[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR40.3]

[Page 447-449]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 40_PROVISIONS COMMON TO CONTRACT MARKETS, DERIVATIVES TRANSACTION 
 
Sec.  40.3  Voluntary submission of new products for Commission review and 

approval.

    (a) Request for approval. A designated contract market or registered 
derivatives transaction execution facility may request under Section 
5c(c)(2) of the Act that the Commission approve new products. A 
submission requesting approval shall:
    (1) Be filed electronically with the Secretary of the Commission and 
at the regional office of the Commission having local jurisdiction over 
the submitting registered entity in a format specified by the Secretary 
of the Commission;
    (2) Include a copy of the submission cover sheet in accordance with 
the instructions in Appendix D to this part;
    (3) Include a copy of the rules that set forth the contract's terms 
and conditions;
    (4) Comply with the requirements of Appendix A to this part--
Guideline No. 1. To demonstrate compliance, the submission shall 
include:
    (i) An explanation, if not self-evident from the rules, as to how 
the specific terms and conditions satisfy the acceptable practices set 
forth in Guideline No. 1, Appendix A to Part 40. This

[[Page 448]]

information may be provided in narrative form or by completion of the 
applicable chart.
    (ii) For physical delivery contracts, an explanation as to how the 
terms and conditions as a whole will result in a deliverable supply such 
that the contract will not be conducive to price manipulation or 
distortion and that the deliverable supply reasonably can be expected to 
be available to short traders and salable by long traders at its market 
value in normal cash marketing channels.
    (iii) For cash settled contracts, an explanation as to how the cash 
settlement of the contract is at a price reflecting the underlying cash 
market, will not be subject to manipulation or distortion, and is based 
on a cash price series that is reliable, acceptable, publicly available 
and timely.
    (iv)(A) A brief description of the cash market for the commodity, 
instrument, index or interest that underlies the contract. The 
description may include materials prepared by the designated contract 
market or registered derivatives transaction execution facility, 
existing studies by industry trade groups, academics, governmental 
bodies or other entities, reports of consultants, or other materials, 
which provide a description of the underlying cash market.
    (B) The cash market description may, however, be confined only to 
those aspects relevant to particular term(s) or condition(s) that differ 
from an existing contract, where a contract based on the same, or a 
closely related, commodity is already listed for trading and is not 
dormant.
    (5) Describe any agreements or contracts entered into with other 
parties that enable the designated contract market or derivatives 
transaction execution facility to carry out its responsibilities.
    (6) Include the certifications required in Sec.  41.22 for product 
approval of a commodity that is a security future or a security futures 
product as defined in Sections 1a(31) or 1a(32) of the Act, 
respectively;
    (7) Identify with particularity information in the submission 
(except for the product's terms and conditions which are made publicly 
available at the time of submission) that will be subject to a request 
for confidential treatment and support that request for confidential 
treatment with reasonable justification;
    (8) Include the filing fee required under appendix B to this part; 
and
    (9) Include, if requested by Commission staff, additional evidence, 
information or data relating to whether the contract meets, initially or 
on a continuing basis, any of the specific requirements of the Act, or 
any other requirement for designation under the Act or Commission 
regulations or policies thereunder.
    (b) Forty-five day review. All products submitted for Commission 
approval under this paragraph shall be deemed approved by the Commission 
forty-five days after receipt by the Commission, or at the conclusion of 
such extended period as provided under paragraph (c) of this section, 
unless notified otherwise within the applicable period, if:
    (1) The submission complies with the requirements of paragraph (a) 
of this section; and
    (2) The submitting entity does not amend the terms or conditions of 
the product or supplement the request for approval, except as requested 
by the Commission or for correction of typographical errors, renumbering 
or other such nonsubstantive revisions, during that period. Any 
voluntary, substantive amendment by the submitting entity will be 
treated as a new submission under this section.
    (c) Extension of time. The Commission may extend the forty-five day 
review period in paragraph (b) of this section for:
    (1) An additional forty-five days, if the product raises novel or 
complex issues that require additional time for review or is of major 
economic significance, in which case, the Commission would notify the 
submitting registered entity within the initial forty-five day review 
period and would briefly describe the nature of the specific issues for 
which additional time for review would be required; or
    (2) Such extended period as the submitting registered entity so 
instructs the Commission in writing.
    (d) Notice of non-approval. The Commission at any time during its 
review

[[Page 449]]

under this section may notify the submitting entity that it will not, or 
is unable to, approve the product or instrument. This notification will 
briefly specify the nature of the issues raised and the specific 
provision of the Act or regulations, including the form or content 
requirements of paragraph (a) of this section, that the product would 
violate, appears to violate or the violation of which cannot be 
ascertained from the submission.
    (e) Effect of non-approval. (1) Notification to a submitting entity 
under paragraph (d) of this section of the Commission's refusal to 
approve a product or instrument does not prejudice the entity from 
subsequently submitting a revised version of the product or instrument 
for Commission approval or from submitting the product or instrument as 
initially proposed pursuant to a supplemented submission.
    (2) Notification to a submitting registered entity under paragraph 
(d) of this section of the Commission's refusal to approve a product 
shall be presumptive evidence that the entity may not truthfully certify 
under Sec.  40.2 that the same, or substantially the same, product does 
not violate the Act or regulations thereunder.

[66 FR 42283, Aug. 10, 2001, as amended at 67 FR 62879, Oct. 9, 2002; 69 
FR 67505, Nov. 18, 2004; 71 FR 1968, Jan. 12, 2006]