Commodity Futures Trading Commission September 2010 – Federal Register Recent Federal Regulation Documents

Recently, the Commodity Futures Trading Commission (``Commission,'' or ``CFTC'') has been confronted with the question of how to treat certain transactions on fractional undivided interests, or shares, in single commodity investment products referred to as exchange traded funds (``ETF'' or ``ETFs''),\1\ primarily in the metals complex. The ETFs have in all relevant instances been structured as trusts (singularly, ``ETF Trust'' or ``Trust''),\2\ the assets of which consist of holdings of one specific physical commodity.\3\ The explicit and sole investment objective of each of these ETF Trusts is to track as nearly as possible the spot price of the underlying physical commodity less the expenses of trust operations. The listing of these ETF shares provides shareholders with efficient exposure to commodity market price movements.\4\ These Precious Metal Commodity-Based ETFs have primarily focused on holding either gold or silver, with a recent expansion into palladium and platinum. The Commission has issued Orders pursuant to Section 4(c) of the Commodity Exchange Act (the ``Act'') permitting the trading and clearing of certain transactions on these Trusts as, respectively, options on securities and security futures.\5\ The Previous Orders have provided exemptions from certain provisions of the Act, or the Commission's regulations thereunder, which might have been transgressed by trading or clearing, among other things, options and futures on Commodity-Based ETFs. The exemption mechanism has enabled the Commission to reserve judgment as to the jurisdictional classification (i.e. commodity or security) of Commodity-Based ETFs and options and futures on Commodity-Based ETFs while at the same time providing a mechanism to ensure both that the Commission's regulatory oversight needs are satisfied (whether through regulation by the Securities and Exchange Commission (``SEC'') or by attaching conditions to the exemption orders) and that novel products may be introduced without undue delay for market participant and investor use.

The Commodity Futures Trading Commission (CFTC) is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., Federal agencies are required to publish notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, and to allow 60 days for public comment in response to the notice. This notice solicits comments on requirements relating to procedures for submitting requests for exemptive, no- action, and interpretative letters.

The Technology Advisory Committee will hold a public meeting on October 12, 2010, from 1 p.m. to 5 p.m., at the CFTC's Washington, DC headquarters.

The Global Markets Advisory Committee will hold a public meeting on October 5, 2010, from 1 p.m. to 5 p.m., at the CFTC's Washington, DC headquarters.

Section 723 of the Dodd-Frank Wall Street Reform and Consumer Protection Act permits persons transacting business in exempt commodities in reliance upon Section 2(h) of the Commodity Exchange Act to petition the Commission for grandfather relief enabling them to continue to rely on Section 2(h) after the effective date of the Dodd- Frank Wall Street Reform and Consumer Protection Act. While persons may submit such grandfather relief petitions in accordance with the procedures provided herein, at this time the Commission has determined that it will not be issuing such relief to persons seeking to continue to rely on Section 2(h)(1)-(2). The Commission is prepared to revisit its decision in the future should it be necessary in order to ensure a smooth transition to the new regulatory regime mandated by the Dodd- Frank Wall Street Reform and Consumer Protection Act. Any relief that the Commission determines to grant in the future will not be limited to persons that may file a petition.

This document corrects a missing e-mail address in a proposed rule published in the Federal Register of September 9, 2010, regarding relief from certain disclosure, reporting and recordkeeping requirements that Commission staff previously has issued on a case-by- case basis to commodity pool operators (CPOs).

On September 15, 2010, commencing at 9 a.m. and ending at 12:30 p.m., staff of the Agencies will hold a public roundtable discussion at which invited participants will discuss swap execution facilities and security-based swap execution facilities in the context of certain authority that Sections 733 and 763 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the ``Act'') granted to the Agencies respectively. The discussion will be open to the public with seating on a first-come, first-served basis. Members of the public may also listen by telephone. Call-in participants should be prepared to provide their first name, last name, and affiliation. The information for the conference call is set forth below. US/Canada Toll-Free: 877-732-6422 Conference ID: 7772 A transcript of the public roundtable discussion will be published on the SEC's mandatory exchange trading and swap execution facilities rulemaking page at https://www.sec.gov/spotlight/ regreformcomments.shtml. The transcript also will be available by a link on the CFTC's SEF Registration Requirements and Core Principle Rulemaking, Interpretation & Guidance Web page at https://www.cftc.gov/ LawRegulation/OTCDerivatives/otc_rules.html. The roundtable discussion will take place in the Auditorium (Room L-002) at the SEC Headquarters located at 100 F Street, NE., Washington, DC.

The Commodity Futures Trading Commission (``Commission'' or ``CFTC'') is authorizing the National Futures Association (``NFA''), effective September 10, 2010, to process and grant applications for initial registration, renewed registration and withdrawals of retail foreign exchange dealers (``RFEDs'') and their associated persons (``APs'') and to issue temporary licenses to eligible APs; to conduct proceedings to deny, condition, suspend, restrict or revoke the registration of any RFED or AP of an RFED, or an applicant for registration in either category; and to maintain records regarding RFEDs and their APs, and to serve as the official custodian of those Commission records.

The Commission is extending the comment period for the Notice of Proposed Rulemaking (``NPRM'') that calls for the collection of ownership, control and related information.\1\ The new deadline for submitting public comments is October 7, 2010.