CFTC Staff Letter 76-02: No-Action Relief for Kansas City Board of Trade Regarding Cash Market Rules

Dear
CFTC STAFF INTERPRETATIVE
LETTER# 7~-~
COMMODITY FUTURES TRADING COMMISSION
1120 CONNECTICUT AVENUE N. W.
WASHINGTON, D. C. 20036
February 13, 1976
..
Re: Approval of Cash Rules Pursuant to
Section 5a(l2) of the Commodity Exchange Act
This is in response to your letters of September 17, 1975, and January 5, 1976, in which you submitted, pursuant to section 5a(l2) of the Commodity Exchange Act, as amended ("Act"), proposed amendments to Board of Tr.ade of Kansas City, Missouri, Inc. ("Exchange") Rules 1710. 24 and 17 23 and the · proposed d'e1etion of Chapter 26 from the Exchange's rules. All of the rules in question herein appear to relate exclu￾sively to cash commodity transactions, rather than commodity futures t'ransactions. Rules 1710.24 and 1723 relate to shipping terms in contracts for cash sales of grain; Chapter 26 of·the E':x:change's rules relates to the regulation of the employment ·and use by Exchange members. of non-member solici￾tors and brokers in cash rather than futures transactions. In your letter of January 5, 1976, you question "whether, absent manipulation (actual or attempted), the CFTC h~s statutory authority to approve or disapprove rule changes, . such as this, in the cash sector." As you are aware, the Commission's Advisory Committee on Market Regulation is considering the scope of section 5a(l2) of the Act. ·After reviewing the report and recommendation of the AdvisQry Committee, the Commission will be making its determinatibn with respect to the scope of section 5a(l2). At that time, the Commission may decide whether the scope of section 5a(l2) covers cash market rules.

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• 2 -
  Because of the uncertainty of this issue, the
  Division has determined that it will not recommend to the Commission· at this time that it review for approval or dis￾approval, pursuant to section Sa(l2) of the Act, those con￾tract market rules relating exclusively to the cash market. Nor will the Division recommend that the Commission institute .enforcement action against a contract market for failure to submit .such cash market rules for Commission approval, should it later be determined by the Commission that cash market rules are within the scope of section Sa(l2) of the Act. Nevertheless, ·contract market rules relating to cash trans￾actions must be submitted to the Commission pursuant to
  section 5a(l) of the Act.
  Very truly yours, --~.;::r
  / ~~?(;' ) ~ ·~ •I~ ..:.....------ ~....-., ' /-:.__ Thomas A.,·. Russo Director Division of Trading and Markets