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

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Commodity Futures Trading Commission.


Establish a new schedule of fees.


The Commission charges fees to designated contract markets and the National Futures Association (NFA) to recover the costs incurred by the Commission in the operation of a program which provides a service to these entities. The fees are charged for the Commission's conduct of its program of oversight of self-regulatory rule enforcement programs (17 CFR part 1 appendix B) (NFA and the contract markets are referred to as SROs).

The calculation of the fee amounts to be charged for the upcoming year is based on an average of actual program costs incurred in the most recent three full fiscal years, as explained below. The new fee schedule is set forth in the Supplementary Information and information is provided on the effective date of the fees and the due date for payment.


The fees for Commission oversight of each SRO rule enforcement program must be paid by each of the named SROs in the amount specified by no later than August 17, 2001.

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Donald L. Tendick, Acting Executive Director, Office of the Executive Director, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581, (202) 418-5160.

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I. General

This notice only relates to fees for the Commission's review of the rule enforcement programs at the registered futures associations and contract markets regulated by the Commission. Fees for designation will be set forth in rules implementing the Commodity Futures Modernization Act of 2000, Appendix E of Pub. L. No. 106-554, 114 Stat. 2763, and the Commission's new regulatory framework. The Commission has proposed rules to implement the Commodity Futures Modernization Act of 2000, Appendix E of Pub. L. No. 106-554, 114 Stat. 2763, and the Commission's new regulatory framework. The proposed rules (66 FR 14262, Mar. 9, 2001) establish three new market categories, including exempt markets and two categories of markets subject to Commission regulatory oversight—designated contract markets and registered derivatives transaction execution facilities. The Commission proposed also to charge a fee for product review where approval has been requested by a designated contract market or registered derivatives transaction execution facility. See 66 FR 14262, 14286 (Mar. 9, 2001). No fee was proposed for the initial designation of a contract market or registration of a derivatives transaction execution facility. The new rules will amend the Schedule of Fees found in appendix B to part 5 of the Commission's rules.

II. Schedule of Fees

Fees for the Commission's review of the rule enforcement programs at the registered futures associations and contract markets regulated by the Commission:

EntityFee amount
Chicago Board of Trade$187,396
Chicago Mercantile Exchange224,912
New York Mercantile Exchange/COMEX173,156
New York Board of Trade73,730
Minneapolis Grain Exchange3,269
National Futures Association213,421

III. Background Information

A. General

The Commission recalculates the fees charged each year with the intention of recovering the costs of operating this Commission program.[1] All costs are accounted for by the Commission's Management Accounting Structure Codes (MASC) system, which records each employee's time for each pay period. The fees are set each year based on direct program costs, plus an overhead factor.

B. 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 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 consist generally 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): 104 percent for fiscal year 1998, 105 percent for fiscal year 1999, and 105 percent for fiscal year 2000. These overhead rates are applied to the direct labor costs to calculate the costs of oversight of SRO rule enforcement programs.

C. Conduct of SRO Rule Enforcement Reviews

Under the formula adopted in 1993 (58 FR 42643, Aug. 11, 1993) which appears at 17 CFR part 1 appendix B, the Commission calculates the fee to recover the costs of its review of rule enforcement programs, based on a three-year average of the actual cost of performing reviews at each SRO. The cost of operation of the Commission's program of SRO oversight varies from SRO to SRO, according to the size and complexity of each SRO's program. The three-year averaging is intended to smooth out year-to-year variations in cost. Timing of reviews may affect costs—a review may span two fiscal years and reviews are not conducted at each SRO each year. 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 made is as follows: The fee required to be paid to the Commission by each contract market is equal to the lesser of actual costs based on the three-year historical average of costs for that contract market or one-half of average costs incurred by the Commission for each contract market 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 contract markets for the most recent three years. The formula for calculating the second factor is: 0.5a + 0.5vt=current fee. In this formula, “a” equals the average annual costs, “v” equals the percentage of total volume across exchanges over the last three years, and “t” equals the average annual cost for all exchanges. NFA, the only registered futures association regulated by the Commission, 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 and the resulting fee for each entity:

Three-year average actual costsThree-year percentage of volumeAverage year 2001 fee
Chicago Board of Trade$187,39643.3411$187,396
Chicago Mercantile Exchange224,91235.7562224,912
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New York Board of Trade120,0683.522073,730
Kansas City Board of Trade24,582.401913,854
Minneapolis Grain Exchange5,102.18453,269
Philadelphia Board of Trade0.00040
National Futures Association213,421N/A213,421

An example of how the fee is calculated for one exchange, the Minneapolis Grain Exchange, is set forth here:

a. Actual three-year average costs equal $5,102.

b. The alternative computation is:

(.5)($5,102) + (.5)(.001845)($777,760) = $3,269.

c. The fee is the lesser of a or b; in this case $3,269.

As noted above, the alternative calculation based on contracts traded, is not applicable to the NFA because it is not a contract market and has no contracts traded. The Commission's average annual cost for conducting oversight review of the NFA rule enforcement program during fiscal years 1998 through 2000 was $213,421 (one-third of $640,263). The fee to be paid by the NFA for the current fiscal year is $213,421.

IV. Regulatory Flexibility Act

The Regulatory Flexibility Act, 5 U.S.C. 601, et seq., requires agencies to consider the impact of rules on small business. The fees implemented in this release affect contract markets (also referred to as exchanges) and registered futures associations. The Commission has previously determined that contract markets and registered futures associations are not “small entities” for purposes of the Regulatory Flexibility Act. Accordingly, the Acting Chairman on behalf of the Commission, certifies pursuant to 5 U.S.C. 605(b), that the fees implemented here will not have a significant economic impact on a substantial number of small entities.

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Issued in Washington, DC on June 6, 2001 by the Commission.

Catherine D. Dixon,

Assistant Secretary of the Commission.

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1.  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).

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[FR Doc. 01-15272 Filed 6-15-01; 8:45 am]