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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 the FY 2004 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 FY 2004 is based on an average of actual program costs incurred in during FY 2001, 2002, and 2003, as explained below. The FY 2004 fee schedule is set forth in the SUPPLEMENTARY INFORMATION. Beginning with the FY 2004 fee, electronic payment of fees is required.


The FY 2004 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 January 18, 2005.

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Stacy Dean Yochum, Counsel to the Executive Director, Commodity Futures Trading Commission, (202) 418-5160, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581. For information on electronic payment, contact Stella Lewis, Three Lafayette Centre, 1155 21st Street NW., Washington, DC 20581, (202) 418-5186.

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I. General

This notice 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.

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$81,264
Chicago Mercantile Exchange318,729
Kansas City Board of Trade11,866
New York Mercantile Exchange136,622
Minneapolis Grain Exchange6,605
National Futures Association110,946
New York Board of Trade51,075
BrokerTec Futures Exchange 112,126
1 BrokerTec Futures Exchange, now known as Exchange Place Futures Exchange, LLC, ceased operations in November 2003. As of January 30, 2004, Exchange Place Futures is wholly owned by U.S. Futures Exchange (USFE).

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.[2] 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 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 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): 117 percent for fiscal year 2001, 129 percent for fiscal year 2002, and 113 percent for fiscal year 2003. 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 Start Printed Page 67544appears 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 the three-year average of the actual costs 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 + 0.5 vt = 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 costs 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 2003 fee
Chicago Board of Trade$81,26434.0371$81,264
Chicago Mercantile Exchange318,72950.8784318,729
New York Mercantile Exchange182,49212.4781136,622
New York Board of Trade87,4852.016351,075
Kansas City Board of Trade21,5340.302211,866
Minneapolis Grain Exchange12,3940.11216,605
BrokerTec Futures Exchange23,3870.118812,126
National Futures Association110,946N/A110,946

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 $12,394.

b. The alternative computation is:

(.5) ($12,394) + (.5) (.001121) ($727,285) = $6,605.

c. The fee is the lesser of a or b; in this case $6,605.

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 2001 through 2003 was $110,946 (one-third of $332,837). The fee to be paid by the NFA for the current fiscal year is $110,946.

Payment Method

The Debt Collection Improvement Act (DCIA) requires deposits of fees owed to the government by electronic transfer to funds (See 31 U.S.C. 3720). For information about electronic payments, please contact Stella Lewis at (202) 418-5186 or, or see the CFTC Web site at, specifically,​cftc/​cftcelectronicpayments.htm.

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 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 November 12, 2004, by the Commission.

Jean A. Webb,

Secretary of the Commission.

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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).

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[FR Doc. 04-25615 Filed 11-17-04; 8:45 am]