Fees for Reviews of the Rule Enforcement Programs of Designated Contract Markets and Registered Futures Associations

Federal Register, Volume 83 Issue 239 (Thursday, December 13, 2018)

Federal Register Volume 83, Number 239 (Thursday, December 13, 2018)

Notices

Pages 64116-64118

From the Federal Register Online via the Government Publishing Office www.gpo.gov

FR Doc No: 2018-27042

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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 2018 schedule of fees.

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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 rule enforcement programs, specifically National Futures Association (``NFA''), a registered futures association, and the designated contract markets. Fees collected from each self-regulatory organization are deposited in the Treasury of the United States as miscellaneous receipts. The calculation of the fee amounts charged for 2018 by this notice is based upon an average of actual program costs incurred during fiscal year (FY) 2015, FY 2016, and FY 2017.

DATES: Each self-regulatory organization is required to remit electronically the applicable fee on or before February 11, 2019.

FOR FURTHER INFORMATION CONTACT: Anthony C. Thompson, Executive Director, Commodity Futures Trading Commission; (202) 418-5697; 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:

1. Background Information

   1. 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 a self-

      regulatory organization (``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\

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      \1\ National Futures Association 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, appendix B

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   2. 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): 211 percent for FY 2015, and 190 percent for FY 2016, and 175 precent for FY 2017.

   3. 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

      Page 64117

      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:

      Table 1--Summary of Data Used in Fee Calculations

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      3-Year average 3-Year average Adjusted 2017 Actual 2018 Assessed

      Actual total costs FY 2015 FY 2016 FY 2017 actual costs volume (%) volume costs fee fee

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      CBOE Futures.................................................... $158,209 $227,059 $31,765 $139,011 1.44 $79,398 $71,004 $79,398

      Chicago Board of Trade.......................................... 17,938 28,720 98,737 48,465 30.14 231,283 34,058 48,465

      Chicago Mercantile Exchange..................................... 540,151 372,278 483,391 465,273 44.34 537,235 379,377 465,273

      ICE Futures U.S................................................. 105,864 386,719 203,826 232,136 8.68 175,696 143,431 175,696

      Minneapolis Grain Exchange...................................... 147,983 14,314 43,230 68,509 0.06 34,667 35,250 34,667

      NADEX North American............................................ .............. 81,758 86,680 56,146 0.18 29,309 14,516 29,309

      New York Mercantile Exchange.................................... 118,701 242,792 217,861 193,118 14.25 194,451 172,990 193,118

      OneChicago, LLC................................................. 289 282 37,311 12,627 0.31 8,443 6,798 8,443

      NASDAQ.......................................................... .............. .............. 257,177 85,726 0.58 46,847 .............. 46,847

      ERIS Exchange................................................... .............. .............. 54,272 18,091 0.01 9,136 .............. 9,136

      CANTOR.......................................................... .............. .............. 61,474 20,491 .............. 10,246 .............. 10,246

      NODAL........................................................... .............. .............. 102,993 34,331 .............. 17,166 .............. 17,166

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      Subtotal.................................................... 1,089,134 1,353,921 1,678,716 1,373,924 100 1,373,877 857,423 1,117,763

      National Futures Association.................................... 401,337 282,405 676,430 453,390 .............. .............. 325,281 453,390

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      Total................................................... 1,490,471 1,636,326 2,355,145 1,827,314 .............. .............. $1,182,704 1,571,154

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      Note to Table 1: The 2018 Fee is the Lessor of the 3-year Average Actual cost or the Adjusted Volume Cost

      An example of how the fee is calculated for one exchange, the Chicago Board of Trade, is set forth here:

      1. Actual three-year average costs = $48,465.

      2. The alternative computation is: (.5) ($48,465) + (.5) (.3014) ($1,373,924) = $231,283.

      3. The fee is the lesser of a or b; in this case $48,465.

      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 2015 through 2017 was $453,390. The fee to be paid by the NFA for the current fiscal year is $453,390.

2. 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:

   Table 2--Schedule of Fees

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   3-Year average 3-Year average Adjusted 2018 Assessed

   actual costs volume % volume costs fee

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   CBOE Futures.................................... $139,011 1.44 $79,398 $79,398

   Chicago Board of Trade.......................... 48,465 30.14 231,283 48,465

   Chicago Mercantile Exchange..................... 465,273 44.34 537,235 465,273

   ICE Futures U.S................................. 232,136 8.68 175,696 175,696

   Minneapolis Grain Exchange...................... 68,509 0.06 34,667 34,667

   NADEX North American............................ 56,146 0.18 29,309 29,309

   New York Mercantile Exchange.................... 193,118 14.25 194,451 193,118

   OneChicago, LLC................................. 12,627 0.31 8,443 8,443

   NASDAQ.......................................... 85,726 0.58 46,847 46,847

   ERIS Exchange................................... 18,091 0.01 9,136 9,136

   CANTOR.......................................... 20,491 .............. 10,246 10,246

   NODAL........................................... 34,331 .............. 17,166 17,166

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   Subtotal.................................... 1,373,924 100 1,373,877 1,117,763

   National Futures Association.................... 453,390 .............. .............. 453,390

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   Total................................... 1,827,314 .............. .............. 1,571,154

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   Page 64118

3. 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 email protected, or see the CFTC website at http://www.cftc.gov, specifically, www.cftc.gov/cftc/cftcelectronicpayments.htm.

   Fees collected from each self-regulatory organization shall be deposited in the Treasury of the United States as miscellaneous receipts. See 7 U.S.C 16a.

   Issued in Washington, DC, on December 10, 2018, by the Commission.

   Robert Sidman,

   Deputy Secretary of the Commission.

   FR Doc. 2018-27042 Filed 12-12-18; 8:45 am

   BILLING CODE 6351-01-P