Comment Text:
Arbor Research and Trading. LLC.
August 27, 2012
David A. Stawick
Secretary of the Commission
Commodity Futures Trading Commission
Three Lafayette Centre
1155 21st Street NW
Washington, DC 20581
Re: Clearing Requirement Determination Under Section 2(h) of the CEA
RIN Number 3038–AD86
Dear Mr. Stawick,
Arbor Research & Trading, L.L.C. ('Arbor') is an institutional research and brokerage firm that produces innovative research across a broad range of global fixed-income, equity, currency, and commodity markets. Founded in 1988, Arbor has a long history of delivering innovative, technology-based products to many of the largest and most influential financial institutions world wide. As the landscape of global financial markets has changed, Arbor has adhered to its mission, providing clients with timely analysis, objective opinion and first-class execution. Arbor strongly supports the Commodity Futures Trading Commission’s (the “Commission”) proposed Clearing Requirement Determination Under Section 2(h) of the CEA (the “Determination”) for certain classes of credit default swaps (CDS) and interest rate swaps (IRS).
Implementing the mandatory clearing requirement for these liquid and standardized segments of the swaps markets is a significant milestone towards achieving the Dodd-Frank Act’s objectives of reducing interconnectedness, mitigating systemic risk, increasing transparency, and promoting competition in the swaps market – all essential steps towards restoring the safety and soundness of our financial markets.
The specific fixed-to-floating swaps, basis swaps, FRAs, and OIS as well as CDX and iTraxx CDS indices listed in proposed §50.4 easily satisfy the five statutory factors that the Commission is required to consider for clearing requirement determinations, as the Commission’s analysis demonstrates. These swaps are all cleared today in material volumes and we thus agree with the Commission that “there is already a blueprint for clearing and appropriate risk management.” We recommend that the Commission maintain the full proposed product scope in its final Determination.
We urge the Commission to conclude its review and issue its final Determination as expeditiously as possible within the 90 day review period so the market can finally benefit from the implementation of mandatory central clearing.
Sincerely,
Edward Mcelwrealth
Executive Vice President
Arbor Research and Trading, LLC.
405 Lexington Avenue, 53rd FL
New York, NY 10174
