Comment Text:
Meeting with CME
Wednesday, December 15, 2010
Memo from
Adriance, Riva
CFTC Staff :
Gary Gensler
Dan Berkovitz
Rick Shilts
John Riley
Ananda Radhakrishnan
Riva Spear Adriance
External Attendees :
Terry Duffy
Jerry Salzman
Linda Rich
Anne Klein Gray
Additional Information :
(1) SEFs – (a)
Compliance Responsibilities
- CME asked about the compliance responsibilities that SEF will have under the core principles, and noted their concern if the responsibility differs from that of DCMs. (b)
SEF Definition
– the SEF definition was discussed, and Chairman Gensler noted that it included the ability to provide firm, executable quotes, while indicative quotes are allowed. The Chairman also noted that the impartial access requirement of Core Principle 2 would require any SEF that allowed indicative quotes to provide the quotes to everyone.
(2) DCMs – (a)
Core Principle 9
- CME asked several questions concerning the requirements for complying with Core Principle 9 under the proposed amendments to Part 38, including asking (i) which contracts and which trades would receive temporary relief under the proposal, and (ii) whether the proposed relief was by contract or by position. (b)
Basis for On-exchange % Standard
- CME asked about the basis for the proposal’s use of 85% as the standard for determining if the percentage of trading done on the centralized market is sufficient to comply with Core Principle 9. (c)
Clearing Alternatives
- CME asked about clearing alternatives that would be available for ClearPort trades under the proposal. (d)
CME RFQ System
- CME provided a short explanation if its CME RFQ system. (e)
Comments Welcome
- the CFTC suggested further review of the DCM rulemaking proposal, and that comments are welcome.
(3) Position Limits - CME discussed various issues related to position limits, including bona fide hedges, aggregation and significant price discovery function swaps.
(4) Clearing Proposals - CME discussed various issues relating to risk management issues.
