[Federal Register Volume 76, Number 56 (Wednesday, March 23, 2011)]
[Notices]
[Pages 16388-16391]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-6821]
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COMMODITY FUTURES TRADING COMMISSION
Fees for Reviews of the Rule Enforcement Programs of Contract
Markets and Registered Futures Associations
AGENCY: Commodity Futures Trading Commission.
ACTION: FY 2008 and 2009 schedule of fees; establish the FY 2010
schedule of fees revision.
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SUMMARY: 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.
DATES: 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.
FOR FURTHER INFORMATION CONTACT: 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.
SUPPLEMENTARY INFORMATION:
I. General
This notice relates to fees for the Commission's review of the rule
enforcement programs at the registered
[[Page 16389]]
futures associations \1\ and designated contract markets (DCM), which
are collectively referred to herein as SROs, regulated by the
Commission.
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\1\ NFA is the only registered futures association.
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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.
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\2\ See generally 74 FR 46115 (Sep. 8, 2009).
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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
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2010 Fee (lesser of
3-year average 3-year % of volume actual or calculated
actual costs fee)
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Chicago Board of Trade........................ $188,085 0.291273 $188,085
Chicago Mercantile Exchange................... 145,952 55.5839 145,952
New York Mercantile Exchange.................. 572,494 12.5373 363,321
Kansas City Board of Trade.................... 27,303 0.1351 14,482
ICE Futures U.S............................... 144,847 2.3324 86,762
Minneapolis Grain Exchange.................... 104,706 0.0488 52,653
HedgeStreet................................... 23,272 0.002 11,636
Chicago Climate Futures Exchange.............. 21,705 0.0205 10,853
US Futures Exchange........................... 0 0.0001 0
OneChicago.................................... 1,157 0.1791 1,157
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Subtotal.................................. 1,229,521 .................... 847,901
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National Futures Association.................. 561,531 .................... 561,531
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[[Page 16390]]
Total................................. 1,791,052 .................... 1,436,432
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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\
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\3\ See 73 FR 44707 (Sep. 29, 2008) and 74 FR 46115 (Sep. 8,
2009).
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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
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Entity 2009 Assessment Adjustment 2009 Revision
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Chicago Board of Trade................................. $77,371 $6,522 $83,893
Chicago Mercantile Exchange............................ 121,071 0 121,071
New York Mercantile Exchange........................... 197,535 141,670 339,205
Kansas City Board of Trade............................. 10,127 13,210 23,337
ICE Futures U.S........................................ 32,683 1,815 34,498
Minneapolis Grain Exchange............................. 62,449 (30,420) 32,029
HedgeStreet............................................ 14,375 8 14,383
Chicago Climate Futures Exchange....................... 12,259 7 12,266
US Futures Exchange.................................... 18,601 (18,601) 0
OneChicago............................................. 1,157 0 1,157
National Futures Association........................... 179,641 347,243 526,884
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Total.............................................. 727,270 461,453 1,188,723
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FY 2008 Fee Adjustments
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Entity 2008 Assessment Adjustment 2008 Revision
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Chicago Board of Trade................................. $146,077 $56,971 $203,048
Chicago Mercantile Exchange............................ 124,734 0 124,734
New York Mercantile Exchange........................... 144,893 104,026 248,919
Kansas City Board of Trade............................. 11,119 174 11,293
ICE Futures U.S........................................ 37,662 1,678 39,340
Minneapolis Grain Exchange............................. 28,181 (27,413) 768
HedgeStreet............................................ 10,194 13 10,207
Chicago Climate Futures Exchange....................... 8,306 3 8,309
US Futures Exchange.................................... 14,602 68 14,670
OneChicago............................................. 15,836 262 16,098
National Futures Association........................... 450,419 (3,045) 447,374
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Total.............................................. 992,022 132,737 1,124,760
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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:
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Entity 2008 Adjustment 2009 Adjustment 2010 Fee Due
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Chicago Board of Trade.............. $56,971 $6,522 $188,085 $251,578
[[Page 16391]]
Chicago Mercantile Exchange......... 0 0 145,952 145,952
New York Mercantile Exchange........ 104,026 141,670 363,321 609,017
Kansas City Board of Trade.......... 174 13,210 14,482 27,866
ICE Futures U.S..................... 1,678 1,815 86,762 90,255
Minneapolis Grain Exchange.......... (27,413) (30,420) 52,653 (5,180)
HedgeStreet......................... 13 8 11,636 11,657
Chicago Climate Futures Exchange.... 3 7 10,853 10,863
OneChicago.......................... 262 0 1,157 1,419
National Futures Association........ (3,045) 347,243 561,531 905,729
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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 [email protected], or see the
CFTC Web site at http://www.cftc.gov, specifically, http://www.cftc.gov/cftc/cftcelectronicpayments.htm.
Issued in Washington, DC, on March 14, 2011 by the Commission.
David Stawick,
Secretary of the Commission.
[FR Doc. 2011-6821 Filed 3-22-11; 8:45 am]
BILLING CODE 6351-01-P