April 11, 2013Ms. Melissa Jurgens, Secretary
U.S. Commodity Futures Trading Commission Three Lafayette Centre1155 21st Street, N.W. Washington, D.C. 20581Re: Core Principles and Other Requirements for Swap Execution Facilities, 76 Fed. Reg.1,214 (January 7, 2011) RIN 3038–AD18; Regulation 37.404 (“Ability to ObtainInformation”)Dear Ms. Jurgens:
The Wholesale Market Brokers’ Association, Americas (“WMBAA” or “Association”)
submits thefollowing comments to the U.S. Commodity Futures Trading Commission (“CFTC” or“Commission”) regarding concerns related to § 37.404 of the proposed Core Principles and OtherRequirements for Swap Execution Facilities (“proposed SEF rules”)
under the Commodity Exchange Act (“CEA”). The WMBAA addressed this provision in its March 8, 2011 commentletter
and seeks to expand on those remarks in this letter.Proposed § 37.404 would require a swap execution facility (“SEF”) to have rules that require tradersin its swaps to keep records of their trading, including records of their activity in the underlying commodity and related derivatives markets, and make such records available, upon request, to theSEF and the Commission. In addition, a SEF with customers trading through intermediaries wouldbe required to either use a comprehensive large-trader reporting system (“LTRS”) or be able todemonstrate that it can obtain position data from other sources in order to conduct an effectivesurveillance program.
The WMBAA is an independent industry body representing the largest inter-dealer brokers operating in the North American wholesale markets across a broad range of financial products. The five founding members of the group are:BGC Partners; GFI Group; ICAP; Tradition; and Tullett Prebon. For more information, please see www.wmbaa.org.
Core Principles and Other Requirements for Swap Execution Facilities, 76 Fed. Reg. 1,214 (January 7, 2011).
letter from the WMBAA to David Stawick, Secretary, CFTC, dated March 8, 2011,
http://comments.cftc.gov/PublicComments/ViewComment.aspx?id=31296 (“The WMBAA does not believe that theCEA provides sufficient authority for this requirement. The legislation is clear as to the SEF’s core principles, but doesnot provide the basis for such a prescriptive rule. Further, the WMBAA believes this provision may be more appropriateunder Core Principle 5 – Ability to Obtain Information. The WMBAA seeks additional detail on this requirement in thefinal rules. For example, the WMBAA would appreciate specific direction from the Commission enumerating theduration that records must be retained and the format for record retention that would satisfy the Proposed Rules. The WMBAA also seeks additional information on the LTRS, including the scope of the data and detail on how the data willbe maintained. Finally, consistent with other comments in this letter, the WMBAA asks the Commission to carefully consider its use of the phrases “traders” and “customers” and either define them or use more accurate terms that are inline with the current competitive OTC trade execution marketplace.”).