Determination of Appropriateness of the Supervision by the Bundesanstalt für Finanzdienstleistungaufsicht (BaFin), in Conjunction With Deutsche Bundesbank (Bundesbank), Both of the Federal Republic of Germany, With Respect to the Clearing Activities of Eurex Clearing AG (Eurex), 39303-39305 [E9-18854]

Download as PDF Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Notices The Gulf of Mexico Fishery Management Council (Council) will convene the SEDAR Red Snapper Update Workshop (SEDAR) to conduct an update assessment of the SEDAR 7 red snapper benchmark stock assessment. An update assessment is a single workshop that utilizes the assessment models and input parameters from the previous full SEDAR benchmark assessment, with minor modifications if any, and updated data streams to update the results of the previous full assessment. The previous SEDAR 7 red snapper benchmark assessment was completed in 2004 with supplemental analyses in 2005. That assessment concluded that, as of 2003 (the final year of available catch data), the red snapper stock was overfished and was undergoing overfishing. In addition to updating the data streams previously used, the update assessment workshop will include a discussion on age distribution, growth and density dependent mortality of juvenile red snapper, and composition and changes of red snapper in shrimp trawl bycatch. The workshop will also include a review of the data inputs with respect to life history, indices of abundance, commercial and recreational fisheries statistics, and fishery independent data. A copy of the agenda and related materials can be obtained by calling the Council office at (813) 348–1630. Although other non-emergency issues not on the agendas may come before the SEDAR for discussion, in accordance with the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), those issues may not be the subject of formal action during this meeting. Actions of the SEDAR will be restricted to those issues specifically identified in the agendas and any issues arising after publication of this notice that require emergency action under Section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council’s intent to take action to address the emergency. jlentini on DSKJ8SOYB1PROD with NOTICES SUPPLEMENTARY INFORMATION: Special Accommodations These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Tina O’Hern at the Council (see ADDRESSES) 5 working days prior to the meeting. Dated: July 31, 2009. Tracey L. Thompson, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. E9–18744 Filed 8–5–09; 8:45 am] BILLING CODE 3510–22–S VerDate Nov<24>2008 17:04 Aug 05, 2009 Jkt 217001 39303 Materials Technical Advisory Committee; Notice of Partially Closed Meeting The Materials Technical Advisory Committee will meet on August 13, 2009, 10 a.m., Herbert C. Hoover Building, Room 3884, 14th Street between Constitution & Pennsylvania Avenues, NW., Washington, DC. The Committee advises the Office of the Assistant Secretary for Export Administration with respect to technical questions that affect the level of export controls applicable to materials and related technology. with matters the premature disclosure of which would likely frustrate the implementation of a proposed agency action as described in 5 U.S.C. 552b(c)(9)(B) shall be exempt from the provisions relating to public meetings found in 5 U.S.C. app. 2 §§ 10(a)(1) and 10(a)(3). The remaining portions of the meeting will be open to the public. For more information, call Yvette Springer at (202) 482–2813. Dated: July 31, 2009. Yvette Springer, Committee Liaison Officer. [FR Doc. E9–18846 Filed 8–5–09; 8:45 am] DEPARTMENT OF COMMERCE Bureau of Industry and Security BILLING CODE 3510–JT–P Agenda COMMODITY FUTURES TRADING COMMISSION Open Session RIN 3038–AC 1. Opening Remarks and Introduction. 2. Presentation on recently mandated changes to the interagency Commodity Jurisdiction review process. 3. Report on recent changes to the Commerce Control List based on Australia Group Regime list changes. 4. Report of Composite Working group and ECCN review subgroup. 5. New business. 6. Public comments from teleconference and physical attendees. 7. Closed session to follow. Determination of Appropriateness of the Supervision by the Bundesanstalt ¨ fur Finanzdienstleistungaufsicht (BaFin), in Conjunction With Deutsche Bundesbank (Bundesbank), Both of the Federal Republic of Germany, With Respect to the Clearing Activities of Eurex Clearing AG (Eurex) Closed Session 8. Discussion of matters determined to be exempt from the provisions relating to public meetings found in 5 U.S.C. app. 2 §§ 10(a)(1) and 10(a)(3). The open session will be accessible via teleconference to 20 participants on a first come, first serve basis. To join the conference, submit inquiries to Ms. Yvette Springer at Yspringer@bis.doc.gov no later than August 6, 2009. A limited number of seats will be available during the public session of the meeting. Reservations are not accepted. To the extent time permits, members of the public may present oral statements to the Committee. Written statements may be submitted at any time before or after the meeting. However, to facilitate distribution of public presentation materials to Committee members, the materials should be forwarded prior to the meeting to Ms. Springer via e-mail. The Assistant Secretary for Administration, with the concurrence of the delegate of the General Counsel, formally determined on October 1, 2008, pursuant to Section 10(d) of the Federal Advisory Committee Act, as amended, that the portion of the meeting dealing PO 00000 Frm 00021 Fmt 4703 Sfmt 4703 AGENCY: Commodity Futures Trading Commission. ACTION: Notice and Order. SUMMARY: The Commodity Futures Trading Commission (CFTC) is issuing an order, pursuant to Section 409(b)(3) of FDICIA, stating that the supervision provided by BaFin, in conjunction with the Bundesbank, with respect to the clearing activities of Eurex satisfies appropriate standards (the Order). The Order will permit Eurex to operate a multilateral clearing organization (MCO) in the United States for any over-thecounter (OTC) derivative instrument. DATES: Effective Date: July 31, 2009. FOR FURTHER INFORMATION CONTACT: Robert B. Wasserman, Associate Director, (202) 418–5092, rwasserman@cftc.gov, or Nancy Schnabel, Attorney-Advisor, (202) 418– 5334, nschnabel@cftc.gov, Division of Clearing and Intermediary Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1151 21st Street, NW., Washington, DC 20581. SUPPLEMENTARY INFORMATION: Section 409(a) of FDICIA provides that, in order to operate an MCO 1 in the United States 1 Section 408(1) of FDICIA (12 U.S.C. 4421(1)) defines MCO to mean ‘‘a system utilized by more than [two] participants in which the bilateral credit exposures of participants arising from the E:\FR\FM\06AUN1.SGM Continued 06AUN1 39304 Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Notices jlentini on DSKJ8SOYB1PROD with NOTICES for an OTC derivative instrument,2 a clearing organization must meet one of several alternative requirements.3 Section 409(b)(3) of FDICIA sets forth one such alternative.4 It states that a clearing organization will qualify to operate such an MCO, if such clearing organization is supervised by a foreign financial regulator that the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, or the CFTC, as applicable, has determined satisfies appropriate standards.5 Eurex, a central counterparty licensed by BaFin, has requested that the CFTC determine that the supervision provided by BaFin, in conjunction with the Bundesbank,6 with respect to Eurex’s clearing activities, satisfies appropriate standards in accordance with Section 409(b)(3) of FDICIA.7 Such a determination would permit Eurex to operate an MCO in the United States for any OTC derivative instrument.8 In reviewing the request from Eurex, the CFTC primarily considered three factors. First, the CFTC considered whether the German statutory and transactions cleared are effectively eliminated and replaced by a system of guarantees, insurance, or mutualized risk of loss.’’ 2 Section 408(2) of FDICIA (12 U.S.C. 4421(2)) defines ‘‘OTC derivative instrument.’’ 3 12 U.S.C. 4422(a). 4 12 U.S.C. 4422(b)(3). 5 Section 409(b)(3) of FDICIA (12 U.S.C. 4422(b)(3)). The CFTC has issued three previous orders, pursuant to Section 409(b)(3) of FDICIA, determining that the supervision of a particular MCO by a foreign financial regulator met appropriate standards. The foreign financial regulators involved were (i) the Norwegian Banking, Insurance and Securities Commission, (ii) the Alberta (Canada) Securities Commission, and (iii) the United Kingdom Financial Services Authority. See 67 FR 2419 (January 17, 2002), 71 FR 10958 (March 3, 2006), and 73 FR 44706 (July 31, 2008), respectively. 6 The Bundesbank is the central bank of the Federal Republic of Germany. See https:// www.bundesbank.de/aufgaben/aufgaben.en.php. 7 See Letter, dated March 27, 2009, from Paul Architzel of Alston & Bird LLP, submitted on behalf of Eurex, to David A. Stawick, Secretary of the CFTC, with enclosure and appendices thereto (collectively, the Application). BaFin is authorized under the German Banking Act to (i) supervise the operation of a ‘‘credit institution’’ conducting ‘‘banking business’’ (including a central counterparty) domiciled in Germany, and to (ii) enforce compliance with applicable laws, rules and regulations. Because clearing comprises ‘‘banking business’’ under the German Banking Act, BaFin has the authority to regulate any entity engaged in the clearing of OTC derivative instruments. BaFin undertakes such supervision with the assistance of Bundesbank. See Sections 6 and 7 of the German Banking Act. 8 Currently, Eurex intends to clear as an MCO (i) OTC derivative instruments that share common terms and conditions with commodity contracts that are listed on the Eurex Deutschland Exchange, and (ii) credit default swaps. VerDate Nov<24>2008 17:04 Aug 05, 2009 Jkt 217001 regulatory regime applicable to Eurex clearing activities substantially corresponds with the Commodity Exchange Act (the CEA) including the core principles applicable to a derivatives clearing organization (DCO), and the regulations promulgated thereunder (the Regulations).9 In Germany, a central counterparty such as Eurex, is regulated as a ‘‘credit institution’’ conducting ‘‘banking business.’’ 10 Accordingly, the CFTC reviewed translated versions of the following documents, among others: (i) ¨ The Gesetz uber das Kreditwesen (i.e., the German Banking Act); (ii) the guidance that BaFin or Bundesbank provided on compliance therewith, including (A) ‘‘Minimum Requirements for Risk Management’’ (Circular 5/2007), (B) Auditor’s Report Regulation,11 (C) Principle I (Concerning the Capital of Institutions), and (D) Principle II (Concerning Own Funds and the Liquidity of Institutions); and (iii) the Bundesgesetzblatt (i.e., the German Insolvency Statute); and (iv) Gesetz ¨ gegen Wettbewerbsbeschrankunge (i.e., the German Act Against Restraints of Competition). The CFTC also reviewed an analysis provided by Eurex regarding the correspondence between the German statutory and regulatory regime and the core principles applicable to a DCO. Second, the CFTC considered whether the supervision provided by BaFin, in conjunction with Bundesbank, with respect to Eurex’s clearing activities, substantially corresponds with the supervision provided by the CFTC with respect to the activities of a DCO. Accordingly, the CFTC reviewed the manner in which BaFin, with the assistance of the Bundesbank, conducts supervision of a credit institution (including a central counterparty such as Eurex), both on an annual basis and through special reviews.12 The CFTC 9 See Section 5b(c)(2) of the CEA (7 U.S.C. 7a– 1(c)(2)(A)–(N)) and Appendix A to Part 39 of the Regulations (17 CFR pt. 39, app. A). Section 409(b)(3) of FDICIA (12 U.S.C. 4422(b)(3)) does not reference the supervision of the foreign financial regulator over trading, and the CFTC has accordingly not reviewed BaFin or Bundesbank supervision of trading in considering the Eurex request. 10 See Attachment to the Application entitled, ‘‘Permit according to Section 32 of the Banking Act, issued by BaFin to Eurex as of December 18, 2006 (GZ: WA 22–K 5000–10119203/2006).’’ 11 The full title of the Auditor’s Report Regulation is ‘‘Regulation, as of December 17, 1998, governing the auditing of the annual accounts and interim reports of credit institutions and financial services institutions and auditing in accordance with section 12(1) sentence 3 of the Act on Investment Companies as well as the reports to be drawn up on these.’’ 12 The division of responsibilities between BaFin and the Bundesbank may be found in the PO 00000 Frm 00022 Fmt 4703 Sfmt 4703 also reviewed the manner in which BaFin, as well as the Bundesbank, rely on external auditors of a credit institution in conducting certain aspects of such supervision, including the control which BaFin, as well as Bundesbank, exerts over such external auditors. Third, the CFTC considered whether the supervision provided by BaFin, with the assistance of the Bundesbank, substantially comports with the Principles and Objectives of Securities Regulation (the IOSCO Principles), as developed by the International Organization of Securities Commissions (IOSCO). In reviewing the request from Eurex, the CFTC also considered additional facts, such as (i) the risk management procedures implemented by Eurex with respect to the clearing of credit default swaps, and (ii) existing arrangements with BaFin to exchange information regarding Eurex.13 As a matter of courtesy, the CFTC invited the other federal financial regulators listed in Section 409(b)(3) of FDICIA to comment on the Application. The CFTC also invited the public to comment on the Application, by posting the Application on its Web site on May 13, 2009. The CFTC received no comments. Based on its review, the CFTC has determined, pursuant to Section 409(b)(3) of FDICIA, that the supervision provided by BaFin, in conjunction with the Bundesbank, with respect to the clearing activities of Eurex satisfies appropriate standards. Accordingly, the CFTC has issued this Order. Any material changes or omissions in the facts and circumstances upon which this Order is based might require the CFTC to reconsider this matter. Supervision Directive. See Attachment to the Application entitled, ‘‘Directive for Implementation and Quality Assurance of the Current Supervision of the Credit and Financial Service Institutions by the Deutsche Bundesbank.’’ 13 See Memorandum of Understanding, dated October 17, 1997, between the Commission and the ¨ German Bundesaufsichtsamt fur den Wertpapierhandel (i.e., the predecessor of BaFin) Concerning Consultation and Cooperation in the Administration and Enforcement of Futures Laws (the Memorandum of Understanding), and the Side Letter Relating to the Memorandum of Understanding, dated July 28, 2009 between the Commission and BaFin. BaFin is also a signatory of the multilateral Declaration on Cooperation and Supervision of International Futures Exchanges and Clearing Organizations, and the IOSCO Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information. E:\FR\FM\06AUN1.SGM 06AUN1 Federal Register / Vol. 74, No. 150 / Thursday, August 6, 2009 / Notices Issued in Washington, DC, on July 31, 2009. David A. Stawick, Secretary of the Commission. [FR Doc. E9–18854 Filed 8–5–09; 8:45 am] BILLING CODE P DEPARTMENT OF DEFENSE Office of the Secretary List of Institutions of Higher Education Ineligible for Federal Funds Department of Defense. Notice. AGENCY: ACTION: SUMMARY: This document is published to identify institutions of higher education that are ineligible for contracts and grants by reason of a determination by the Secretary of Defense that the institution prohibits or in effect prevents military recruiter access to the campus, students on campus or student directory information. It also implements the requirements set forth in section 983 of title 10, United States Code, and 32 CFR part 216. The institutions of higher education so identified are: Vermont Law School, South Royalton, Vermont. William Mitchell College of Law, St. Paul, Minnesota. ADDRESSES: Director for Accession Policy, Office of the Under Secretary of Defense for Personnel and Readiness, 4000 Defense Pentagon, Washington, DC 20301–4000. FOR FURTHER INFORMATION CONTACT: Lieutenant Colonel Rose Jourdan, (703) 695–5529. Dated: July 29, 2009. Patricia L. Toppings, OSD Federal Register, Liaison Officer, Department of Defense. [FR Doc. E9–18827 Filed 8–5–09; 8:45 am] BILLING CODE 5001–06–P DEPARTMENT OF DEFENSE Office of the Secretary jlentini on DSKJ8SOYB1PROD with NOTICES Advisory Council on Dependents’ Education AGENCY: Department of Defense Education Activity (DoDEA), DoD. ACTION: Notice of open meeting. SUMMARY: Under the provisions of the Federal Advisory Committee Act of 1972 (5 U.S.C., Appendix, as amended), the Government in the Sunshine Act of 1976 (5 U.S.C. 552b, as amended), and 41 CFR 102–3.150, the Department of VerDate Nov<24>2008 17:04 Aug 05, 2009 Jkt 217001 Defense announces that the following Federal advisory committee meeting of the Advisory Council on Dependents’ Education will take place: DATES: Wednesday, October 14, 2009, 8 a.m. to 5 p.m. Eastern Daylight Standard Time. ADDRESSES: DoDEA Headquarters, 4040 N. Fairfax Drive, Arlington, VA 22203. FOR FURTHER INFORMATION CONTACT: Mr. Leesa Rompre, at (703) 588–3128, or at Leesa.Rompre@hq.dodea.edu. SUPPLEMENTARY INFORMATION: Purpose of the Meeting: Recommend to the Director, DoDEA, general policies for the operation of the Department of Defense Dependents Schools (DoDDS); to provide the Director with information about effective educational programs and practices that should be considered by DoDDS; and to perform other tasks as may be required by the Secretary of Defense. Agenda: The meeting agenda will be the current operational qualities of schools, the continuous improvement processes, and other educational matters. Public’s Accessibility to the Meeting: Pursuant to 5 U.S.C. 552b and 41 CFR 102–3.140 through 102–3.165 and the availability of space, this meeting is open to the public. Seating is on a firstcome basis. Appropriate government issued identification will be required to enter the meeting facility, which is a U.S. Military managed facility. Committee’s Point of Contact: Ms. Leesa Rompre, tel. (703) 588–3128, 4040 North Fairfax Drive, Arlington, VA 22203, e-mail: Leesa.Rompre@hq.dodea.edu. Written Statements: Pursuant to 41 CFR 102–3.105(j) and 102–3.140 and section 10(a)(3) of the Federal Advisory Committee Act of 1972, the public or interested organizations may submit written statements to the Advisory Council on Dependents’ Education about its mission and functions. Written statements may be submitted at any time or in response to the stated agenda of the planned meeting of the Advisory Council on Dependents’ Education. All written statements shall be submitted to the Designated Federal Officer for the Advisory Council on Dependents’ Education and this individual will ensure that the written statements are provided to the membership for their consideration. For the next meeting of the Advisory Council on Dependents’ Education, Mr. Charles Toth, telephone (703) 588–3105, 4040 North Fairfax Drive, Arlington, VA 22203; e-mail: Charlie.Toth@hq.dodea.edu, will be PO 00000 Frm 00023 Fmt 4703 Sfmt 4703 39305 acting in the capacity of the Designated Federal Officer for this committee. Statements being submitted in response to the agenda mentioned in this notice must be received by the Designated Federal Officer at the address listed above at least fourteen calendar days prior to the meeting which is the subject of this notice. Written statements received after this date may not be provided to or considered by the Advisory Council on Dependents’ Education until its next meeting. The Designated Federal Officer will review all timely submissions with the Advisory Council on Dependents’ Education Chairpersons and ensure they are provided to all members of the Advisory Council on Dependents’ Education before the meeting that is the subject of this notice. Oral Statements by the Public to the Membership: Pursuant to 41 CFR 102– 3.140(d), time will be allotted for public comments to the Advisory Council on Dependents’ Education. Individual comments will be limited to a maximum of five minutes duration. The total time allotted for public comments will not exceed thirty minutes. Dated: July 28, 2009. Patricia L. Toppings, OSD Federal Register Liaison Officer, Department of Defense. [FR Doc. E9–18825 Filed 8–5–09; 8:45 am] BILLING CODE 5001–06–P DEPARTMENT OF DEFENSE Office of the Secretary Strategic Environmental Research and Development Program, Scientific Advisory Board Department of Defense. Notice. AGENCY: ACTION: SUMMARY: This notice is published in accordance with Section 10(a)(2) of the Federal Advisory Committee Act (Pub. L. 92–463). The topic of the meeting on September 9–11, 2009 is to review new start research and development projects requesting Strategic Environmental Research and Development Program funds in excess of $1M. This meeting is open to the public. Any interested person may attend, appear before, or file statements with the Scientific Advisory Board at the time and in the manner permitted by the Board. DATES: Wednesday, September 9, 2009 from 9 a.m. to 5:30 p.m., Thursday, September 10, 2009 from 9 a.m. to 5 p.m., and Friday, September 11, 2009 from 8:30 a.m. to 12 p.m. E:\FR\FM\06AUN1.SGM 06AUN1

Agencies

Commodity Futures Trading Commission

[Federal Register Volume 74, Number 150 (Thursday, August 6, 2009)]
[Notices]
[Pages 39303-39305]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-18854]


=======================================================================
-----------------------------------------------------------------------

COMMODITY FUTURES TRADING COMMISSION

RIN 3038-AC


Determination of Appropriateness of the Supervision by the 
Bundesanstalt f[uuml]r Finanzdienstleistungaufsicht (BaFin), in 
Conjunction With Deutsche Bundesbank (Bundesbank), Both of the Federal 
Republic of Germany, With Respect to the Clearing Activities of Eurex 
Clearing AG (Eurex)

AGENCY: Commodity Futures Trading Commission.

ACTION: Notice and Order.

-----------------------------------------------------------------------

SUMMARY: The Commodity Futures Trading Commission (CFTC) is issuing an 
order, pursuant to Section 409(b)(3) of FDICIA, stating that the 
supervision provided by BaFin, in conjunction with the Bundesbank, with 
respect to the clearing activities of Eurex satisfies appropriate 
standards (the Order). The Order will permit Eurex to operate a 
multilateral clearing organization (MCO) in the United States for any 
over-the-counter (OTC) derivative instrument.

DATES: Effective Date: July 31, 2009.

FOR FURTHER INFORMATION CONTACT: Robert B. Wasserman, Associate 
Director, (202) 418-5092, rwasserman@cftc.gov, or Nancy Schnabel, 
Attorney-Advisor, (202) 418-5334, nschnabel@cftc.gov, Division of 
Clearing and Intermediary Oversight, Commodity Futures Trading 
Commission, Three Lafayette Centre, 1151 21st Street, NW., Washington, 
DC 20581.

SUPPLEMENTARY INFORMATION: Section 409(a) of FDICIA provides that, in 
order to operate an MCO \1\ in the United States

[[Page 39304]]

for an OTC derivative instrument,\2\ a clearing organization must meet 
one of several alternative requirements.\3\ Section 409(b)(3) of FDICIA 
sets forth one such alternative.\4\ It states that a clearing 
organization will qualify to operate such an MCO, if such clearing 
organization is supervised by a foreign financial regulator that the 
Comptroller of the Currency, the Board of Governors of the Federal 
Reserve System, the Federal Deposit Insurance Corporation, the 
Securities and Exchange Commission, or the CFTC, as applicable, has 
determined satisfies appropriate standards.\5\
---------------------------------------------------------------------------

    \1\ Section 408(1) of FDICIA (12 U.S.C. 4421(1)) defines MCO to 
mean ``a system utilized by more than [two] participants in which 
the bilateral credit exposures of participants arising from the 
transactions cleared are effectively eliminated and replaced by a 
system of guarantees, insurance, or mutualized risk of loss.''
    \2\ Section 408(2) of FDICIA (12 U.S.C. 4421(2)) defines ``OTC 
derivative instrument.''
    \3\ 12 U.S.C. 4422(a).
    \4\ 12 U.S.C. 4422(b)(3).
    \5\ Section 409(b)(3) of FDICIA (12 U.S.C. 4422(b)(3)). The CFTC 
has issued three previous orders, pursuant to Section 409(b)(3) of 
FDICIA, determining that the supervision of a particular MCO by a 
foreign financial regulator met appropriate standards. The foreign 
financial regulators involved were (i) the Norwegian Banking, 
Insurance and Securities Commission, (ii) the Alberta (Canada) 
Securities Commission, and (iii) the United Kingdom Financial 
Services Authority. See 67 FR 2419 (January 17, 2002), 71 FR 10958 
(March 3, 2006), and 73 FR 44706 (July 31, 2008), respectively.
---------------------------------------------------------------------------

    Eurex, a central counterparty licensed by BaFin, has requested that 
the CFTC determine that the supervision provided by BaFin, in 
conjunction with the Bundesbank,\6\ with respect to Eurex's clearing 
activities, satisfies appropriate standards in accordance with Section 
409(b)(3) of FDICIA.\7\ Such a determination would permit Eurex to 
operate an MCO in the United States for any OTC derivative 
instrument.\8\
---------------------------------------------------------------------------

    \6\ The Bundesbank is the central bank of the Federal Republic 
of Germany. See https://www.bundesbank.de/aufgaben/aufgaben.en.php.
    \7\ See Letter, dated March 27, 2009, from Paul Architzel of 
Alston & Bird LLP, submitted on behalf of Eurex, to David A. 
Stawick, Secretary of the CFTC, with enclosure and appendices 
thereto (collectively, the Application).
    BaFin is authorized under the German Banking Act to (i) 
supervise the operation of a ``credit institution'' conducting 
``banking business'' (including a central counterparty) domiciled in 
Germany, and to (ii) enforce compliance with applicable laws, rules 
and regulations. Because clearing comprises ``banking business'' 
under the German Banking Act, BaFin has the authority to regulate 
any entity engaged in the clearing of OTC derivative instruments. 
BaFin undertakes such supervision with the assistance of Bundesbank. 
See Sections 6 and 7 of the German Banking Act.
    \8\ Currently, Eurex intends to clear as an MCO (i) OTC 
derivative instruments that share common terms and conditions with 
commodity contracts that are listed on the Eurex Deutschland 
Exchange, and (ii) credit default swaps.
---------------------------------------------------------------------------

    In reviewing the request from Eurex, the CFTC primarily considered 
three factors. First, the CFTC considered whether the German statutory 
and regulatory regime applicable to Eurex clearing activities 
substantially corresponds with the Commodity Exchange Act (the CEA) 
including the core principles applicable to a derivatives clearing 
organization (DCO), and the regulations promulgated thereunder (the 
Regulations).\9\ In Germany, a central counterparty such as Eurex, is 
regulated as a ``credit institution'' conducting ``banking business.'' 
\10\ Accordingly, the CFTC reviewed translated versions of the 
following documents, among others: (i) The Gesetz [uuml]ber das 
Kreditwesen (i.e., the German Banking Act); (ii) the guidance that 
BaFin or Bundesbank provided on compliance therewith, including (A) 
``Minimum Requirements for Risk Management'' (Circular 5/2007), (B) 
Auditor's Report Regulation,\11\ (C) Principle I (Concerning the 
Capital of Institutions), and (D) Principle II (Concerning Own Funds 
and the Liquidity of Institutions); and (iii) the Bundesgesetzblatt 
(i.e., the German Insolvency Statute); and (iv) Gesetz gegen 
Wettbewerbsbeschr[auml]nkunge (i.e., the German Act Against Restraints 
of Competition). The CFTC also reviewed an analysis provided by Eurex 
regarding the correspondence between the German statutory and 
regulatory regime and the core principles applicable to a DCO.
---------------------------------------------------------------------------

    \9\ See Section 5b(c)(2) of the CEA (7 U.S.C. 7a-1(c)(2)(A)-(N)) 
and Appendix A to Part 39 of the Regulations (17 CFR pt. 39, app. 
A).
    Section 409(b)(3) of FDICIA (12 U.S.C. 4422(b)(3)) does not 
reference the supervision of the foreign financial regulator over 
trading, and the CFTC has accordingly not reviewed BaFin or 
Bundesbank supervision of trading in considering the Eurex request.
    \10\ See Attachment to the Application entitled, ``Permit 
according to Section 32 of the Banking Act, issued by BaFin to Eurex 
as of December 18, 2006 (GZ: WA 22-K 5000-10119203/2006).''
    \11\ The full title of the Auditor's Report Regulation is 
``Regulation, as of December 17, 1998, governing the auditing of the 
annual accounts and interim reports of credit institutions and 
financial services institutions and auditing in accordance with 
section 12(1) sentence 3 of the Act on Investment Companies as well 
as the reports to be drawn up on these.''
---------------------------------------------------------------------------

    Second, the CFTC considered whether the supervision provided by 
BaFin, in conjunction with Bundesbank, with respect to Eurex's clearing 
activities, substantially corresponds with the supervision provided by 
the CFTC with respect to the activities of a DCO. Accordingly, the CFTC 
reviewed the manner in which BaFin, with the assistance of the 
Bundesbank, conducts supervision of a credit institution (including a 
central counterparty such as Eurex), both on an annual basis and 
through special reviews.\12\ The CFTC also reviewed the manner in which 
BaFin, as well as the Bundesbank, rely on external auditors of a credit 
institution in conducting certain aspects of such supervision, 
including the control which BaFin, as well as Bundesbank, exerts over 
such external auditors.
---------------------------------------------------------------------------

    \12\ The division of responsibilities between BaFin and the 
Bundesbank may be found in the Supervision Directive. See Attachment 
to the Application entitled, ``Directive for Implementation and 
Quality Assurance of the Current Supervision of the Credit and 
Financial Service Institutions by the Deutsche Bundesbank.''
---------------------------------------------------------------------------

    Third, the CFTC considered whether the supervision provided by 
BaFin, with the assistance of the Bundesbank, substantially comports 
with the Principles and Objectives of Securities Regulation (the IOSCO 
Principles), as developed by the International Organization of 
Securities Commissions (IOSCO).
    In reviewing the request from Eurex, the CFTC also considered 
additional facts, such as (i) the risk management procedures 
implemented by Eurex with respect to the clearing of credit default 
swaps, and (ii) existing arrangements with BaFin to exchange 
information regarding Eurex.\13\
---------------------------------------------------------------------------

    \13\ See Memorandum of Understanding, dated October 17, 1997, 
between the Commission and the German Bundesaufsichtsamt f[uuml]r 
den Wertpapierhandel (i.e., the predecessor of BaFin) Concerning 
Consultation and Cooperation in the Administration and Enforcement 
of Futures Laws (the Memorandum of Understanding), and the Side 
Letter Relating to the Memorandum of Understanding, dated July 28, 
2009 between the Commission and BaFin.
    BaFin is also a signatory of the multilateral Declaration on 
Cooperation and Supervision of International Futures Exchanges and 
Clearing Organizations, and the IOSCO Multilateral Memorandum of 
Understanding Concerning Consultation and Cooperation and the 
Exchange of Information.
---------------------------------------------------------------------------

    As a matter of courtesy, the CFTC invited the other federal 
financial regulators listed in Section 409(b)(3) of FDICIA to comment 
on the Application. The CFTC also invited the public to comment on the 
Application, by posting the Application on its Web site on May 13, 
2009. The CFTC received no comments.
    Based on its review, the CFTC has determined, pursuant to Section 
409(b)(3) of FDICIA, that the supervision provided by BaFin, in 
conjunction with the Bundesbank, with respect to the clearing 
activities of Eurex satisfies appropriate standards. Accordingly, the 
CFTC has issued this Order. Any material changes or omissions in the 
facts and circumstances upon which this Order is based might require 
the CFTC to reconsider this matter.


[[Page 39305]]


    Issued in Washington, DC, on July 31, 2009.
David A. Stawick,
Secretary of the Commission.
[FR Doc. E9-18854 Filed 8-5-09; 8:45 am]
BILLING CODE P

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