Comment for Proposed Rule 77 FR 15460

Comment Text:

Coalition for Derivatives End-Users meeting

Tuesday, November 23, 2010

Memo from
Steiner, Jeffrey L.

CFTC Staff :
Jeff Steiner
Julian Hammar
Thelma Diaz
John Riley
Dave Johnson
George Wilder
Dan Berkovitz
Dave Johnson

External Attendees :
Kirk W. Freeman (NAREIT)
Luke Zubrod (Chatham Financial)
Sam Peterson (Chatham Financial)
Mark S. Barber (GE Capital)
Renuka Gupta (GE Capital)
Bob Shepher (National Association of Manufacturers)
Matthew Miller (Financial Executives International)
Vikas Huria (Ford)
Sally Ingberg (Forest City)
Stacey Dion (Boeing)
Aquila Powell (General Motors)
James Harshaw (General Motors)
Michael D. Bopp (Gibson Dunn)
Brian Callanan (Gibson Dunn)

Additional Information :
Real-time Reporting
General
Expressed concern about the relationship of block trade delays with getting good pricing.  Any reporting requirements would affect their price.  A dealer would need to off-set the risk of the transaction and they would do so as quickly as they can, therefore large or illiquid trades would cause the most concern since they may not be able to off-set the risk.  Front-running is a concern since it would lead to increased up-front costs to the end-user.  The prices provided to end-users would be greater since the dealers would factor the risk of not being able to off-set the transaction into the price.
 
Time Delay
For standardized trades that are not too large, 15 minutes may be ample time.  For sufficiently large or illiquid trades, 15 minutes may not be enough.  It could take a day or more for illiquid transactions to be off-set.  Illiquid transactions may occur in all asset classes, including interest rates and currency.  Whether a swap is illiquid may depend on the time of day and the term.
 
"As soon as technologically practicable"
Expressed concern of whether “as soon as technologically practicable” would mean the same for swaps under the 2(h)(7) exception as swaps that are executed on SEFs or DCMs.
 
Data fields
Expressed interest on how data fields should be properly defined.  Mentioned that requiring the reporting of credit terms could cause confusion.
 
Reporting of transactions if no SDR or third-party service provider
Asked question of how reporting will occur if there is no SDR or third-party service provider.  Staff responded that the issue is open for public comment.