certain
requirements on federal agencies (including the Commission) in
connection with their conducting or sponsoring any collection of
information as defined by the Paperwork Reduction Act (``PRA''). The
amendments to Rules 1.55(d) and 155(f) that are the subject of this
rulemaking do not alter the paperwork burden associated with the OMB
Collection of Information submission, OMB Control Number 3038-0022,
Rules Pertaining to Contract Markets and Their Members, where the
Commission most recently described the paperwork burden associated with
the 2001 rulemaking amendments.\10\ Thus, there is no need for an
additional submission pursuant to the PRA.
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\9\ Pub. L. 104-13 (May 13, 1995).
\10\ See 66 FR 45221, 45228 (August 28, 2001).
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List of Subjects
17 CFR Part 1
Brokers, Commodity futures, Consumer protection, Disclosure,
Reporting and recordkeeping requirements.
17 CFR Part 155
Brokers, Commodity futures, Reporting and recordkeeping
requirements.
0
In consideration of the foregoing, and pursuant to the authority
contained in the Commodity Exchange Act and, in particular, Sections
4b, 4c(b), and 8a(5) thereof, 7 U.S.C. 6b, 6c(b), and 12a(5) (2000),
and pursuant to the authority contained in 5 U.S.C. 552 and 552b
(2003), the Commission hereby amends Chapter I of Title 17 of the Code
of Federal Regulations as follows:
PART 1--GENERAL REGULATIONS UNDER THE COMMODITY EXCHANGE ACT
0
1. The authority citation for part 1 continues to read as follows:
Authority: 7 U.S.C. 1a, 2, 4, 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, as amended by the Commodity
Futures Modernization Act of 2000, appendix E of Pub. L. 106-554,
114 Stat. 2763 (2000).
0
2. Section 1.55 is amended by revising paragraphs (d)(1) and (f) to
read as follows:
Sec. 1.55 Distribution of ``Risk Disclosure Statement'' by futures
commission merchants and introducing brokers.
* * * * *
(d) * * *
(1) Prior to the opening of such account, the futures commission
merchant or introducing broker obtains an acknowledgement from the
customer, which may consist of a single signature at the end of the
futures commission merchant's or introducing broker's customer account
agreement, or on a separate page, of the disclosure statements,
consents and elections specified in this section and Sec. 1.33(g), and
in Sec. Sec. 33.7, Sec. 155.3(b)(2), Sec. 155.4(b)(2), and Sec.
190.06 of this chapter, and which may include authorization for the
transfer of funds from a segregated customer account to another account
of such customer, as listed directly above the signature line, provided
the customer has acknowledged by check or other indication next to a
description of each specified disclosure statement, consent or election
that the customer has received and understood such disclosure statement
or made such consent or election; and
* * *
(f) A futures commission merchant or, in the case of an introduced
account, an introducing broker, may open a commodity futures account
for an ``institutional customer'' as defined in Sec. 1.3(b) without
furnishing such institutional customer the disclosure statements or
obtaining the acknowledgments required under paragraph (a) of this
section, Sec. Sec. 1.33(g) and 1.65(a)(3), and Sec. Sec. 30.6(a),
33.7(a), 155.3(b)(2), 155.4(b)(2) and 190.10(c) of this chapter.
* * * * *
PART 155--TRADING STANDARDS
0
3. The authority citation for part 155 continues to read as follows:
Authority: U.S.C. 6b, 6c, 6g, 6j and 12a, unless otherwise
noted.
0
4. Section 155.3 is amended by revising paragraph (b)(2) as follows:
Sec. 155.3 Trading standards for futures commission merchants.
* * * * *
(b) * * *
(2)(i) Knowingly take, directly or indirectly, the other side of
any order of another person revealed to the futures commission merchant
or any of its affiliated persons by reason of their relationship to
such other person, except with such other person's prior consent and in
conformity with contract market rules approved by or certified to the
Commission.
(ii) In the case of a customer who does not qualify as an
``institutional customer'' as defined in Sec. 1.3(g) of this chapter,
a futures commission merchant must obtain the customer's prior consent
through a signed acknowledgment, which may be accomplished in
accordance with Sec. 1.55(d) of this chapter.
* * * * *
0
5. Section 155.4 is amended by revising paragraph (b)(2) as follows:
Sec. 155.4 Trading standards for introducing brokers.
* * * * *
(b) * * *
(2)(i) Knowingly take, directly or indirectly, the other side of
any order of another person revealed to the introducing broker or any
of its affiliated persons by reason of their relationship to such other
person, except with such other persons's prior consent and in
conformity with contract market rules approved by or certified to the
Commission.
[[Page 5925]]
(ii) In the case of a customer who does not qualify as an
``institutional customer'' as defined in Sec. 1.3(g) of this chapter,
an introducing broker must obtain the customer's prior consent through
a signed acknowledgment, which may be accomplished in accordance with
Sec. 1.55(d) of this chapter.
* * * * *
Dated: January 27, 2005.
By the Commission.
Jean A. Webb,
Secretary of the Commission.
[FR Doc. 05-1906 Filed 2-3-05; 8:45 am]
BILLING CODE 6351-01-M
