Industry Oversight
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Implementation of a New Designated Contract Market Rule or Rule Amendment by Self-Certification
See, generally, CFTC Regulation 40.6, 17 CFR 40.6, which governs the self-certification of new rules and rule amendments. By filing a self-certification, the DCM certifies to the CFTC that the new rule or rule amendment, or the listing of a new product complies with the Commodity Exchange Act (CEA) and the CFTC’s regulations and associated policies.
1. The designated contract market (DCM) must file its submission electronically with the Secretary of the CFTC at secretary@cftc.gov and at the CFTC regional office having local jurisdiction over the DCM (to determine the correct regional office, consult CFTC Regulation 140.2).
2. The submission must include:
a. A Submission Cover Sheet that must be filled out in accordance with the instructions in Appendix D to Part 40 of the CFTC’s regulations;
b. The text of the rule (in the case of a rule amendment, deletions and additions must be indicated);
c. The date of implementation;
d. A brief explanation of any substantive opposing views expressed to the registered entity by governing board or committee members, members of the entity or market participants that were not incorporated into the rule; and
e. A certification by the DCM that the rule complies with the Commodity Exchange Act (CEA) and the regulations thereunder.
The applicable economic requirements related to rules associated with the terms and conditions of a futures or option contract are contained in the CFTC’s Guideline No. 1, Appendix A to Part 40, of the CFTC’s regulations.
Deadline for Self-Certifying a New Rule or Rule Amendment
The CFTC must receive the DCM’s submission at its headquarters by the open of business (8:15 a.m. in Washington, DC) on the business day preceding the day the DCM implements the rule or rule amendment.
There is an exception for rules or rule amendments implemented under procedures of the governing board to respond to an emergency, as defined in CFTC Regulation 40.1(g), Those shall, if practicable, be filed with the CFTC prior to implementation or, if not practicable, be filed with the CFTC at the earliest possible time after implementation, but in no event more than 24 hours after implementation. (“Emergency Rule Certification” should be noted in the Description section of the submission cover sheet.)
While not explicitly required by the CEA or the CFTC’s regulations, CFTC staff recommends that DCMs contact the Division of Market Oversight immediately in the case of an emergency whether or not special rules are required.
CFTC Review
The CFTC may stay the effectiveness of a rule implemented pursuant to these self-certification procedures during the pendency of CFTC proceedings for filing a false self-certification or to alter or amend the rule pursuant to Section 8a(7) of the CEA, 7 USC 12a(7). The decision to stay the effectiveness of a rule in such circumstances is not delegable to any employee of the CFTC.