Comment Text:
January 18, 2011
David Stawick, Secretary
Commodity Futures Trading Commission
Three LaFayette Centre
1155 21st Street NW
Washington, DC 20581
RE: Proposed CFTC Regulation 1.71 Conflict of Interest Policies and Procedures by FCM’s and Introducing Brokers
Mr. Stawick:
Re: CFTC Proposed Rule Regarding Conflicts of Interest Policies and Procedures by FCM's and IB's
When reviewing the new rules which attempt to merge NASDAQ and other securities rules with the futures industry it seems that a “copy and paste” effort was utilized from existing securities law, with no consideration given to the dramatic differences between the two markets. The authors of this opinion own a well respected research company and while our own professional business might be enhanced by the new regulation, the unintended consequence of the regulation will mean less efficient market information and possible increased volatility.
In our opinion, the net impact of the new regulations will be to dramatically reduce the flow of important market developments to the marketplace, as analysts and traders and anyone with an opinion or important information needed to be openly held by the market will drastically reduce discourse to public venues. Any and all discussions of markets will require record keeping and long term archiving. In essence the “new regulation” will keep critical information in the hands of the large entities and the masses will be even further out of the loop. Obviously the rules will not only retard public information but could make it so large players will end up with more disproportionate access to what used to be more widely-disseminated public information.
The requirement to “include all important facts” is so broad that the important facts will become part of a blizzard of facts required by the new rules and that will confuse and mislead the public and will ultimately result in increased price volatility.
1st Amendment Concerns - It appears that under the new rule, the definition of a research report will be broader than what is defined in NASD rule 2711 because it does not exempt discussions of broad-based indices, communications on economic, political, market conditions, etc. This is very broad and again will be something that retards the flow of information to the marketplace.
It seems that just about any statement could be called into question under the new rules. Apparently, in an attempt to expand the regulation from analysis of individual stocks to the broader world of futures and options, the new regulations are attempting to regulate just about anything that can be written about markets and the economy.
David Hightower
Terry Roggensack
The Hightower Report
141 W Jackson #4004
Chicago, Il 60604
