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

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Commodity Futures Trading Commission.


Establishment of the FY 2006 schedule of fees.


The 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 (SRO) 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 2006 is based upon an average of actual program costs incurred during FY 2003, 2004, and 2005, as explained below. The FY 2006 fee schedule is set forth in the SUPPLEMENTARY INFORMATION. Electronic payment of fees is required.


Effective Dates: The FY 2006 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 September 11, 2006.

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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 [1] and designated contract markets (DCM), which are referred to as SROs, 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 DCMs regulated by the Commission:

EntityFee amount
Chicago Board of Trade$72,286
Chicago Mercantile Exchange201,763
New York Mercantile Exchange105,117
Kansas City Board of Trade10,992
New York Board of Trade63,561
Minneapolis Grain Exchange11,108
National Futures Association277,661

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): 113 percent for fiscal year 2003, 109 percent for fiscal year 2004, and 109 percent for fiscal year 2005. 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 rule enforcement review 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. 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 Start Printed Page 39673percentage 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 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 and the resulting fee for each entity:

3-year average actual costs3-year % of volumeAverage year 2006 fee
Chicago Board of Trade72,28634.480372,286
Chicago Mercantile Exchange201,76351.4928201,763
New York Mercantile Exchange144,89910.7381105,117
Kansas City Board of Trade16,9850.821610,992
New York Board of Trade115,3201.939763,561
Minneapolis Grain Exchange21,4900.119311,108
National Futures Association277,661N/A277,661

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 $21,490.

b. The alternative computation is: (.5) ($21,490) + (.5) (.001193) ($608,438) = $11,108.

c. The fee is the lesser of a or b; in this case $11,108.

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 2003 through 2005 was $277,661 (one-third of $832,983). The fee to be paid by the NFA for the current fiscal year is $277,661.

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 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 July 5, 2006, by the Commission.

Eileen A. Donovan,

Acting Secretary of the Commission.

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1.  National Futures Association (NFA) is the only registered futures association.

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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. 06-6109 Filed 7-12-06; 8:45 am]