temporary emergency rule prior to implementing, modifying or terminating the rule. If it is not practicable for the contract market to notify the Commission prior to taking emergency action, the contract market shall provide the Commission with notice of the implementation, modification, or termination of any emergency rule at the earliest possible time. Notice must be given to the Director of the Division of Trading and Markets or any employee of the Commission, as may be designated by the Director for such purpose. The contract market must provide notice to the Commission by the fastest means available and must use its best efforts to ensure that the notice is actually received by one of the authorized persons above. Notice should include:

(A) To the extent practicable, a complete explanation of the contract market action intended or taken to meet the emergency and a description of the nature of the emergency;

(B) In any instance where a contract market does not provide prior notice of an emergency action, an explanation of why it was not practicable for a contract market to provide such notice; and

(C) An explanation of why it was not practicable for the contract market to submit the temporary emergency rule to the Commission for prior review under section 5a(a)(12)(A) of the Act.

(ii) Any available documentation of the nature of the emergency conditions and the intended or actual emergency action should be submitted at the time of notification.

(3) On or before the fifth day after the day that a contract market provides notice under paragraph (f)(2), except as described in paragraph (f)(4), the contract market shall supplement its notice by submitting the following information to the Commission at its Washington, DC headquarters:

(i) A written copy of the temporary emergency rule and any modification to or termination of the rule;

(ii) A complete written explanation of the emergency action, which explanation must include a complete description of any matter voted on that related to the emergency; a summary of the substantive reasons in support of

and in opposition to any matter voted on that related to the emergency given at a meeting in which the members implemented, modified, or terminated a temporary emergency rule; the names of all persons who were members of the governing board at the time of the meeting; the names of all persons who attended the meeting in person or who were otherwise present by electronic means; the name of any person who rescued himself from the meeting, the reason for recusal, and the time that the recusal occurred; the approximate time that notice of the meeting was given to each governing board member and the times that the meeting began and ended; the name of any person who was directed to abstain from deliberating or voting at the meeting; an itemized list of how each governing board member voted; and a summary of any disclosure made by a person of his or her positions in any subject contract market, including disclosure of positions held in any personal account, controlled account, other account in which a person has an interest, and customer and proprietary accounts at a person's affiliated firm;

(iii) Any documentation, not previously provided, relating to the emergency conditions and the emergency action, including documentation regarding the reasons for the specific emergency action taken;

(iv) A description of the basis for and procedures followed by a governing board in making any determination as to the eligibility of an interested person to deliberate or to vote on matters relating to the emergency;

(v) Documentation of the gross positions held in any personal account, controlled account, other account in which the governing board member has an interest, and proprietary accounts at an affiliated firm, as well as documentation of the net customer positions held at an affiliated firm, by a governing board member who attended the meeting for the contract months that the contract market reasonably expects could be affected by the emergency action, provided that the contract market explains its reasons in writing for selecting less than all contract months in the subject contract market;

(vi) A representation from each governing board member who voted on an emergency action as to whether or not he had actual knowledge of individual customer positions at his affiliated firm at the time of the vote; and

(vii) Such other information as the Commission may require.

(4)(i) Within 10 days of the receipt from a contract market of all of the information required by paragraphs (2) and (3), or as soon as practicable thereafter, the Commission will make a determination to permit the temporary emergency rule to remain in effect, consistent with paragraph (1), unless it finds that the contract market's emergency action is:

(A) Arbitrary, capricious or an abuse of discretion;

(B) Lacking a reasonable basis in fact; or

(C) Taken in bad faith by the contract market or its officials.

(ii) If the Commission determines that the contract market's emergency action is arbitrary, capricious or an abuse of discretion; lacking a reasonable basis in fact; or taken in bad faith, then the Commission may, in its discretion and upon such terms and conditions as it deems appropriate, suspend the effect of the rule pending review under section 5a(a)(12)(A) or otherwise if it finds that suspension of the rule is not contrary to the public interest and the purposes of section 5a(a)(12) of the Act.

(5) The Commission will submit a report on its determination pursuant to paragraph (4) and the basis for this determination to:

(i) The affected contract market; (ii) The Committee on Agriculture of the House of Representatives; and

(iii) The Committee on Agriculture, Nutrition, and Forestry of the Senate. If the report is submitted more than 10 days after the Commission receives all of the information required under paragraphs (2) and (3) from a contract market, the report will include an explanation of why submission within 10 days from receipt of notification and explanation was not practicable.

(6) A determination by the Commission to suspend the effect of a rule under subparagraph (4)(ii) of this regulation will be subject to judicial review

on the same basis as an emergency determination under section 8a(9) of the

Act.

(7) A temporary emergency rule may provide for, or may authorize the contract market, or the governing board thereof or any committee thereof, to undertake actions necessary or appropriate to meet the emergency, including, but not limited to, such actions as:

(i) Limiting trading to liquidation only, in whole or in part, or limiting trading to liquidation only except for new sales by parties who have the commodity to delivery pursuant to such sales;

(ii) Extending or shortening the expiration date for trading in contracts; (iii) Altering delivery terms or conditions;

(iv) Modifying price limits; (v) Modifying circuit breakers; (vi) Ordering the liquidation of contracts, the fixing of a settlement price or the reduction in positions;

(vii) Ordering the transfer of contracts, and the money, securities, and property securing such contracts, held on behalf of customers by a member of the contract market to another member, or other members, of the contract market willing to assume such contracts or obligated to do so;

(viii) Extending, limiting or changing hours of trading;

(ix) Suspending trading; and

(x) Modifying or suspending any provision of the rules of the contract market, including any contract market prohibition against dual trading.

(8) A contract market shall not maintain in effect rules that are inconsistent with this regulation.

(9) Nothing in this section prevents the Commission from taking emergency action under section 8a(9) of the Act or from taking any enforcement action under section 6(c), 6(d), 6b, or 6c of the Act.

(10) Governing board members who abstain from voting on a temporary emergency rule pursuant to §1.69 shall not be counted in determining whether such a rule was approved by the twothirds vote required by this regulation. Such members can be counted for the purpose of determining whether a quorum exists.

(g) Physical emergencies. In the event the physical functions of a contract market are, or are threatened to be, severely and adversely affected by a "physical emergency," such as fire or other casualty, bomb threats, substantial inclement weather, power failures, communications breakdowns, computer system breakdowns, screen-based trading system breakdowns or transportation breakdowns, a contract market official, duly authorized to take such action for and on behalf of the contract market with respect to such a "physical emergency" pursuant to a rule of the contract market that has been approved by the Commission or has become effective pursuant to section 5a(a)(12) of the Act and these regulations, may take any action authorized by such rule necessary or appropriate to deal with the emergency, including, but not limited to, suspending trading on the contract market. Suspension of trading in the contract market by such a designated official shall not continue in effect for more than five (5) days, except where the contract market has submitted in writing and the Commission has granted, for good cause shown, a request for an extension of time. A request for an extension of time must be given to the Director of the Division of Trading and Markets or any employee of the Commission, as may be designated by the Director for such purpose. If so authorized by such a rule of the contract market, the designated official may also order restoration of trading on the contract market, or removal of other restrictions imposed by the official as permitted by this paragraph (g), in the absence of action by the governing board of the contract market, upon a determination by such official that the "physical emergency" has sufficiently abated to permit the physical functions of the contract market to continue in an orderly manner. A contract market must notify the Director of the Division of Trading and Markets or any employee of the Commission, as may be designated by the Director for such purpose, of the implementation, modification or termination of a physical emergency action as soon as possible after taking the action.

(h) Stock index contracts. (1) Notwithstanding the provisions of paragraph (b) of this section, all changes in the composition, computation, or method of stock selection of a stock index in which a contract market is designated to trade futures contracts, or options on such futures contracts, shall be deemed approved by the Commission at the time such changes are adopted by a contract market if:

(i) The index is compiled for commercial purposes by an independent third party; and

(ii) The change is consistent with a rule of the contract market which has been approved by the Commission for this purpose which specifically defines, or establishes standards governing, the composition of the stock index upon which the designated futures contracts are authorized to trade.

(2) The contract market must provide to the Commission, upon special call, information regarding the composition, computation, or method of stock selection of the index, including any change or changes, or any other issues relating to the index, as instructed, and within such time, and for such a period, specified in the call.

(i) Other index contracts. (1) Notwithstanding the provisions of paragraph (b) of this section, all changes in the composition, computation, or method of selection of an index other than a stock index in which a contract market is designated to trade futures or option contracts shall be deemed approved by the Commission at the time such changes are adopted by a contract market if:

(i) The index is compiled by an independent third party whose business relates to the collection or dissemination of price information and which was not formed solely for the purpose of compiling an index for use in connection with a futures or option contract;

(ii) The change is consistent with a rule of the contract market which has been approved by the Commission for this purpose, which specifically defines or establishes standards governing the composition of the index upon which designated futures or commodity options are authorized to trade;

(iii) The contract market provides the Commission with written notice of

the change within five days after the change is adopted by the contract market; and

(iv) The contract market labels the written notice as being submitted pursuant to paragraph (i) of this section.

(2) The Commission will, within ten days after receipt by the Commission of notice of a change in the composition, computation, or method of selection of an index, notify the contract market making the submission if it appears that the change is not consistent with the provisions of this paragraph. Upon such notification by the Commission to the contract market, the change will be subject to the usual procedures under section 5a(a)(12)(A) of the Act and paragraph (b) of this section.

(j) Survey lists. (1) Notwithstanding the provisions of paragraph (b) of this section, all changes in lists of banks, brokers, dealers or other entities which provide price or cash market information to a contract market for purposes of computing cash settlement prices or a cash price series, or for defining deliverable supply, shall be deemed approved by the Commission at the time such changes are adopted by a contract market if:

(i) The change is consistent with a rule of the contract market which has been approved by the Commission for this purpose and which establishes standards or criteria for the persons or entities which qualify for the list;

(ii) The contract market provides the Commission with written notice of the change within three days after the change is adopted by the contract market; and

(iii) The contract market labels the written notice as being submitted pursuant to paragraph (j) of this section.

(2) The Commission will, within ten days after receipt by the Commission of notice of a change in such a list, notify the contract market making the submission if it appears that the change is not consistent with the provisions of this paragraph. Upon such notification by the Commission to the contract market, the change will be subject to the usual procedures under section 5a(a)(12)(A) of the Act and paragraph (b) of this section.

(k) Trading hours. (1) Notwithstanding the provisions of paragraph (b) of this section and except in connection with an initial listing of a contract on an automated trading system, all changes in trading hours shall be deemed approved by the Commission at the close of business one business day after written notice of such a change is received by the Commission if:

(i) The change is not inconsistent with any provision of the Act or the Commission's regulations;

(ii) For a change that permits trading anytime between 6:00 p.m. and 7:00 a.m. local time in the city where the contract market is located, the contract market has previously received Commission approval for trading between such hours in at least one of its designated contracts; and

(iii) The contract market labels the written notice as being submitted pursuant to paragraph (k) of this section.

(2) The Commission will, within ten days after receipt by the Commission of notice of a change in trading hours, notify the contract market making the submission if it appears that the change is not consistent with some provision of the Act or the Commission's regulations. Upon such notification by the Commission to the contract market, the change will be subject to the usual procedures under section 5a(a)(12)(A) of the Act and paragraph (b) of this section.

(1) Trading months. (1) Notwithstanding the provisions of paragraph (b) of this section, all changes in trading months shall be deemed approved by the Commission ten days after written notice of such a change is received by the Commission if:

(i) The change is consistent with a rule of the contract market governing the listing of trading months which has been approved by the Commission, and with the Act and the Commission's regulations;

(ii) The change does not provide for the listing of a trading month outside the currently established cycle of trading months; and

(iii) For proposals to delist previously listed futures or option contract months, the months to be delisted have no open interest at the time of delisting.

(iv) The contract market labels the written notice as being submitted pursuant to paragraph (1) of this section.

(2) The Commission will, within ten days after receipt by the Commission of notice of a change in the listing of trading months, notify the contract market making the submission if it appears that the change is not consistent with the provisions of this paragraph. Upon such notification by the Commission to the contract market, the change will be subject to the usual procedures under section 5a(a)(12)(A) of the Act and paragraph (b) of this section.

(m) Contract terms established by independent third parties. (1) Notwithstanding the provisions of paragraph (b) of this section, changes in grades or standards of commodities on which futures or options contracts are based, which are established, selected or calculated by independent third parties and which are incorporated by reference as terms of a contract, shall be deemed approved by the Commission ten days after written notice of such a change is received by the Commission if:

(i) The grade or standard is established, selected or calculated by an independent third party for purposes other than solely for use in connection with a futures or options contract;

(ii) The change is consistent with a rule of the contract market which has been approved by the Commission for this purpose, and with the Act and the Commission's regulations; and

(iii) The contract market labels the written notice as being submitted pursuant to paragraph (m) of this section.

(2) The Commission will, within ten days after receipt by the Commission of notice of such a change, notify the contract market making the submission if it appears that the change is not consistent with the provisions of this paragraph. Upon such notification by the Commission to the contract market, the change will be subject to the usual procedures under section 5a(a)(12)(A) of the Act and paragraph (b) of this section.

(n) Other changes. (1) Notwithstanding the provisions of paragraph (b) of this section, changes in the terms and conditions of a futures or option

contract other than those changes specified in paragraphs (h)–(m) of this section shall be deemed approved by the Commission at such time as the Commission shall specify if:

(i) The Commission notifies the contract market in writing, at the time of contract market designation, or such other time as the Commission may deem appropriate, that certain changes in terms and conditions may be submitted pursuant to the provisions of this paragraph;

(ii) The change is consistent with standards established by the Commission in its notification to the contract market of the applicability of this paragraph, and with the Act and the Commission's regulations; and

(iii) The contract market labels the written notice as being submitted pursuant to paragraph (n) of this section.

(2) The Commission will within ten days after receipt by the Commission of notice of a change submitted pursuant to this paragraph, notify the contract market making the submission if it appears that the change is not consistent with standards established by the Commission. Upon such notification by the Commission to the contract market, the change will be subject to the usual procedures under section 5a(a)(12)(A) of the Act and paragraph (b) of this section.

(3) The Commission may at any time alter or revoke the applicability of this paragraph to any particular contract.

(0) Option strike price listing procedures. (1) Notwithstanding the provisions of paragraph (b) of this section, all changes in the number of strike prices listed, both initially when a contract for a specific expiration date is first listed for trading and throughout the life of that option contract, and changes in the strike-price interval(s) shall be deemed approved by the Commission 10 days after written notice of such change is received by the Commission if:

(i) The amended rule provides for a strike-price listing procedure that is specified and automatic.

(ii) The amended rule does not affect any option with open interest at the time the rule goes into effect.