[Federal Register Volume 75, Number 227 (Friday, November 26, 2010)]
[Notices]
[Pages 72816-72818]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29780]
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COMMODITY FUTURES TRADING COMMISSION
Public Input for the Study Regarding the Oversight of Existing
and Prospective Carbon Markets
AGENCY: Commodity Futures Trading Commission.
ACTION: Notice and request for comment.
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SUMMARY: Section 750 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the ``Dodd-Frank Act'' or ``Act'') establishes an
interagency working group (``interagency group''), headed by the
Commodity Futures Trading Commission (the ``CFTC''), to conduct a study
on the oversight of existing and prospective carbon markets to ensure
an efficient, secure, and transparent carbon market, including
oversight of spot markets and derivative markets. The members of the
interagency group are the Chairman of the CFTC, the Secretary of
Agriculture, the Secretary of the Treasury, the Chairman of the
Securities and Exchange Commission, the Administrator of the
Environmental Protection Agency, the Chairman of the Federal Energy
Regulatory Commission, the Chairman of the Federal Trade Commission and
the Administrator of the Energy Information Administration, or their
designees. In conducting the study, the Dodd-Frank Act directs the
interagency group to consult, as appropriate, with representatives of
exchanges, clearing houses, self-regulatory bodies, major carbon market
participants, consumers, and the general public. To assist the
interagency group in conducting the study and formulating
recommendations for the oversight of existing and prospective carbon
markets, the CFTC is issuing this request for information through
public comment.
DATES: Comments must be received on or before December 17, 2010.
ADDRESSES: You may submit comments by any of the following methods:
Agency Web site, via its Comments Online process: http://comments.cftc.gov. Follow the instructions for submitting comments
through the Web site.
Mail: David A. Stawick, Secretary of the Commission,
Commodity Futures
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Trading Commission, Three Lafayette Centre, 1155 21st Street, NW.,
Washington, DC 20581.
Hand Delivery/Courier: Same as mail above.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
All comments must be submitted in English, or if not, accompanied
by an English translation. Comments will be posted as received to
http://www.cftc.gov. You should submit only information that you wish
to make available publicly. If you wish the Commission to consider
information that is exempt from disclosure under the Freedom of
Information Act, a petition for confidential treatment of the exempt
information may be submitted according to the procedure established in
CFTC regulation 145.9 (17 CFR 145.9). The Commission reserves the
right, but shall have no obligation, to review, pre-screen, filter,
redact, refuse or remove any or all of your submission from
www.cftc.gov that it may deem to be inappropriate for publication, such
as obscene language. All submissions that have been redacted or removed
that contain comments on the substance of the request for comments will
be retained in the public comment file.
FOR FURTHER INFORMATION CONTACT: Gregory Kuserk, Chief, Market Analysis
and Strategic Review Branch, Division of Market Oversight, 202-418-
5286, Irina Leonova, Financial Analyst, Division of Market Oversight,
202-418-5646, or Nela Richardson, Research Economist, Office of the
Chief Economist, 202-418-5592, Commodity Futures Trading Commission,
Three Lafayette Centre, 1155 21st Street, NW., Washington, DC 20581.
SUPPLEMENTARY INFORMATION:
I. Background
Recently a number of legislative proposals have been introduced in
Congress setting out various approaches to reducing carbon emissions.
Some of the proposals contain a market-based policy instrument. Various
forms of carbon markets have also been established internationally as
well as domestically. Some of the examples of those markets are the
European Union Emission Trading Scheme, the Clean Development
Mechanism, and the Regional Greenhouse Gas Initiative. In addition,
markets exist in the U.S. for the trading of sulfur dioxide allowances
under the EPA Acid Rain program and nitrogen oxide under the EPA
NOX Trading program. The CFTC also oversees the derivative
trading of a number of environmental instruments on the Chicago Climate
Futures Exchange and the Green Exchange.\1\ Under the various bills,
different proposals have been set forth with respect to the oversight
of a carbon market that would be established in those bills.
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\1\ The CFTC designated the Green Exchange as a contract market
on July 22, 2010; however, the exchange is not yet operational.
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On July 21, 2010 the Dodd-Frank Act was enacted.\2\ Section 750 of
the Act establishes an interagency working group to study the oversight
of existing and prospective carbon markets. The interagency group is
composed of the following members or designees: The Chairman of the
Commodity Futures Trading Commission, who shall serve as the Chairman
of the interagency group, the Secretary of Agriculture, the Secretary
of the Treasury, the Chairman of the Securities and Exchange
Commission, the Administrator of the Environmental Protection Agency,
the Chairman of the Federal Energy Regulatory Commission, the Chairman
of the Federal Trade Commission \3\ and the Administrator of the Energy
Information Administration.
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\2\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203, 124 Stat. 1376 (2010).
\3\ The CFTC notes that the text of Section 750(a)(7) of the Act
references the ``Commissioner of the Federal Trade Commission'' as a
member of the interagency group, and the CFTC interprets this text
as a reference to the Chairman of the Federal Trade Commission.
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The Dodd-Frank Act directs the interagency group to ``conduct a
study on the oversight of existing and prospective carbon markets to
ensure an efficient, secure, and transparent carbon market, including
oversight of spot markets and derivative markets.'' In carrying out
this study, the Act also directs the interagency group to consult with
representatives of exchanges, clearinghouses, self-regulatory bodies,
major carbon market participants, consumers and the general public, as
the interagency group determines is appropriate. Finally, the Act
requires the interagency group to submit to Congress a report, no later
than 180 days after the date of enactment of the Act, on the results of
the study, including recommendations regarding such oversight.
II. Solicitation for Comments on the Study on Oversight of Carbon
Markets
To assist the interagency group in conducting the study on
oversight of a carbon market, the CFTC seeks public comment on the
following topics and questions:
1. Section 750 of the Dodd-Frank indicates that the goals of
regulatory oversight should be to ensure that carbon markets are
efficient, secure and transparent. What other regulatory objectives, if
any, should guide the oversight of such markets?
2. What are the basic economic features that might be incorporated
in a carbon market that would have an effect on market oversight
provisions--e.g., the basic characteristics of allowances, frequency of
allocations and compliance obligations, banking of allowances,
borrowing of allowances, cost containment mechanisms, etc.?
3. Do the regulatory objectives differ with respect to the
oversight of spot market trading of carbon allowances compared to the
oversight of derivatives market trading in these instruments? If so,
explain further.
4. Are additional statutory provisions necessary to achieve the
desired regulatory objectives for carbon markets beyond those provided
in the Commodity Exchange Act, as amended by the Dodd-Frank Act, or
other federal acts that may be applicable to the trading of carbon
allowances?
5. What regulatory methods or tools would be appropriate to achieve
the desired regulatory objectives?
6. What types of data or information should be required of market
participants in order to allow adequate oversight of a carbon market?
Should reporting requirements differ for separate types of market
participants?
7. To what extent is it desirable or not desirable to have a
unified regulatory oversight program that would oversee activity in
both the secondary carbon market and in the derivatives markets?
8. To what extent, if any, and how should a U.S. regulatory program
interact with the regulatory programs of carbon markets in foreign
jurisdictions?
9. What has been the experience of state regulators in overseeing
trading in the regional carbon markets and how would that instruct the
design of a federal oversight program?
10. Based on trading experiences in SO2 and
NOX emission allowances what regulatory oversight would
market participants and market operators, respectively, recommend?
11. Who are the primary participants in the current primary
environmental markets? Who are the primary participants in the current
secondary allowance and derivatives environmental markets?
III. Paperwork Reduction Act
Pursuant to the Office of Management and Budget (``OMB'')
Regulation 5 CFR 1320.3(h)(4), this Notice and request for comment
published in the Federal Register, which requests general public
[[Page 72818]]
comment, does not include a collection of information that would
require OMB approval. Accordingly, the Paperwork Reduction Act does not
apply.
Issued in Washington, DC, on November 19, 2010 by the
Commission.
Sauntia S. Warfield,
Assistant Secretary of the Commission.
[FR Doc. 2010-29780 Filed 11-24-10; 8:45 am]
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