Comment Text:
Dear Mr. & Mrs. C:
Good afternoon and hope all is still well way back East.
Please Note: We're adding part 2 of our 2 part set of comments, and hope you all will welcome the spirit in which they arrive:
Part 2 of 2---Pw's I. Interim Final Rule Section 1a of the Commodity Exchange Act (‘‘CEA’’) Comments:
Pg. 1 of 18_"Section 1a of the Commodity Exchange Act (‘‘CEA’’) 2
sets forth defined terms referenced throughout the statute. These terms are alphabetized and numbered,
currently beginning with ‘‘(1) Alternative Trading System’’ and ending with ‘‘(51) Trading Facility.’’
Whenever defined terms are added by Congress, the new term is placed in the proper location in the alphabetic order and the entire list is renumbered. The alphabetized list makes it relatively easy for an individual completely unfamiliar with the CEA to find a particular term referenced in the statute."
Please Note: Finding a particular term is not the issue here, understanding what the term actually means is; non-intuitive, open to multiple interpretations, confusing, obtuse, opaque and currently totally disconnected from a Reasonable Man interpretation of just exactly what the term is telling its audience, in this case the The Global Investment Community, Clients, Brokers, The Global Financial Industry Constructs, Auditors, Accountants & even those individuals (aka: de-regulators)tasked with
using such terms in the responsible performance of their job and/or interpreting same when asked by those they serve-the Investment Community---a term we were unable to find during our review cycle---its probably there, somewhere, we couldn't find it ).
"...By reorganizing the definitions set forth in § 1.3 into alphabetical order and updating all related cross references throughout all Commission regulations, this interim final rule serves to clarify its regulations. Therefore, the Commission has determined that this interim final rule will not have a significant economic impact on a substantial number of small entities...."
Please provide the extensive testing you all conducted on your target audience(s) to justify such a statement & it would be nice to read your 'walk-through' notes from such sessions, as that will be both helpful, nice & informative...
Pg. 2: "...As such, substantively, the interim final rule poses no incremental costs or benefits relative to the regulatory requirements that are now in force. This interim final rule does have a discretionary element."
Please Note: (Lets hear it for cost savings and changing the rules of engagement without notifying the other side, in this case the Public Entities obligated to play by the CFTC’s rules…..Neat trick, eh?.....Just another example of snarky Invisible Cows taking over Pw’s Laptop, without his permission….just another neat trick of Irony….which is not a Software App in this case…..) Respectfully yours, Pw Carey
"...By issuing the interim final rule, the Commission is exercising its discretion to clarify, by amendment, the definitions currently in force. By alphabetizing the definitions, the interim final rule addresses a potential source of uncertainty for market participants, which promotes the public interest in market integrity and regulatory clarity. The Commission recognizes that this discretionary act of clarification may result in some administrative costs to market participants.
However, the Commission believes any such costs will not be material...."
Please Note: If there are no costs and no benefits...then what's the point of this exercise? Training on the proper use of hyphens & semi-colons....Respectfully yours, Pw
Pg. 5:..."swap execution facility that is a trading facility which do not exceed in quantity: (A) The fixed-price sale of the same cash commodity by the same person; (B) The quantity equivalent of fixed price sales of the cash products and byproducts of such commodity by the same person; and (C) Twelve months’ unfilled anticipated requirements of the same cash commodity for processing, manufacturing, or feeding by the same person, provided that such transactions and positions in the five last trading days of any agreement, contract or transaction do not exceed the person’s unfilled anticipated requirements of the same cash commodity for that month and for the next succeeding month. (iii) Offsetting sales and purchases in any agreement, contract or transaction in an excluded commodity on a designated contract market or swap execution facility that is a trading facility which do..."
Please Note: (should read “does not” rather than “do not”….you maroon…Sometimes snarky invisible cows take over our laptop, without our permission….IT says they’re working on it….soooo it won’t be long now…..)
"...not exceed in quantity that amount of the same cash commodity which has been bought and sold by the same person at unfixed prices basis different delivery months of the contract market, provided that no such position is maintained in any agreement, contract or transaction during the five last trading days."
Please Note: Does this mean the same as BUSINESS DAYS…? & who sets the value of same & who confirms that the valuations are correct and/or legit...which ever comes first....&....how does the claw-back and restitution trigger kick-in when things go South....?
"...(3) Equity swaps. Any swap that is primarily based on equity securities, including but not limited to any swap based on one or more broad-based indices of equity securities and any total return swap on one or more equity indices. (4) Other commodity swaps. Any swap that is not included in the rate swap, credit swap or equity swap categories. * * * * * "
Please Note: Do these characters represent TBD’s (To Be Determined at Some Future Point In Time)…?
"...Commodity option transaction; commodity option. These terms each mean any transaction or agreement in interstate commerce which is or is held out to be of the character of, or is commonly known to the trade as, an ‘‘option,’’ ‘‘privilege,’’ ‘‘indemnity,’’ ‘‘bid,’’ ‘‘offer,’’ ‘‘call,’’ ‘‘put,’’ ‘‘advance guaranty,’’ or ‘‘decline guaranty,’’ and which is subject to regulation under the Act and the regulations in this chapter. * * * * * Commodity trading advisor. (1) This term means any person who, for compensation or profit, engages in the business of advising others, either directly or through publications, writings or electronic media, as to the value of or the advisability of trading in any contract of sale of a commodity for future delivery, security futures product, or swap;..."
Please Note: Are you all referring to CDSs & CDO's (Credit Default Swaps & Credit Default Obligations)? A cute financial slight-of-hand that gave credence to the expression of the boomerange effect, within a highly-leveraged corp. & complicit Regulatory culture, that contributed to the 'down-sizing' of; Bear Stearns, Lehman Bros, AIG, et al way back in the distant past---thank gaud there are no more fin-bubbles---& The International Swaps and Derivatives Association trade group has everything under control....no wait.
Pg. 7:
"...(D) The potential change in the value of assets, services, inputs, products, or commodities that a person owns, produces, manufactures, processes, merchandises, leases, or sells, or reasonably anticipates owning, producing, manufacturing, processing, merchandising, leasing, or selling in the ordinary course of business of the enterprise; (E) Any potential change in value related to any of the foregoing arising from interest, currency, or foreign exchange rate movements associated with such assets, liabilities, services, inputs, products, or commodities; or (F) Any fluctuation in interest, currency, or foreign exchange rate exposures arising from a person’s current or anticipated assets or liabilities; or (ii) Qualifies as bona fide hedging for purposes of an exemption from position limits under the Act; or (iii) Qualifies for hedging treatment under: (A) Financial Accounting Standards Board
Note: (Pw added this-FASB & GASB)
Accounting Standards Codification Topic 815, Derivatives and Hedging (formerly known as Statement No. 133); or (B) Governmental Accounting Standards Board Statement 53, Accounting and Financial Reporting for Derivative Instruments; and (2) Such position is: (i) Not held for a purpose that is in the nature of speculation, investing or trading; and (ii) Not held to hedge or mitigate the risk of another swap or security-based swap position, unless that other position itself is held for the purpose of hedging or mitigating commercial risk as defined by this definition or § 240.3a67–4 of this title. * * * * * Major swap participant—(1) In general. The term major swap participant means any person: (i) That is not a swap dealer; and (ii)(A) That maintains a substantial position in swaps for any of the major swap categories, excluding both positions held for hedging or mitigating commercial risk, and positions maintained by any employee benefit plan (or any contract held by such a plan) as defined in paragraphs (3) and (32) of section 3 of the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1002, for the primary purpose of hedging or mitigating any risk directly associated with the operation of the plan; (B) Whose outstanding swaps create substantial counter-party exposure that could have serious adverse effects on the financial stability of the United States banking system or financial markets; or (C) That is a financial entity that: (1) Is highly leveraged relative to the amount of capital such entity holds and that is not subject to capital..."
Please Note: (What does..."Reasonably anticipates owning", et al MEAN….? & Please provide examples of same…Also, please explain why we don't see CDO's and/or CDS's credit default obligations & credit default swaps mentioned here, as we shouldn't be afraid of such terms, should we...? In closing, since, we've run out of room today, we'll give you all a break and reinforce the notion that what you all are doing is important and does have consequences (real and/or imagined) soooo, Keep up the good effort in this regard, as we all can improve...and our best wishes, too....
Respectfully yours, Pw Carey
