[Federal Register Volume 64, Number 117 (Friday, June 18, 1999)]
[Proposed Rules]
[Pages 32829-32830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-15441]
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COMMODITY FUTURES TRADING COMMISSION
17 CFR Parts 1 and 30
Access to Automated Boards of Trade
AGENCY: Commodity Futures Trading Commission.
ACTION: Proposed rules; withdrawal.
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SUMMARY: On March 24, 1999, the Commission issued proposed rules to
permit the use in the United States of automated trading systems
providing access to foreign electronic boards of trade. The Commission
has decided to withdraw these proposed rules.
FOR FURTHER INFORMATION CONTACT: David M. Battan, Chief Counsel,
Lawrence B. Patent, Associate Chief Counsel, or Charles T. O'Brien,
Attorney Advisor, Division of Trading and Markets, Commodity Futures
Trading Commission, 1155 21st Street, N.W., Washington, D.C. 20581.
Telephone (202) 418-5450.
SUPPLEMENTARY INFORMATION: The Commission had first sought public
comment on these matters in a concept release published July 24, 1998,
followed by the proposed rules published in March. After an extension
was granted at the request of a number of industry participants, the
comment period on the proposed rules closed on April 30, 1999. During
the comment period, the Commission held a Public Roundtable as well as
a meeting of its Global Markets Advisory Committee (``GMAC'') to
discuss these matter.
On June 2, 1999, the Commission issued an order withdrawing the
proposed rules and instructing the staff ``to begin immediately
processing no-action requests from foreign boards of trade seeking to
place terminals in the United States, and to issue responses where
appropriate, pursuant to general guidelines included in the Eurex (DTB)
no-action process,\1\ or other guidelines issued by the Commission, to
be reviewed and applied as appropriate on a case-by-case basis.'' See
Order of the Commission (June 2, 1999). In the same order, the
Commission determined to ``commit to simultaneously initiate processes
to address the comparative regulatory levels between U.S. and foreign
electronic systems so as not to
[[Page 32830]]
provide one with a competitive advantage.'' Id.
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\1\ In February 1996, the Commission's Division of Trading and
Markets (``Division'') issued a no-action letter to the Deutsche
Terminborse (``DTB'' or ``Eurex''), an all-electronic futures and
option exchange headquartered in Frankfurt, Germany, in which the
Division agreed, subject to certain conditions, not to recommend
enforcement action to the Commission if Eurex placed computer
terminals in the U.S. offices of its members.
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As with the rapid developments in technology overtaking other
industries, the growth of electronic exchanges and the placement of
cross-border futures and option trading systems in the United States
raise some of the most basic and fundamental issues facing the
Commission and the futures industry. Among the critically important
questions that need to be addressed are what role intermediation will
play when technological developments make access to global markets far
easier than before; what the future relationships will be between and
among customers, futures commission merchants, exchanges, technology
providers, and regulators; and how to provide a level-playing field and
foster fair competition in the context of electronic trading systems
between domestic and foreign market participants and between exchanges
and FCMs while maintaining the protection of customers and the safety
and soundness of larger and faster global markets.
The Commission's July 1998 concept release was by necessity of a
general nature, and the resulting comments were not able to address
with specificity all of these difficult issues. Only with the release
of the proposed rules have all of the interested parties focused fully
on all of the specific questions at hand. Moreover, even in just the
past few months, the technology and the business relationships among
the various constituents in the futures industry have changed
substantially, and continue to do so. In any event, the result of all
this, as evidenced by the comments received on the proposed rules, and
by the wide-ranging positions outlined at the recent Roundtable and
GMAC meetings on these issues, is that further consensus among the
various affected parties must be sought before rules or guidelines may
be finalized in this area. In this environment, the Commission
determined to withdraw its proposed rules and defer adoption of final
rules or guidelines pending further consideration of these issues by
the Commission.
Issued in Washington, D.C. on June 11, 1999 by the Commission.
Jean A. Webb,
Secretary of the Commission.
U.S. Commodity Futures Trading Commission
Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581
June 2, 1999.
Order of the Commission
It is hereby ordered that the Commodity Futures Trading
Commission shall, effective immediately:
Lift the moratorium and instruct the staff to begin immediately
processing no-action requests from foreign boards of trade seeking
to place trading terminals in the United States, and to issue
responses where appropriate, pursuant to the general guidelines
included in the Eurex (DTB) no-action process, or other guidelines
established by the Commission, to be reviewed and applied as
appropriate on a case-by-case basis;
Commit to simultaneously initiate processes to address the
comparative regulatory levels between U.S. and foreign electronic
trading systems so as not to provide one with a competitive
advantage; and
Withdraw the proposed rules regarding access to automated boards
of trade and proceed expeditiously toward adoption of rules and/or
guidelines.
Dated: June 2, 1999.
Commissioner Barbara P. Holum.
Dated: June 2, 1999.
Commissioner David D. Spears.
Dated: June 2, 1999.
Commissioner James E. Newsome.
[FR Doc. 99-15441 Filed 6-17-99; 8:45 am]
BILLING CODE 6351-01-M