Comment for Proposed Rule 75 FR 76139

Comment Text:

Meeting with Argus Media, Inc.

Wednesday, December 15, 2010

Memo from
Steiner, Jeffrey L.

CFTC Staff :
Tom Leahy
Jeff Steiner
George Pullen
Carl Kennedy
Jason Shafer

External Attendees :
Euan Craik (Argus Media, Inc. (“Argus”)
Daniel Massey (Argus)
Anthony M. Mansfield (McDermott Will & Emery LLP (“McDermott”))
Christopher J. Polito (McDermott)

Additional Information :
On December 15, 2010, Argus met with staff to discuss the real-time public reporting notice of proposed rulemaking.  Argus plans to write a formal comment letter on the notice of proposed rulemaking. 
 
Transparency of Illiquid Markets
Argus mentioned that there is a concern that extreme transparency of illiquid swaps could run the risk of disincentivizing people to run risk management.  Extreme transparency could quash innovation (creating new swap products) and may lead market participants to use less than perfect hedges which could lead to certain losses that will be borne by the consumer.  Revealing swap transaction information in real-time may divulge the parties to the transaction.  Therefore, in certain markets and for certain transactions, it may make more sense to reveal the transaction data weekly or end-of-day depending on the market.  Argus also suggested aggregating data and reporting certain data fields generally, to protect participants’ identities.
 
Argus asked whether it is more useful for the public to know the information in real-time with less specificity or on a delayed basis with more specificity?  Which of these is more important?  Argus merely raised these questions but did not address possible answers.
 
Fees
Will third party service providers be able to charge?  Staff stated that the Commission is seeking comment on fee structures.
 
Swap Data Repositories (“SDRs”) that are real-time disseminators
Expressed concern that an SDR that also is a real-time disseminator may have insights that would provide the SDR with an unfair competitive advantage over a third-party real-time disseminator, with respect to selling data analytics.
 
Implementation timeframe
The challenge is that the industry does not have the systems in place and therefore there may not be anything available now that can be used right out of the box.
 
Data Fields
Argus’s main role currently is in the physical markets, so if the data fields described in the notice of proposed rulemaking become standard, participants/customers may want the physical data to be in the same or similar format as the swap data.  Swap data, however, is not as specific as the data needed for the physical specifications.