Agency Information Collection Activities; Proposals, Submissions, and Approvals: Proposed Questionnaire to Regulation 30.10 Relief Recipients

Federal Register: February 3, 2010 (Volume 75, Number 22)

Notices

Page 5576-5578

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

DOCID:fr03fe10-33

COMMODITY FUTURES TRADING COMMISSION

Agency Information Collection Activities: Request for New

Collection--3038-NEW, Registration Under the CEA--Proposed

Questionnaire to Regulation 30.10 Relief Recipients (17 CFR Part 30)

AGENCY: Commodity Futures Trading Commission

ACTION: Notice--proposed questionnaire.

SUMMARY: 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, and to allow 60 days for comment in response to the notice. The

Division of Clearing and Intermediary Oversight (DCIO) of the Commodity

Futures Trading Commission (CFTC) is proposing to send a questionnaire to obtain updated information on the current laws and market developments of each jurisdiction in which exemptive relief was granted by the Commission pursuant to Regulation 30.10.

DATES: Comments must be received by April 5, 2010.

ADDRESSES: Interested persons should submit their views and comments to

Secretary of the Commission, Commodity Futures Trading Commission, 1155 21st Street, NW., Washington, DC 20581. In addition, comments may be sent by facsimile transmission to number (202) 418-5521, or by electronic mail to secretary@cftc.gov. Reference should be made to

``Commission Regulation 30.10 Questionnaire.''

FOR FURTHER INFORMATION CONTACT: Andrew Chapin, Associate Director, or

Andrea Musalem, Attorney-Advisor, Division of Clearing and Intermediary

Oversight, Commodity Futures Trading Commission, 1155 21st Street, NW.,

Washington, DC 20581. Telephone: (202) 418-5167.

SUPPLEMENTARY INFORMATION:

  1. Background

    CFTC Regulation 30.10 allows persons located and doing business outside the U.S., who are subject to a comparable regulatory framework in the country in which they are located, to seek an exemption from the application of certain of the Part 30 regulations. Regulation 30.10 expressly states that, upon petition, the Commission may exempt any person from any requirement of the Part 30 regulations. If the

    Commission grants an exemption, persons located and doing business outside the U.S. may solicit or accept orders directly from U.S. customers for foreign futures or options transactions without registering under the Act as FCMs.

    A petition for exemption pursuant to Regulation 30.10 is typically filed on behalf of persons located and doing business outside the U.S. that seek access to U.S. customers by (1) a governmental agency responsible for implementing and enforcing the foreign regulatory program, or (2) a self-regulatory organization (SRO) of which such persons are members. A petitioner who seeks an exemption pursuant to

    Regulation 30.10, based on substituted compliance with a non-U.S. regulatory framework that is comparable to the Act and rules thereunder, must set forth with particularity the comparable regulations applicable in the jurisdiction in which that person is located. In essence, a petitioner under Regulation 30.10 must present, with particularity, the factual basis for a finding of comparability and the reasons why the policies and purposes of the Commission's regulatory program are met, notwithstanding any differences of degree or kind in the petitioner's regulatory program.

    Appendix A to Part 30 (Appendix A) articulates standards to be used by staff in assessing whether a foreign

    Page 5577

    regulatory system is comparable.\1\ These standards involve inquiry into the following areas: (1) Registration, authorization or other form of licensing, fitness review or qualification of persons through which customer orders are solicited and accepted; (2) minimum financial requirements for those persons that accept customer funds; (3) protection of customer funds from misapplication; (4) recordkeeping and reporting requirements; (5) minimum sales practice standards, including disclosure of the risks of futures and options transactions and, in particular, the risk of transactions undertaken outside the jurisdiction of domestic law; (6) compliance; and (7) information- sharing.

    \1\ ``Interpretative Statement With Respect to the Commission's

    Exemptive Authority Under Sec. 30.10 of its Rules,'' l7 C.R Part 30, Appendix A.

  2. The Proposed Questionnaire

    Currently, there are 13 foreign entities \2\ (two regulators and 11 futures exchanges) that have a Regulation 30.10 exemption some of which date back to the late eighties, early nineties. Consequently, the

    Commission's Division of Clearing and Intermediary Oversight (DCIO) would like to embark upon a program whereby each year, DCIO sends out a questionnaire to exemption recipients inquiring as to material and other relevant changes that impacted our could impact the fundamentals for which exemptive relief was granted in the first place.

    \2\ The 13 foreign entities are represented by the following jurisdictions: The United Kingdom, Australia, Brazil, Germany,

    Canada, France, Spain, New Zealand, Singapore, Taiwan, and Japan.

    The proposed 2010 Questionnaire will ask the following questions:

    The following questions relate to material changes that have occurred since the original filing of the 30.10 petition. Please answer the following questions in detail. 1. Have there been any material changes with regards to the identity or organization of the original Petitioner (i.e. change in control, change in name, change in structure, etc.)? 2. Has there been a change in the role of the government, the regulator, or the self-regulatory organization(s) which has or could potentially impact their supervision of and their enforcement powers over the exchange and its members? 3. Has there been any material change in the legal framework which impacted or could impact any of the following: a. Registration, authorization or other form of licensing, fitness review or qualification of persons through which customer orders are solicited and accepted; b. Minimum financial requirements for those persons that accept customer funds; c. Protection of customer funds from misapplication; d. Recordkeeping and reporting requirements; e. Minimum sales practice standards, including disclosure of risks of futures and options transactions and, in particular, the risk of transactions undertaken outside the jurisdiction of domestic law; and f. Compliance (i.e. any change in oversight structure which impacted or could impact the governmental authority or the self- regulatory organization's ability to audit Part 30 firms for compliance with, or take action against persons that violate the requirements of the Part 30 program). 4. What changes, if any, have occurred in insolvency laws as they affect futures customers? If there have been changes to insolvency laws, have the changes occurred within the past two to three years? To what extent do you view any recently proposed changes to insolvency laws as resulting from the 2008-09 financial crisis? 5. Security futures products have both an equity component and a futures component. Consequently, in what accounts are security futures products held (i.e. the equity account, the futures account, or a combined account)? Are security futures products subject to separate disclosure and margin requirements than those required for plain vanilla futures products? 6. Please provide an updated list of all firms with relief under the Regulation 30.10 exemption. 7. Since the granting of the original exemption, please affirm whether 30.10 firms have been subject to arbitration and/or disciplinary proceedings arising from transactions with U.S. customers. To the best extent possible, please provide the number of times and a brief description of such proceedings. 8. Please provide the name and contact information for individuals to whom follow up questions might be directed.

  3. Related Matters

    1. 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 businesses. 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.\3\ The proposed Questionnaire discussed herein would affect foreign futures exchanges and/or foreign securities regulators who sought and obtained Regulation 30.10 exemptive relief on behalf of its members and/or regulatees. Foreign regulators and exchanges are not included in the definition of ``small entities'' per 47 FR 18618 and 66 FR 42256. Therefore, the Chairman, on behalf of the

      Commission, hereby certifies, pursuant to 5 U.S.C. 605(b) that this proposed Questionnaire will not have an economic impact on a small entities. Nonetheless, the Commission specifically requests comment on the impact this proposed Questionnaire may have on small entities.

      Nonetheless, the Commission specifically requests comment on the impact this proposed Questionnaire may have on small entities--New

      Collection--3038.XXXX.

      \3\ 47 FR 18618-18621 (April 30, 1982).

    2. Paperwork Reduction Act

      When publishing a proposed questionnaire, the Paperwork Reduction

      Act of 1995 \4\ 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. In compliance with the Act, the Commission, through this

      Questionnaire proposal, solicits comments to: (1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including the validity of the methodology and assumptions used; (2) evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (3) enhance the quality, utility, and clarity of the information to be collected; and (4) minimize the burden of the collection of the information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission of responses.

      \4\ Public Law 104-13 (May 13, 1995).

      The Commission has submitted this proposed Questionnaire and its associated information collection requirements to the Office of

      Management and Budget. The burden associated with this entire New

      Collection--3038-XXXX--including this proposed Questionnaire, is as follows:

      Average burden hours per response: one hour/question

      Number of questions: 13

      Number of respondents: 13

      Frequency of response: Annually

      Persons wishing to comment on the estimated paperwork burden associated with this proposed Questionnaire should contact the Desk

      Officer, CFTC, Office of Management and Budget, Room 10202, NEOB,

      Washington, DC 20503, (202) 395-7340. Copies of the

      Page 5578

      information collection submission to OMB are available from the CFTC

      Clearance Officer, 1155 21st Street, NW., Washington, DC 20581, (202) 418-5160.

      Dated: January 28, 2010.

      David A. Stawick,

      Secretary of the Commission.

      FR Doc. 2010-2238 Filed 2-2-10; 8:45 am

      BILLING CODE P

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