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a contract is dormant as defined in $ 5.2(a) of these regulations.
(d) Time for filing. Contract markets are required to file reports required under paragraph (b) within 30 days of the end of the relevant low volume trading period. Unless provided otherwise by notice to the contract market, subsequent low volume trading periods will begin immediately following the end of a previous low volume trading period.
APPENDIX A-GUIDELINE No. 1; INTER
PRETIVE STATEMENT REGARDING EcoNOMIC AND PUBLIC INTEREST REQUIREMENTS FOR CONTRACT MARKET DESIGNATION
For purposes of a board of trade seeking designation as a contract market and thereafter for the purpose of demonstrating continued compliance with the requirements of sections 5 and 5a of the Commodity Exchange Act, the following shall be provided to the Commission.
A. Description of the Cash Market. In support of the justification and demostration to be furnished under Sections B and C of this guideline, a board of trade shall submit with its application a description of the cash market for the commodity on which the contract is based. For purposes of this section, the term cash market includes all aspects of the spot and forward markets in which the commodity underlying the contract is merchandised and for which the contract serves a hedging or price basing function. As applicable to the justification of individual contract terms or the contract's hedging or price basing function, the cash market description shall include:
(1) Production of the underlying commodity, including as appropriate, geographical locations and seasonal patterns in the case of tangible commodities and scheduled issuances in the case of financial instruments.
(2) Consumption of the underlying commodity, including, as appropriate, geographic locations and seasonal patterns of intermediate and ultimate consumption in the case of tangible commodities.
(3) The nature and structure of the cash marketing channels, including the nature and number of marketing institutions, the nature of the forward contracting market, and the manner in which the price of the commodity is determined at various stages in its marketing.
(4) The prevalent means of market communications, methods of financing commodity ownership, and in the case of tangible commodities the manner in which tangible commodities are transported and stored.
(5) Information provided by the board of trade pursuant to this section shall include statistical data where applicable and where reasonably available. Such data shall cover a period of time sufficient to show accurately the historical patterns of production, consumption and marketing of the commodity which are relevant to the pricing or hedging use of the contract and/or the specification of its terms and conditions. In the absence of a justification for providing data from a shorter period, at least five (5) years of such data should be provided. If the board of trade through reasonable effort cannot obtain sufficient data, interviews with, or statements by, persons having knowledge of the cash market may be used to supplement or, if necessary, substitute for quantitative information.
(B) Justification of Individual Contract Terms and Conditions. A board of trade shall submit an analysis and justification of significant individual terms and conditions of the contract. Such analysis and justification for each term and condition should be supported in the manner provided by paragraph (5) of Section A of the guideline.
(1) The justification submitted by a board of trade concerning significant contract terms shall include, where applicable, (a) evidence of conformity with the underlying cash market and (b) evidence that the term for condition will provide for a deliverable supply which will not be conducive to price manipulation or distortion and that such a supply reasonably can be expected to be available to the short trader and saleable by the long trader at its market value in normal cash marketing channels. To the extent that a term or condition is not in conformity with prevailing cash market practices, the board of trade shall provide a reason for the variance and demonstrate that the term or condition is necessary or appropriate for the contract and will result in sufficiently available and saleable deliverable supplies.
(2) The justification shall also include, where applicable, the following:
(a) Complete specification of commodity characteristics for par and non-par delivery (such as grade, class, weight, issuer, maturi. ty, rating) including the economic basis for the premiums and discounts, or lack thereof, for differing characteristics. For futures contracts based on debt securities, this shall include an economic justification of the formula to be used for the evaluation of nonpar instruments.
(b) All delivery points, including, where applicable, for each point:
(i) The nature of the cash market at the delivery point (e.g., auction market, buying station or export terminal);
(ii) A description of the composition of the market;
(iii) The normal commercial practice for stablishing cash market values and the vailability of published cash prices reflectng the value of the deliverable commodity; (iv) The level of deliverable supplies norally available, including the seasonal disribution of such supplies; and
(v) Any locational differentials for delivry points, including the economic basis for iscounts or premiums, or lack thereof, aplying to delivery points;
(c) A description of the delivery facility such as warehouse, depository, financial institution) including:
(i) The type(s) of delivery facility at each delivery point;
(ii) The number and total capacity of facilities meeting contract requirements;
(iii) The proportion of such capacity expected to be available for traders who may wish to make delivery and seasonal changes in such proportions; and
(iv) The extent to which ownership and control of such facilities is dispersed or concentrated;
(d) Delivery months. The board of trade shall specify the delivery months and, where applicable, shall describe the relationship of each future delivery month to cyclical variations in deliverable supplies, availability of warehouse space, transportation facilities, cash market activity, and any other factors which may affect the viability of delivery in each such month. The board of trade's justification shall also consider the delivery months for existing contracts which draw on the same deliverable supply.
(e) The permissible delivery pack or composition of delivery units (such as 30 dozen cases of eggs or bonds of the same issue), including a description of any restrictions on the composition of the delivery unit;
(f) The size of contract unit, and, where relevant,
(i) Information concerning the typical cash market transaction size.
(ii) Information concerning the usual means of transportation for the commodity, including the quantity of the commodity customarily carried by such means, and
(iii) If a storable commodity is involved, the size of the unit normally handled by commercial storage facilities;
(g) The inspection and certification procedures for the verification of delivery eligibility and, for perishable commodities, the duration of the inspection certificate and any discounts applied to deliveries of a given age;
(h) The delivery instrument (such as a warehouse receipt of demand certificate), and the conditions under which such instrument is negotiable;
(i) The transportation terms at point of delivery (such as FOB, CIF, proportional rail billing or freight paid to another destination);
(j) The provisions for payment of costs in making and taking delivery, including a description of significant costs (such as inspection, assay, certification, warehouse charges or rail charges);
(k) The minimum price change (minimum price fluctuation), including the manner in which prices for the underlying commodity are normally quoted;
(1) Any restrictions on daily price movements (maximum price fluctuations), including the effect of any such restrictions upon the contract's pricing and hedging functions; and
(m) A demonstration that the contract terms and conditions, as a whole, will result in a deliverable supply which will not be conducive to price manipulation or distortion.
(3) In the case of contracts where cash settlements may serve as an alternative to or substitute for physical delivery, information submitted by the board of trade pursuant to this section must include evidence that the cash settlement of the contract is at a price reflecting the underlying cash market, will not be subject to manipulation, and must also include:
(a) an analysis of the price series upon which such settlement will be based, including the series' reliability, acceptability, public availability and timeliness.
(b) an analysis of the potential for manipulation of the cash-price series.
C. Economic Purpose Test. As a condition of initial and continued designation, a board of trade must demonstrate that the contract meets the economic purpose test. In order to meet the economic purpose test a board of trade shall demonstrate that:
(1) The prices involved in transactions for future delivery in the commodity are, or reasonably can be expected to be, generally quoted and disseminated as a basis for de termining prices to producers, processors, merchants, or consumers of such commodity or the products or byproducts thereof, or
(2) Such transactions are, or reasonably can be expected to be, utilized by producers, processors, merchants, or consumers engaged in handling such commodity (including the products, byproducts or source commodity thereof) in interstate (including foreign) commerce as means of hedging themselves against possible loss through fluctuations in price.
(3) For purposes of this section, the term hedging means bona fide hedging transactions and positions as defined in $ 1.3(2)(1) of the Commission's rules.
(4) Initial Designation. To meet the economic purpose test at the time of initial designation, a board of trade must demonstrate that it is reasonable to expect the contract, as specified, to be used for hedging and/or price basing by providing an analysis of the
potential price basing and hedging uses of the contract which shall include consideration of:
(a) The salient characteristics of the cash market, including its institutions and participants, as described pursuant to Section A of this guideline.
(b) The intended price basing or hedging characteristics of the specific contract terms and conditions, as described pursuant to Section B of this guideline. If a principal commercial use of the contract is expected to be hedging of commodities other than that for which designation is sought ("cross hedging") the board of trade shall supply data which indicates that such use of the contract would constitute appreciable risk reduction.
(c) As requested, statements from, or reports of interviews with potential users of the contract which convey specifically the manner and circumstances under which these persons may be expected to utilize the contract for pricing or hedging.
(5) Continuing Designation. To justify its continuing designation under the economic purpose requirement, a board of trade designated as a contract market must demonstrate that trading in the contract for which it is designated has, in fact, served a hedg. ing or price basing function on more than an occasional basis. Such a demonstration shall include:
(a) An evaluation of the actual trading experience in the contract in terms of commercial usage and its use for price basing.
(b) An evaluation of the extent to which commercial participation in the contract constitutes hedging.
D. Other Public Interest Requirements. As requested, a board of trade shall submit evidence other than that required in sections B and C of this guideline pertaining to the public interest standard contained in Section 5(g) of the Act. [47 FR 49838, Nov. 3, 1982)
(d) An exchange with one or more applications for designation pending before the Commission on the effective date of this section may elect to pay the $10,000 fee for any such application by remitting the fee in the manner provided by paragraph (b) of this section within 30 days of such effective date. With respect to all such applications for which such $10,000 fee has not been paid, the exchange shall, within 30 days of the effective date of this section, send written notice to the Commission, at the address provided in paragraph (b) of this section, which notice shall specify which of its pending applications the exchange requests the Commission to continue to process. With respect to each application for which such request is made, including any application that the exchange withdraws from Commission consideration subsequent to the end of such 30-day period but prior to final Commission action thereon, the exchange shall pay the $10,000 fee no later than the earlier of (1) three business days after the date on which the Commission takes final action on the application or (2) one year after the effective date of this section. If, as to any pending application, the exchange fails either to pay the fee or to provide the Commission with written notice as provided in this paragraph within 30 days of the effictive date of this section, such application shall be deemed withdrawn by the exchange at the end of such 30-day period, and no fee shall be payable with respect to such application. The withdrawal of any application as herein provided shall be without prejudice to the exchange resubmitting the application subsequent to the end of such 30-day period. Any such resubmission shall be subject to payment of the fee provided in paragraph (a) of this section as then in effect. (Secs. 40(c), 5, 5a, and 8a(5) of the Commodity Exchange Act, 7 U.S.C. 6c(c), 7, 7a, and 12a(5); sec. 26 of the Futures Trading Act of 1978, 92 Stat. 877, 7 U.S.C. 16a (Supp. V 1981), as amended by sec. 237 of the Futures Trading Act of 1982, Pub. L. 97-444, 96 Stat. 2326 (Jan. 11, 1983); Independent Offices Appropriation Act of 1952, as amended by Pub. L. 97-258, 96 Stat. 1051 (Sept. 13, 1982)) [48 FR 38217, Aug. 23, 1983)
APPENDIX B-SCHEDULE OF FEES
(a) Applications for Contract Market Designation. Each application for designation as a contract market must be accompanied by a check or money order in the amount of $10,000 made payable to the Commodity Futures Trading Commission.
(b) Checks and applications should be sent to the attention of the Office of the Secretariat, Commodity Futures Trading Commission, 2033 K Street, NW., Washington, D.C. 20581. No checks or money orders may be accepted by personnel other than those in the Office of the Secretariat.
(c) Failure to submit the fee with an applications for designation as a contract market will result in return of the application. Fees will not be returned after receipt.
PART 1-CONTRACT MARKET RULES
ALTERED OR SUPPLEMENTED BY
Subpart A-General Provisions
Sec. 7.1 Scope of rules.
Subpart B-Chicago Mercantile Exchange Rules
87.101 Rule 3602(A).
Rule 3602(A) of the Chicago Mercantile Exchange governing trading months and hours in the One-Year U.S. Treasury Bill futures contract is altered and shall provide as follows: Futures contracts shall be scheduled for trading during such hours and delivery in such months as may be determined by the Board of Governors, subject to the requirement that all such determinations and other actions implementing such determinations be submitted to the Commodity Futures Trading Commission in accordance with the provisions of section 5a(12) of the Commodity Exchange Act and all Commission regulations adopted thereunder.
7.100 Rule 3202(A). 7.101 Rule 3602(A).
Subpart C—Board of Trade of the City of
7.200 Rule 1805.01.
AUTHORITY: Secs. 5a(12) and 8a(7) of the Commodity Exchange Act, 7 U.S.C. 7a(12) and 12a(7) (1976).
SOURCE: 45 FR 51526, Aug. 1, 1980, unless otherwise noted.
Subpart C—Board of Trade of the
City of Chicago Rules
Subpart A-General Provisions
8 7.1 Scope of rules.
This part sets forth contract market rules altered or supplemented by the Commission pursuant to section 8a(7) of the Act.
Subpart B-Chicago Mercantile
$ 7.200 Rule 1805.01.
Rule 1805.01 of the Board of Trade of the City of Chicago governing months traded in the Long-Term (20year) United States Treasury Bond futures contract is altered and shall provide as follows: Trading in long-term U.S. Treasury bonds may be scheduled for trading in such months as determined by the Financial Instruments Committee or the Board, subject to the requirement that all such determinations and other actions implementing such determinations be submitted to the Commodity Futures Trading Commission in accordance with the provisions of section 5a(12) of the Commodity Exchange Act and all Commission regulations adopted thereunder.
8 7.100 Rule 3202(A).
Rule 3202(A) of the Chicago Mercantile Exchange governing trading months and hours in the contract market's 13-Week U.S. Treasury Bill futures contract is altered and shall hereby provide as follows: Futures contracts shall be scheduled for trading during such hours and delivery in such months as may be determined by the Board of Governors, subject to the requirement that all such determinations and other actions implementing such determinations be submitted to the Commodity Futures Trading Commission in accordance with the provisions of section 5a(12) of the Commodity Exchange Act and all Commission regulations adopted thereunder.
8 7.201 Regulation 620.01(B).
Customers' claims and grievances. The Arbitration Committee and Mixed Panels constituted pursuant to Regulation 620.02 have jurisdiction to arbitrate all customers' claims and grievances against any member or employee thereof which have arisen prior to the date the customer's claim is asserted. If the customer elects to initiate an arbitration proceeding of any customer claim or grievance, the member shall submit to arbitration in accordSec. 8.11 Notice of charges. 8.12 Right to representation. 8.13 Answer to charges. 8.14 Admission or failure to deny charges. 8.15 Denial of charges and right to hear
ing. 8.16 Settlement offers. 8.17 Hearing. 8.18 Decision. 8.19 Appeal. 8.20 Final decision.
ance with these Arbitration Rules and Regulations. The Arbitration shall be initiated by delivery to the Administrator of (a) a Statement of Claim and a “Chicago Board of Trade Arbitration Submission Agreement for Customer's Claims and Grievances” signed by the customer or (b) a Statement of Claim and another arbitration agreement between the parties, which agreement conforms in all respects with any applicable requirements prescribed by the Commodity Futures Trading Commission. The refusal of any member or employee to sign the “Chicago Board of Trade Arbitration Submission Agreement for Customer's Claims and Grievances” shall not deprive the Arbitration Committee or a Mixed Panel constituted pursuant to Regulation 620.02 of jurisdiction to arbitrate customers' claims under these Arbitration Rules and Regulations. The Committee and Mixed Panels have jurisdiction to arbitrate a counterclaim asserted in such an arbitration, but only if it arises out of the transaction or occurrence that is the subject of the customer's claim or grievance and does not require for adjudication the presence of essential witnesses, parties or third persons over whom the Association does not have jurisdiction. Other counterclaims are subject to arbitration by the Committee, or a Mixed Panel, only if the customer agrees to the submission after the counterclaim has arisen.
Subpart C—Summary Actions 8.25 Member responsibility actions. 8.26 Procedure for member responsibility
actions. 8.27 Violations of rules regarding decorum,
submission of records or other similar
activities. 8.28 Final decision.
AUTHORITY: 7 U.S.C. 60, 7a, 12a and 12c.
SOURCE: 43 FR 41950, Sept. 19, 1978, unless otherwise noted.
Subpart A-General Provisions
8 8.01 Scope of rules.
This part sets forth the standards to be followed by an exchange in establishing procedures for investigating and adjudicating possible rule violations within the disciplinary jurisdiction of the exchange, for taking summary action in member responsibility cases and in cases involving violations of rules regarding decorum, submission of records or other similar activities, and for adjudicating membership denial determinations. Nothing in this part shall be construed to prohibit an exchange from adopting additional rules and practices not inconsistent with those set forth herein.
(49 FR 10660, Mar. 22, 1984)
PART 8-EXCHANGE PROCEDURES
FOR DISCIPLINARY, SUMMARY, AND MEMBERSHIP DENIAL ACTIONS
Subpart A-General Provisions
Sec. 8.01 Scope of rules. 8.02 Implementing exchange rules. 8.03 Definitions.
8 8.02 Implementing exchange rules.
(a) Each exchange shall submit to the Commission for its approval rules implementing the following regula. tions: $ $ 8.11, 8.13, 8.15, 8.17, 8.18 and 8.20 of Subpart B and $ $ 8.26 and 8.28 of Subpart C. Any such rule not previously submitted to the Commission shall not be put into effect prior to Commission approval.
(b) An exchange may adopt rules implementing any or all of the following regulations: $ $ 8.10, 8.16 and 8.19 of Subpart B and $ 8.27 of Subpart C.
Subpart B-Disciplinary Procedure
8.05 Enforcement staff. 8.06 Investigations. 8.07 Investigation reports. 8.08 Disciplinary committee. 8.09 Review of investigation report. 8.10 Predetermined penalties.