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Comment for Proposed Rule 76 FR 44508

  • From: R. Ramaseshan
    National Commodities and Derivatives Exchange (NCDEX)

    Comment No: 48172
    Date: 9/16/2011

    Comment Text:

    Sent: Friday, September 16, 2011 08:02 AM
    To: Markman Radhakrishnan, Natalie
    Subject: CFTC-SEC Study on International Swap Regulation and Report to U.S. Congress.

    Dear Ms. Radhakrishnan:

    Thank you for your email of August 9, 2011, and the opportunity to comment on the pending international swap regulation study and report. The National Commodities and Derivatives Exchange (NCDEX) do not currently engage in the trading or clearing of swaps or other OTC products. However, we are closely following the developments in US market regulatory activity, particularly post Dodd-Frank Act.
    We have been particularly aware of the rapid development of swaps clearing facilities and OTC clearing facilities in general, and we track these activities from both competitive and regulatory compliance perspectives.

    Much of the growth in the global derivatives markets over the last 10 years has been attributed to the rapid growth in OTC trading, including swaps. Our understanding is that the risk associated with off exchange business is often mitigated to some degree by using exchange traded instruments. To the extent that such increased exchange traded business is possible, we are of course interested in the regulatory framework which develops surrounding the off exchange transactions.

    We are examining “exchange for physicals” or “EFPs” as an alternative strategy for use in our markets. These products would be the first step in the development of swap instruments, and therefore we are moving with caution and interacting with our regulator, the Forwards market Commission (FMC). In view of our status, we can only state that we watch with interest as regulatory issues are sorted out, and we would hope to integrate such best practices into our market structure as warranted by our progress. In the interim, we are fully supportive of your efforts and look forward to future opportunities to share our thoughts and perspectives regarding the global regulatory framework.

    Best regards

    R. Ramaseshan.

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