FR Doc 2010-29780[Federal Register: November 26, 2010 (Volume 75, Number 227)]

[Notices]

[Page 72816-72818]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr26no10-60]

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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

[[Page 72817]]

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]

BILLING CODE P

Last Updated: November 26, 2010