Fees for Reviews of the Rule Enforcement Programs of Designated Contract Markets and Registered Futures Associations
Federal Register, Volume 79 Issue 201 (Friday, October 17, 2014)
Federal Register Volume 79, Number 201 (Friday, October 17, 2014)
Notices
Pages 62418-62420
From the Federal Register Online via the Government Printing Office www.gpo.gov
FR Doc No: 2014-24624
=======================================================================
-----------------------------------------------------------------------
COMMODITY FUTURES TRADING COMMISSION
Fees for Reviews of the Rule Enforcement Programs of Designated Contract Markets and Registered Futures Associations
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice of 2014 Schedule of Fees.
-----------------------------------------------------------------------
SUMMARY: The Commodity Futures Trading Commission (CFTC or Commission) charges fees to designated contract markets and registered futures associations to recover the costs incurred by the Commission in the operation of its program of oversight of self-regulatory organization (SRO) rule enforcement programs, specifically National Futures Association (NFA), a registered futures association, and the designated contract markets. The calculation of the fee amounts charged for 2014 by this notice is based upon an average of actual program costs incurred during fiscal year (FY) 2011, FY 2012, and FY 2013.
DATES: Effective date: Each SRO is required to remit electronically the applicable fee on or before December 16, 2014.
FOR FURTHER INFORMATION CONTACT: Mary Jean Buhler, Chief Financial Officer, Commodity Futures Trading Commission; (202) 418-5089; Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581. For information on electronic payment, contact Jennifer Fleming; (202) 418-
5034; Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
-
Background Information
-
General
This notice relates to fees for the Commission's review of the rule enforcement programs at the registered futures associations \1\ and designated contract markets (DCM), each of which is an SRO regulated by the Commission. The Commission recalculates the fees charged each year to cover the costs of operating this Commission program.\2\ The fees are set each year based on direct program costs, plus an overhead factor. The Commission calculates actual costs, then calculates an alternate fee taking volume into account, and then charges the lower of the two.\3\
---------------------------------------------------------------------------
\1\ NFA is the only registered futures association.
\2\ See section 237 of the Futures Trading Act of 1982, 7 U.S.C. 16a, and 31 U.S.C. 9701. For a broader discussion of the history of Commission fees, see 52 FR 46070 (Dec. 4, 1987).
\3\ 58 FR 42643 (Aug. 11, 1993) and 17 CFR part 1, app. B.
---------------------------------------------------------------------------
Page 62419
-
Overhead Rate
The fees charged by the Commission to the SROs are designed to recover program costs, including direct labor costs and overhead. The overhead rate is calculated by dividing total Commission-wide overhead direct program labor costs into the total amount of the Commission-wide overhead pool. For this purpose, direct program labor costs are the salary costs of personnel working in all Commission programs. Overhead costs generally consist of the following Commission-wide costs: Indirect personnel costs (leave and benefits), rent, communications, contract services, utilities, equipment, and supplies. This formula has resulted in the following overhead rates for the most recent three years (rounded to the nearest whole percent): 145 Percent for FY 2011, 161 percent for FY 2012, and 181 percent for FY 2013.
-
Conduct of SRO Rule Enforcement Reviews
Under the formula adopted by the Commission in 1993, the Commission calculates the fee to recover the costs of its rule enforcement reviews and examinations, based on the three-year average of the actual cost of performing such reviews and examinations at each SRO. The cost of operation of the Commission's SRO oversight program varies from SRO to SRO, according to the size and complexity of each SRO's program. The three-year averaging computation method is intended to smooth out year-
to-year variations in cost. Timing of the Commission's reviews and examinations may affect costs--a review or examination may span two fiscal years and reviews and examinations are not conducted at each SRO each year.
As noted above, adjustments to actual costs may be made to relieve the burden on an SRO with a disproportionately large share of program costs. The Commission's formula provides for a reduction in the assessed fee if an SRO has a smaller percentage of United States industry contract volume than its percentage of overall Commission oversight program costs. This adjustment reduces the costs so that, as a percentage of total Commission SRO oversight program costs, they are in line with the pro rata percentage for that SRO of United States industry-wide contract volume.
The calculation is made as follows: The fee required to be paid to the Commission by each DCM is equal to the lesser of actual costs based on the three-year historical average of costs for that DCM or one-half of average costs incurred by the Commission for each DCM for the most recent three years, plus a pro rata share (based on average trading volume for the most recent three years) of the aggregate of average annual costs of all DCMs for the most recent three years. The formula for calculating the second factor is: 0.5a + 0.5 vt = current fee. In this formula, ``a'' equals the average annual costs, ``v'' equals the percentage of total volume across DCMs over the last three years, and ``t'' equals the average annual costs for all DCMs. NFA has no contracts traded; hence, its fee is based simply on costs for the most recent three fiscal years. This table summarizes the data used in the calculations of the resulting fee for each entity:
--------------------------------------------------------------------------------------------------------------------------------------------------------
Actual total costs 3-year
------------------------------------------------ average 3-year % of Volume FY 2014
FY 2011 FY 2012 FY 2013 actual costs volume adjusted costs assessed fee
--------------------------------------------------------------------------------------------------------------------------------------------------------
CBOE Futures............................ $98,556 $29,278 $235,567 $121,134 0.66 $65,672 $65,672
Chicago Board of Trade.................. 5,260 238,392 164,974 136,209 29.85 298,837 136,209
Chicago Mercantile Exchange............. 422,837 757,347 391,917 524,034 46.88 624,386 524,034
ELX Futures............................. .............. 34,593 134,267 56,287 0.212 29,782 29,782
ICE Futures U.S......................... 17,624 221,813 360,223 199,886 6.08 146,957 146,957
Kansas City Board of Trade.............. 30,976 34,335 559 21,957 0.17 12,331 12,331
Minneapolis Grain Exchange.............. 88,790 60,897 220,975 123,554 0.04 62,122 62,122
NADEX North American.................... .............. 11,293 101,252 37,515 0.000 18,758 18,758
New York Mercantile Exchange............ 136,565 7,411 135,316 93,098 15.41 165,638 93,098
NYSE LIFFE US........................... 416,069 71,317 24,802 170,729 0.50 89,232 89,232
One Chicago............................. .............. 55,755 128,599 61,452 0.176 32,085 32,085
---------------------------------------------------------------------------------------------------------------
Subtotal............................ 1,216,678 1,522,431 1,898,452 1,545,854 100 1,545,799 1,210,279
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Futures Association............ 416,615 487,328 186,499 363,480 .............. .............. 363,480
---------------------------------------------------------------------------------------------------------------
Total............................... 1,633,293 2,009,759 2,084,950 1,909,334 .............. .............. 1,573,760
--------------------------------------------------------------------------------------------------------------------------------------------------------
An example of how the fee is calculated for one exchange, the Chicago Board of Trade, is set forth here:
-
Actual three-year average costs equal $136,209.
-
The alternative computation is: (.5) ($136,209) + (.5) (.298) ($1,545,854) = $298,837.
-
The fee is the lesser of a or b; in this case $136,209.
As noted above, the alternative calculation based on contracts traded is not applicable to NFA because it is not a DCM and has no contracts traded. The Commission's average annual cost for conducting oversight review of the NFA rule enforcement program during fiscal years 2011 through 2013 was $363,480 (one-third of $1,090,441). The fee to be paid by the NFA for the current fiscal year is $363,480.
-
-
-
Schedule of Fees
Fees for the Commission's review of the rule enforcement programs at the registered futures associations and DCMs regulated by the Commission are as follows:
Page 62420
------------------------------------------------------------------------
2014 fee lesser
3-year average of actual or
actual cost calculated fee
------------------------------------------------------------------------
CBOE Futures........................ $ 121,134 $ 65,672
Chicago Board of Trade.............. 136,209 136,209
Chicago Mercantile Exchange......... 524,034 524,034
ELX Futures......................... 56,287 29,782
ICE Futures U.S..................... 199,886 146,957
Kansas City Board of Trade.......... 21,957 12,331
Minneapolis Grain Exchange.......... 123,554 62,122
NADEX North American................ 37,515 18,758
New York Mercantile Exchange........ 93,098 93,098
NYSE LIFFE US....................... 170,729 89,232
One Chicago......................... 61,452 32,085
-----------------------------------
Subtotal........................ 1,545,854 1,210,279
------------------------------------------------------------------------
National Futures Association........ 363,480 363,480
-----------------------------------
Total........................... 1,909,334 1,573,760
------------------------------------------------------------------------
-
Payment Method
The Debt Collection Improvement Act (DCIA) requires deposits of fees owed to the government by electronic transfer of funds. See 31 U.S.C. 3720. For information about electronic payments, please contact Jennifer Fleming at (202) 418-5034 or jfleming@cftc.gov, or see the CFTC Web site at www.cftc.gov, specifically, www.cftc.gov/cftc/cftcelectronicpayments.htm.
Authority: 7 U.S.C. 16a.
Issued in Washington, DC, on October 10, 2014, by the Commission.
Christopher J. Kirkpatrick,
Secretary of the Commission.
FR Doc. 2014-24624 Filed 10-16-14; 8:45 am
BILLING CODE 6351-01-P
