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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.


FY 2008 and 2009 schedule of fees; establish the FY 2010 schedule of fees revision.


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 (National Futures Association (NFA), a registered futures association, and the contract markets are referred to as SROs). The calculation of the fee amounts to be charged for FY 2010 is based upon an average of actual program costs incurred during FY 2007, 2008, and 2009, as explained below. The FY 2010 fee includes adjustments to program costs incurred in FY 2008 and 2009, which are being revised as a result of an internal review of program costs. The FY 2010 fee schedule and the revision of FY 2008 and 2009 fees are set forth in the SUPPLEMENTARY INFORMATION section. Electronic payment of fees is required.


The FY 2010 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 May 23, 2011.

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Mark Carney, Chief Financial Officer, Commodity Futures Trading Commission, (202) 418-5477, Three Lafayette Centre, 1155 21st Street, NW. Washington, DC 20581. For information on electronic payment, contact Jennifer Fleming, Three Lafayette Centre, 1155 21st Street NW. Washington, DC 20581, (202) 418-5034.

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I. General

This notice relates to fees for the Commission's review of the rule enforcement programs at the registered Start Printed Page 16389futures associations [1] and designated contract markets (DCM), which are collectively referred to herein as SROs, regulated by the Commission.

II. Background Information

A. General

The Commission recalculates the fees charged each year with the intention of recovering the costs of operating this Commission program. Fees are calculated by extracting direct labor costs for rule enforcement reviews from the agency's Budget Programming Accounting Codes (BPAC), which captures each employee's time by project, for a three-year period. The agency then adds an overhead factor for benefits and general administrative costs. The agency uses a three-year rolling average to cover fluctuations in the number of hours spent reviewing each SRO over time. In recognition of the fact that the cost of conducting a review may not correlate directly with the size of a particular SRO, the agency also calculates an alternate fee that takes the volume into account. The agency charges the SRO the lesser of the two fees.

Subsequent to an internal review, the Commission found that in FY 2008 and 2009 not all direct program labor costs were captured and that some direct costs were misapplied to SRO reviews. As the formula for calculating the FY 2010 fee to be charged to the SROs includes actual costs incurred in FY 2008 and 2009, the fees for those years are being revised, and the FY 2010 fee is being adjusted to account for the revisions. In addition, the FY 2009 fee that was assessed on USFE is being rescinded,[2] as USFE ceased operations on December 31, 2008. All adjustments are shown in the tables that follow.

B. Overhead Rate

Once the agency determines the direct costs for rule enforcement review of each SRO, it applies an overhead rate to cover employee benefits and other administrative costs. 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): 140 percent for fiscal year 2007, and 144 percent for fiscal year 2008, and 147 percent for 2009.

C. Calculation of FY 2010 Fees

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 reviews 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. To provide relief to SROs who may bear a disproportionately large share of program costs, the Commission's alternate 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 is made as follows: The fee required to be paid to the Commission by each SRO is equal to the lesser of actual costs based on the three-year historical average of costs for that SRO or one-half of average costs incurred by the Commission for each SRO 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 SROs 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 SROs over the last three years, and “t” equals the average annual costs for all SROs. NFA has no contracts traded; hence, its fee is based simply on costs for the most recent three fiscal years. The following table summarizes the data used in the calculations and the resulting fee for each entity for FY 2010. The 3-year average actual cost calculations were derived using the FY 2008 and 2009 fees as they are revised elsewhere in this notice:

FY 2010 Fees

3-year average actual costs3-year % of volume2010 Fee (lesser of actual or calculated fee)
Chicago Board of Trade$188,0850.291273$188,085
Chicago Mercantile Exchange145,95255.5839145,952
New York Mercantile Exchange572,49412.5373363,321
Kansas City Board of Trade27,3030.135114,482
ICE Futures U.S144,8472.332486,762
Minneapolis Grain Exchange104,7060.048852,653
Chicago Climate Futures Exchange21,7050.020510,853
US Futures Exchange00.00010
National Futures Association561,531561,531
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An example of how the fee is calculated for one exchange, the Chicago Board of Trade, is set forth here:

a. Actual three-year average costs equal $188,085

b. The alternative computation is: (.5) ($188,085) + (.5) (.291273) ($1,229,521) = $273,105

c. The fee is the lesser of a or b; in this case $188,085

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 2008 through 2010 was $561,531 (one-third of $1,684,592.85). The fee to be paid by the NFA for the current fiscal year is $561,531, plus the adjustment to the fees that were published for FY 2008 and 2009 in the Federal Register.[3]

D. Revision of FY 2008 and 2009 Fees

This year, Commission conducted an internal review of its SRO fee process that has resulted in adjustments to the fees owed by several SROs and NFA. As a result of the internal review FY 2008 and FY 2009 fees for the Commission's review of the rule enforcement programs at the registered futures associations and SROs regulated by the Commission are accordingly revised as follows:

FY 2009 Fee Adjustments

Entity2009 AssessmentAdjustment2009 Revision
Chicago Board of Trade$77,371$6,522$83,893
Chicago Mercantile Exchange121,0710121,071
New York Mercantile Exchange197,535141,670339,205
Kansas City Board of Trade10,12713,21023,337
ICE Futures U.S32,6831,81534,498
Minneapolis Grain Exchange62,449(30,420)32,029
Chicago Climate Futures Exchange12,259712,266
US Futures Exchange18,601(18,601)0
National Futures Association179,641347,243526,884

FY 2008 Fee Adjustments

Entity2008 AssessmentAdjustment2008 Revision
Chicago Board of Trade$146,077$56,971$203,048
Chicago Mercantile Exchange124,7340124,734
New York Mercantile Exchange144,893104,026248,919
Kansas City Board of Trade11,11917411,293
ICE Futures U.S37,6621,67839,340
Minneapolis Grain Exchange28,181(27,413)768
Chicago Climate Futures Exchange8,30638,309
US Futures Exchange14,6026814,670
National Futures Association450,419(3,045)447,374

E. Final Amounts Due

To determine the final amount due from each SRO, the adjustments for FY 2008 and 2009 must be added to or subtracted from FY 2010 fee. For example: Chicago Board of Trade (CBOT) will owe $251,578 which is computed as follows, $188,085 (2010 fee) + $6,522 (2009 adjustment amount) + $56,971 (2008 adjustment amount) = $251,578. The following chart provides the calculation for each SRO:

Entity2008 Adjustment2009 Adjustment2010 FeeDue
Chicago Board of Trade$56,971$6,522$188,085$251,578
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Chicago Mercantile Exchange00145,952145,952
New York Mercantile Exchange104,026141,670363,321609,017
Kansas City Board of Trade17413,21014,48227,866
ICE Futures U.S1,6781,81586,76290,255
Minneapolis Grain Exchange(27,413)(30,420)52,653(5,180)
Chicago Climate Futures Exchange3710,85310,863
National Futures Association(3,045)347,243561,531905,729

III. Payment Method

The Debt Collection Improvement Act (DCIA) requires deposits of fees owed to the government by electronic transfer of funds (See 31 USC 3720). For information about electronic payments, please contact Jennifer Fleming at (202) 418-5034 or, or see the CFTC Web site at, specifically,​cftc/​cftcelectronicpayments.htm.

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Issued in Washington, DC, on March 14, 2011 by the Commission.

David Stawick,

Secretary of the Commission.

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1.  NFA is the only registered futures association.

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2.  See generally 74 FR 46115 (Sep. 8, 2009).

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3.  See 73 FR 44707 (Sep. 29, 2008) and 74 FR 46115 (Sep. 8, 2009).

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[FR Doc. 2011-6821 Filed 3-22-11; 8:45 am]