23704 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices 

45 7 U.S.C. 1a(29). 

46Because ICE already lists for trading a contract 

(i.e., the Henry Financial LD1 Fixed Price contract) 

that was previously declared by the Commission to 

be a SPDC, ICE must submit a written 

demonstration of compliance with the Core 

Principles within 30 calendar days of the date of 

this Order. 17 CFR 36.3(c)(4). 

1 74 FR 54550 (October 22, 2009). 

2The acronym ‘‘NWP’’ indicates the Northwest 

Pipeline. 

3 Incorporated as Title XIII of the Food, 

Conservation and Energy Act of 2008, Public Law 

110–246, 122 Stat. 1624 (June 18, 2008). 

4 7 U.S.C. 1a(29). 

5 74 FR 12178 (Mar. 23, 2009); these rules became 

effective on April 22, 2009. 

6Pub. L. 110–246 at 13203; Joint Explanatory 

Statement of the Committee of Conference, H.R. 

Rep. No. 110–627, 110 Cong., 2d Sess. 978, 986 

(Conference Committee Report). See also 73 FR 

75888, 75894 (Dec. 12, 2008). 

7For an initial SPDC, ECMs have a grace period 

of 90 calendar days from the issuance of a SPDC 

determination order to submit a written 

demonstration of compliance with the applicable 

core principles. For subsequent SPDCs, ECMs have 

a grace period of 30 calendar days to demonstrate 

core principle compliance. 

2(h)(7)(C). Additionally, the 

IntercontinentalExchange, Inc., satisfies 

the statutory material liquidity and 

material price reference criteria for 

significant price discovery contracts. 

Consistent with this determination, and 

effective immediately, the 

IntercontinentalExchange, Inc., shall be 

and is considered a registered entity 45

with respect to the AECO Financial 

Basis contract and is subject to all the 

provisions of the Commodity Exchange 

Act applicable to registered entities. 

Further, the obligations, requirements 

and timetables prescribed in 

Commission rule 36.3(c)(4) governing 

core principle compliance by the 

IntercontinentalExchange, Inc. 

commence with the issuance of this 

Order.46

Issued in Washington, DC on April 28, 

2010, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. 2010–10299 Filed 5–3–10; 8:45 am] 

BILLING CODE P 

COMMODITY FUTURES TRADING 

COMMISSION 

Order Finding That the NWP Rockies 

Financial Basis Contract Traded on the 

IntercontinentalExchange, Inc., 

Performs a Significant Price Discovery 

Function 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Final order. 

SUMMARY: On October 22, 2009, the 

Commodity Futures Trading 

Commission (‘‘CFTC’’ or ‘‘Commission’’) 

published for comment in the Federal 

Register 1 a notice of its intent to 

undertake a determination whether the 

NWP 2 Rockies Financial Basis (‘‘NWR’’) 

contract traded on the 

IntercontinentalExchange, Inc. (‘‘ICE’’), 

an exempt commercial market (‘‘ECM’’) 

under sections 2(h)(3)–(5) of the 

Commodity Exchange Act (‘‘CEA’’ or the 

‘‘Act’’), performs a significant price 

discovery function pursuant to section 

2(h)(7) of the CEA. The Commission 

undertook this review based upon an 

initial evaluation of information and 

data provided by ICE as well as other 

available information. The Commission 

has reviewed the entire record in this 

matter, including all comments 

received, and has determined to issue 

an order finding that the NWR contract 

performs a significant price discovery 

function. Authority for this action is 

found in section 2(h)(7) of the CEA and 

Commission rule 36.3(c) promulgated 

thereunder. 

DATES: Effective date: April 28, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Gregory K. Price, Industry Economist, 

Division of Market Oversight, 

Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. Telephone: (202) 418–5515. 

E-mail: gprice@cftc.gov; Christa 

Lachenmayr, Economist, Division of 

Market Oversight, same address. 

Telephone: (202) 418–5252. E-mail: 

clachenmayr@cftc.gov; or Susan Nathan, 

Senior Special Counsel, Division of 

Market Oversight, same address. 

Telephone: (202) 418–5133. E-mail: 

snathan@cftc.gov. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The CFTC Reauthorization Act of 

2008 (‘‘Reauthorization Act’’) 3

significantly broadened the CFTC’s 

regulatory authority with respect to 

ECMs by creating, in section 2(h)(7) of 

the CEA, a new regulatory category— 

ECMs on which significant price 

discovery contracts (‘‘SPDCs’’) are 

traded—and treating ECMs in that 

category as registered entities under the 

CEA.4 The legislation authorizes the 

CFTC to designate an agreement, 

contract or transaction as a SPDC if the 

Commission determines, under criteria 

established in section 2(h)(7), that it 

performs a significant price discovery 

function. When the Commission makes 

such a determination, the ECM on 

which the SPDC is traded must assume, 

with respect to that contract, all the 

responsibilities and obligations of a 

registered entity under the Act and 

Commission regulations, and must 

comply with nine core principles 

established by new section 2(h)(7)(C). 

On March 16, 2009, the CFTC 

promulgated final rules implementing 

the provisions of the Reauthorization 

Act.5 As relevant here, rule 36.3 

imposes increased information reporting 

requirements on ECMs to assist the 

Commission in making prompt 

assessments whether particular ECM 

contracts may be SPDCs. In addition to 

filing quarterly reports of its contracts, 

an ECM must notify the Commission 

promptly concerning any contract 

traded in reliance on the exemption in 

section 2(h)(3) of the CEA that averaged 

five trades per day or more over the 

most recent calendar quarter, and for 

which the exchange sells its price 

information regarding the contract to 

market participants or industry 

publications, or whose daily closing or 

settlement prices on 95 percent or more 

of the days in the most recent quarter 

were within 2.5 percent of the 

contemporaneously determined closing, 

settlement or other daily prices of 

another contract. 

Commission rule 36.3(c)(3) 

established the procedures by which the 

Commission makes and announces its 

determination whether a particular ECM 

contract serves a significant price 

discovery function. Under those 

procedures, the Commission will 

publish notice in the Federal Register 

that it intends to undertake an 

evaluation whether the specified 

agreement, contract or transaction 

performs a significant price discovery 

function and to receive written views, 

data and arguments relevant to its 

determination from the ECM and other 

interested persons. Upon the close of 

the comment period, the Commission 

will consider, among other things, all 

relevant information regarding the 

subject contract and issue an order 

announcing and explaining its 

determination whether or not the 

contract is a SPDC. The issuance of an 

affirmative order signals the 

effectiveness of the Commission’s 

regulatory authorities over an ECM with 

respect to a SPDC; at that time such an 

ECM becomes subject to all provisions 

of the CEA applicable to registered 

entities.6 The issuance of such an order 

also triggers the obligations, 

requirements and timetables prescribed 

in Commission rule 36.3(c)(4).7

II. Notice of Intent To Undertake SPDC 

Determination 

On October 22, 2009, the Commission 

published in the Federal Register notice 

of its intent to undertake a 

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8The Commission’s Part 36 rules establish, 

among other things, procedures by which the 

Commission makes and announces its 

determination whether a specific ECM contract 

serves a significant price discovery function. Under 

those procedures, the Commission publishes a 

notice in the Federal Register that it intends to 

undertake a determination whether a specified 

agreement, contract or transaction performs a 

significant price discovery function and to receive 

written data, views and arguments relevant to its 

determination from the ECM and other interested 

persons. 

9FERC is an independent Federal regulatory 

agency that, among other things, regulates the 

interstate transmission of natural gas, oil and 

electricity. McGraw-Hill, through its division Platts, 

compiles and calculates monthly natural gas price 

indices from natural gas trade data submitted to 

Platts by energy marketers. Platts includes those 

price indices in its monthly Inside FERC’s Gas 

Market Report (‘‘Inside FERC’’). ICE is an ECM, as 

noted above. EI is an economic consulting firm with 

offices located in Washington, DC, and San 

Francisco, CA. The comment letters are available on 

the Commission’s Web site: http://www.cftc.gov/ 

lawandregulation/federalregister/ 

federalregistercomments/2009/09-031.html. 

10FERC stated that the NWR contract is cash 

settled and does not contemplate the actual 

physical delivery of natural gas. Acccordingly, 

FERC expressed the opinion that a determination by 

the Commission that a contract performs a 

significant price discovery function ‘‘would not 

appear to conflict with FERC’s exclusive 

jurisdiction under the Natural Gas Act (NGA) over 

certain sales of natural gas in interstate commerce 

for resale or with its other regulatory 

responsibilities under the NGA’’ and further that 

‘‘FERC staff will continue to monitor for any such 

conflict * * * [and] advise the CFTC’’ should any 

such potential conflict arise. CL 01. 

11 In its October 22, 2009, Federal Register 

release, the Commission identified material price 

reference, price linkage and material liquidity as the 

possible criteria for SPDC determination of the 

NWR contract. Arbitrage was not identified as a 

possible criterion and will not be discussed further 

in this document or the associated Order. 

12 17 CFR Part 36, Appendix A. 

13The term ‘‘hub’’ refers to a juncture where two 

or more natural gas pipelines are connected. Hubs 

also serve as pricing points for natural gas at the 

particular locations. 

determination whether the NWR 

contract performs a significant price 

discovery function and requested 

comment from interested parties.8

Comments were received from the 

Federal Energy Regulatory Commission 

(‘‘FERC’’), Platts, Economists 

Incorporated (‘‘EI’’) and ICE.9 The 

comment letters from FERC10 and Platts 

did not directly address the issue of 

whether or not the NWR contract is a 

SPDC; ICE’s and EI’s comments raised 

substantive issues with respect to the 

applicability of section 2(h)(7) the NWR 

contract, generally asserting that the 

NWR contract is not a SPDC as it does 

not meet the material liquidity, material 

price reference and price linkage criteria 

for SPDC determination. ICE’s and EI’s 

comments are more extensively 

discussed below, as applicable. 

III. Section 2(h)(7) of the CEA 

The Commission is directed by 

section 2(h)(7) of the CEA to consider 

the following criteria in determining a 

contract’s significant price discovery 

function: 

• Price Linkage—the extent to which 

the agreement, contract or transaction 

uses or otherwise relies on a daily or 

final settlement price, or other major 

price parameter, of a contract or 

contracts listed for trading on or subject 

to the rules of a designated contract 

market (‘‘DCM’’) or derivatives 

transaction execution facility (‘‘DTEF’’), 

or a SPDC traded on an electronic 

trading facility, to value a position, 

transfer or convert a position, cash or 

financially settle a position, or close out 

a position. 

• Arbitrage—the extent to which the 

price for the agreement, contract or 

transaction is sufficiently related to the 

price of a contract or contracts listed for 

trading on or subject to the rules of a 

DCM or DTEF, or a SPDC traded on or 

subject to the rules of an electronic 

trading facility, so as to permit market 

participants to effectively arbitrage 

between the markets by simultaneously 

maintaining positions or executing 

trades in the contracts on a frequent and 

recurring basis. 

• Material price reference—the extent 

to which, on a frequent and recurring 

basis, bids, offers or transactions in a 

commodity are directly based on, or are 

determined by referencing or 

consulting, the prices generated by 

agreements, contracts or transactions 

being traded or executed on the 

electronic trading facility. 

• Material liquidity—the extent to 

which the volume of agreements, 

contracts or transactions in a 

commodity being traded on the 

electronic trading facility is sufficient to 

have a material effect on other 

agreements, contracts or transactions 

listed for trading on or subject to the 

rules of a DCM, DTEF or electronic 

trading facility operating in reliance on 

the exemption in section 2(h)(3). 

Not all criteria must be present to 

support a determination that a 

particular contract performs a 

significant price discovery function, and 

one or more criteria may be inapplicable 

to a particular contract.11 Moreover, the 

statutory language neither prioritizes the 

criteria nor specifies the degree to 

which a SPDC must conform to the 

various criteria. In Guidance issued in 

connection with the Part 36 rules 

governing ECMs with SPDCs, the 

Commission observed that these criteria 

do not lend themselves to a mechanical 

checklist or formulaic analysis. 

Accordingly, the Commission has 

indicated that in making its 

determinations it will consider the 

circumstances under which the 

presence of a particular criterion, or 

combination of criteria, would be 

sufficient to support a SPDC 

determination.12 For example, for 

contracts that are linked to other 

contracts or that may be arbitraged with 

other contracts, the Commission will 

consider whether the price of the 

potential SPDC moves in such harmony 

with the other contract that the two 

markets essentially become 

interchangeable. This co-movement of 

prices would be an indication that 

activity in the contract had reached a 

level sufficient for the contract to 

perform a significant price discovery 

function. In evaluating a contract’s price 

discovery role as a price reference, the 

Commission will consider whether cash 

market participants are quoting bid or 

offer prices or entering into transactions 

at prices that are set either explicitly or 

implicitly at a differential to prices 

established for the contract. 

IV. Findings and Conclusions 

a. The NWP Rockies Financial Basis 

(NWR) Contract and the SPDC Indicia 

The ICE NWR contract is cash settled 

based on the difference between the 

bidweek price of natural gas at the 

Northwest Pipeline’s Rockies hub for 

the month of delivery, as published in 

Platts’ Inside FERC’s Gas Market Report, 

and the final settlement price for the 

New York Mercantile Exchange’s 

(‘‘NYMEX’s’’) Henry Hub physicallydelivered natural gas futures contract for 

the same specified calendar month. The 

Platts bidweek price, which is 

published monthly, is based on a survey 

of cash market traders who voluntarily 

report to Platts data on fixed-price 

transactions for physical delivery of 

natural gas at the Rockies hub 

conducted during the last five business 

days of the month; such bidweek 

transactions specify the delivery of 

natural gas on a uniform basis 

throughout the following calendar 

month at the agreed upon rate. The 

Platts bidweek index is published on 

the first business day of the calendar 

month in which the natural gas is to be 

delivered. The size of the NWR contract 

is 2,500 million British thermal units 

(‘‘mmBtu’’), and the unit of trading is 

any multiple of 2,500 mmBtu. The NWR 

contract is listed for up to 120 calendar 

months commencing with the next 

calendar month. 

The Henry Hub,13 which is located in 

Erath, Louisiana, is the primary cash 

market trading and distribution center 

for natural gas in the United States. It 

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14See http://www.eia.doe.gov/pub/oil_gas/ 

natural_gas/feature_articles/2009/ngmarketcenter/ 

ngmarketcenter.pdf. 

15The Rockies hub includes fixed-price gas 

delivered into Northwest Pipeline’s mainline in 

Wyoming, Utah and Colorado between the 

Kemmerer and Moab stations. Deliveries at Ignacio, 

CO, and elsewhere in zone MO (the area South of 

Moab, UT, into the San Juan Mountains) are 

excluded. Transactions done at Opal, WY, and the 

Muddy Creek compressor station (where the 

Northwest Pipeline connects with Kern River Gas 

Transmission, Questar Pipeline and Colorado 

Interstate Gas) are used because gas traded at those 

two points often is not nominated into a specific 

pipeline. 

16See http://www.eia.doe.gov/pub/oil_gas/ 

natural_gas/feature_articles/2009/ngmarketcenter/ 

ngmarketcenter.pdf. 

17Basis contracts denote the difference in the 

price of natural gas at a specified location minus the 

price of natural gas at the Henry Hub. The 

differential can be either a positive or negative 

value. 

18Commercial activity in natural gas basis swap 

contracts is evidenced by large positions held by 

energy trading firms in the comparable NYMEX 

ClearPort basis swap contract for the Rockies hub. 

19As noted above, the Commission did not find 

an indication of arbitrage in connection with this 

contract; accordingly, that criterion was not 

discussed in reference to the NWR contract. 

20The OTC Gas End of Day dataset includes daily 

settlement prices for natural gas contracts listed for 

all points in North America. 

21 In addition to referencing ICE prices, natural 

gas market firms participating in the Rockies market 

may rely on other cash market quotes as well as 

industry publications and price indices that are 

published by third-party price reporting firms when 

entering into natural gas transactions. 

also is the delivery point and pricing 

basis for the NYMEX’s actively traded, 

physically-delivered natural gas futures 

contract, which is the most important 

pricing reference for natural gas in the 

United States. The Henry Hub, which is 

operated by Sabine Pipe Line, LLC, 

serves as a juncture for 13 different 

pipelines. These pipelines bring in 

natural gas from fields in the Gulf Coast 

region and ship it to major consumption 

centers along the East Coast and 

Midwest. The throughput shipping 

capacity of the Henry Hub is 1.8 trillion 

mmBtu per day. 

In addition to the Henry Hub, there 

are a number of other locations where 

natural gas is traded. In 2008, there were 

33 natural gas market centers in North 

America.14 Some of the major trading 

centers include Alberta, Northwest 

Rockies, Southern California border 

region and the Houston Ship Channel. 

For locations that are directly connected 

to the Henry Hub by one or more 

pipelines and where there typically is 

adequate shipping capacity, the price at 

the other locations usually directly 

tracks the price at the Henry Hub, 

adjusted for transportation costs. 

However, at other locations that are not 

directly connected to the Henry Hub or 

where shipping capacity is limited, the 

prices at those locations often diverge 

from the Henry Hub price. Furthermore, 

one local price may be significantly 

different than the price at another 

location even though the two markets’ 

respective distances from the Henry 

Hub are the same. The reason for such 

pricing disparities is that a given 

location may experience supply and 

demand factors that are specific to that 

region, such as differences in pipeline 

shipping capacity, unusually high or 

low demand for heating or cooling or 

supply disruptions caused by severe 

weather. As a consequence, local 

natural gas prices can differ from the 

Henry Hub price by more than the cost 

of shipping and such price differences 

can vary in an unpredictable manner. 

The Northwest Pipeline’s Rockies hub 

is located in Wyoming, Utah and 

Colorado.15 The Northwest Pipeline 

draws natural gas supplies from the 

Rocky Mountain region and ships it 

along a 3,900-mile, bi-directional 

transmission system to markets 

throughout the Rockies and Pacific 

Northwest. The Opal market center, a 

trading region that includes the Rockies 

hub, had an estimated throughput 

capacity of 1.5 billion cubic feet per day 

in 2008. Moreover, the number of 

pipeline interconnections at the Opal 

market center was eight in 2008, up 

from four interconnections in 2003. 

Lastly, the pipeline interconnection 

capacity of the Opal market center in 

2008 was six billion cubic feet per day, 

which constituted an 86 percent 

increase over the pipeline 

interconnection capacity in 2003.16 The 

Rockies hub is far removed from the 

Henry Hub and is not directly 

connected to the Henry Hub by an 

existing pipeline. 

The local price at the Rockies hub 

typically differs from the price at the 

Henry Hub. Thus, the price of the Henry 

Hub physically-delivered futures 

contract is an imperfect proxy for the 

Rockies price. Moreover, exogenous 

factors, such as adverse weather, can 

cause the Rockies gas price to differ 

from the Henry Hub price by an amount 

that is more or less than the cost of 

shipping, making the NYMEX Henry 

Hub futures contract even less precise as 

a hedging tool than desired by market 

participants. Basis contracts 17 allow 

traders to more accurately discover 

prices at alternative locations and hedge 

price risk that is associated with natural 

gas at such locations.18 In this regard, a 

position at a local price for an 

alternative location can be established 

by adding the appropriate basis swap 

position to a position taken in the 

NYMEX physically-delivered Henry 

Hub contract (or in the NYMEX or ICE 

Henry Hub look-alike contract, which 

cash settle based on the NYMEX 

physically-delivered natural gas 

contract’s final settlement price). 

In its October 22, 2009, Federal 

Register notice, the Commission 

identified material price reference, price 

linkage and material liquidity as the 

potential SPDC criteria applicable to the 

NWR contract. Each of these criteria is 

discussed below.19

1. Material Price Reference Criterion 

The Commission’s October 22, 2009, 

Federal Register notice identified 

material price reference as a potential 

basis for a SPDC determination with 

respect to this contract. The 

Commission considered the fact that ICE 

sells its price data to market participants 

in a number of different packages which 

vary in terms of the hubs covered, time 

periods, and whether the data are daily 

only or historical. For example, ICE 

offers the ‘‘West Gas End of Day’’ and 

‘‘OTC Gas End of Day’’ 20 packages with 

access to all price data or just current 

prices plus a selected number of months 

(i.e., 12, 24, 36 or 48 months) of 

historical data. These two packages 

include price data for the NWR contract. 

The Rockies hub is a major trading 

center for natural gas in the United 

States. Traders, including producers, 

keep abreast of the prices of the NWR 

contract when conducting cash deals. 

These traders look to a competitively 

determined price as an indication of 

expected values of natural gas at the 

Rockies hub when entering into cash 

market transactions for natural gas, 

especially those trades that provide for 

physical delivery in the future. Traders 

use the ICE NWR contract, as well as 

other ICE basis swap contracts, to hedge 

cash market positions and 

transactions—activities which enhance 

the NWR contract’s price discovery 

utility. The substantial volume of 

trading and open interest in the NWR 

contract appears to attest to its use for 

this purpose. While the NWR contract’s 

settlement prices may not be the only 

factor influencing spot and forward 

transactions, natural gas traders 

consider the ICE price to be a critical 

factor in conducting OTC transactions.21

NYMEX lists a futures contract that is 

comparable to the ICE NWR contract on 

its ClearPort platform. However, unlike 

the ICE contract, none of the trades in 

the NYMEX Rockies Basis Swap (Platts 

IFERC) futures contract are executed in 

NYMEX’s centralized marketplace; 

instead, all of the transactions originate 

as bilateral swaps that are submitted to 

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22Appendix A to the Part 36 rules. 

NYMEX for clearing. The daily 

settlement prices of the NYMEX Rockies 

Basis Swap contract are influenced, in 

part, by the daily settlement prices of 

the ICE NWR contract. This is because 

NYMEX determines the daily settlement 

prices for its natural gas basis swap 

contracts through a survey of cash 

market voice brokers. Voice brokers, in 

turn, refer to the ICE NWR price, among 

other information, as an important 

indicator as to where the market is 

trading. Therefore, the ICE NWR price 

influences the settlement price for the 

NYMEX Rockies Basis Swap contract. 

This is supported by an analysis of the 

daily settlement prices for the NYMEX 

and ICE Rockies basis swap contracts. In 

this regard, 98 percent of the daily 

settlement prices for the NYMEX 

Rockies Basis Swap contract are within 

one standard deviation of the NWR 

contract’s settlement prices. 

Lastly, the fact that the NWR contract 

does not meet the price linkage criterion 

(discussed below) bolsters the argument 

for material price reference. As noted 

above, the Henry Hub is the pricing 

reference for natural gas in the United 

States. However, regional market 

conditions may cause the price of 

natural gas in another area of the 

country to diverge by more than the cost 

of transportation, thus making the 

Henry Hub price an imperfect proxy for 

the local gas price. The more variable 

the local natural gas price is, the more 

traders need to accurately hedge their 

price risk. Basis swap contracts provide 

a means of more accurately pricing 

natural gas at a location other than the 

Henry Hub. An analysis of Rockies 

natural gas prices showed that all of the 

observations were more than 2.5 percent 

different than the contemporaneous 

Henry Hub prices. Specifically, the 

average Rockies basis value between 

January 2008 and September 2009 was 

¥$1.94 per mmBtu with a variance of 

$1.88 per mmBtu. 

i. Federal Register Comments 

Both EI and ICE stated in their 

comment letters that the NWR contract 

does not meet the material price 

reference criterion for SPDC 

determination. ICE argued that the 

Commission appeared to base the case 

that the NWR contract is potentially a 

SPDC on a disputable assertion. In 

issuing its notice of intent to determine 

whether the NWR contract is a SPDC, 

the CFTC cited a general conclusion in 

its ECM study ‘‘that certain market 

participants referred to ICE as a price 

discovery market for certain natural gas 

contracts.’’ ICE stated that, ‘‘Basing a 

material price reference determination 

on general statements made in a two 

year old study does not seem to meet 

Congress’ intent that the CFTC use its 

considerable expertise to study the OTC 

markets.’’ In response to the above 

comment, the Commission notes that it 

cited the ECM study’s general finding 

that some ICE natural gas contracts 

appear to be regarded as price discovery 

markets merely as an indicia that an 

investigation of certain ICE contracts 

may be warranted, and was not 

intended to serve as the sole basis for 

determining whether or not a particular 

contract meets the material price 

reference criterion. 

EI also stated that the NWR contract 

does not satisfy the material price 

reference criterion. The commenter 

argued that other contracts (physical or 

financial) are not indexed based on the 

ICE NWR contract price, but rather are 

indexed based on the underlying cash 

price series against which the NWR 

contract is settled. Thus, EI contends 

that the underlying cash price series is 

the authentic reference price and not the 

ICE contract itself. The Commission 

believes that this interpretation of price 

reference is too limiting in that it only 

considers the final index value on 

which the contract is cash settled after 

trading ceases. Instead, the Commission 

believes that a cash-settled derivatives 

contract could meet the price reference 

criteria if market participants ‘‘consult 

on a frequent and recurring basis’’ the 

derivatives contract when pricing 

forward, fixed-price commitments or 

other cash-settled derivatives that seek 

to ‘‘lock in’’ a fixed price for some future 

point in time to hedge against adverse 

price movements. 

EI also argued that publication of 

price data in a package format is a weak 

justification for material price reference. 

According to the commenter, market 

participants generally do not purchase 

ICE data sets for one contract’s prices, 

so the fact that ICE sells the NWR prices 

as part of a broad package is not 

conclusive evidence that market 

participants are buying the ICE data sets 

because they find the NWR prices have 

substantial value to them. The 

Commission notes that the Rockies hub 

is a major natural gas trading point, and 

the NWR contract’s prices are well 

regarded in the industry as indicative of 

the value of natural gas at the Rockies 

hub. Accordingly, the Commission 

believes that it is reasonable to conclude 

that market participants are purchasing 

the data packages that include the NWR 

contract’s prices in substantial part 

because the NWR contract prices have 

particular value to them. 

ii. Conclusion Regarding Material Price 

Reference 

Based on the above, the Commission 

finds that the NWR contract meets the 

material price reference criterion 

because it is referenced and consulted 

on a frequent and recurring basis by 

cash market participants when pricing 

transactions (direct evidence). 

Moreover, the ECM sells the NWR 

contract’s price data to market 

participants (indirect evidence). 

2. Price Linkage Criterion 

In its October 22, 2009, Federal 

Register notice, the Commission 

identified price linkage as a potential 

basis for a SPDC determination with 

respect to the NWR contract. In this 

regard, the final settlement of the NWR 

contract is based, in part, on the final 

settlement price of the NYMEX’s 

physically-delivered natural gas futures 

contract, where the NYMEX is 

registered with the Commission as a 

DCM. 

The Commission’s Guidance on 

Significant Price Discovery Contracts 22

notes that a ‘‘price-linked contract is a 

contract that relies on a contract traded 

on another trading facility to settle, 

value or otherwise offset the pricelinked contract.’’ Furthermore, the 

Guidance notes that, ‘‘[f]or a linked 

contract, the mere fact that a contract is 

linked to another contract will not be 

sufficient to support a determination 

that a contract performs a significant 

price discovery function. To assess 

whether such a determination is 

warranted, the Commission will 

examine the relationship between 

transaction prices of the linked contract 

and the prices of the referenced 

contract. The Commission believes that 

where material liquidity exists, prices 

for the linked contract would be 

observed to be substantially the same as 

or move substantially in conjunction 

with the prices of the referenced 

contract.’’ Furthermore, the Guidance 

proposes a threshold price relationship 

such that prices of the ECM linked 

contract will fall within a 2.5 percent 

price range for 95 percent of 

contemporaneously determined closing, 

settlement or other daily prices over the 

most recent quarter. Finally, the 

Commission also stated in the Guidance 

that it would consider a linked contract 

that has a trading volume equivalent to 

5 percent of the volume of trading in the 

contract to which it is linked to have 

sufficient volume potentially to be 

deemed a SPDC (‘‘minimum threshold’’). 

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23The NWR contract is one-quarter the size of the 

NYMEX Henry Hub physically-delivered futures 

contract. 

24As noted above, the material liquidity criterion 

speaks to the effect that transactions in the potential 

SPDC may have on trading in ‘‘agreements, 

contracts and transactions listed for trading on or 

subject to the rules of a designated contract market, 

a derivatives transaction execution facility, or an 

electronic trading facility operating in reliance on 

the exemption in section 2(h)(3) of the Act.’’ 

25 ICE does not differentiate between open 

interest created by a transaction executed on its 

trading platform versus that created by a transaction 

executed off its trading platform. 74 FR 54550 

(October 22, 2009). 

26See Commission Rule 36.3(c)(2), 17 CFR 

36.3(c)(2). 

27By way of comparison, the number of contracts 

traded in the NWR contract is similar to that 

exhibited on a liquid futures market and is roughly 

equivalent to the volume of trading for the Chicago 

Mercantile Exchange Feeder Cattle futures contract 

during this period. 

28By way of comparison, open interest in the 

NWR contract is roughly equivalent to that in the 

Chicago Board of Trade’s wheat contract. 

29Specifically, Commission staff econometrically 

estimated a vector autoregression model using daily 

natural gas price levels. A vector autoregression 

model is an econometric model used to capture the 

dependencies and interrelationships among 

multiple time series, generalizing the univariate 

autoregression model. The estimated model 

displays strong diagnostic evidence of statistical 

adequacy. In particular, the model’s impulse 

response function was shocked with a one-time rise 

in Rockies price. The simulation results suggest 

that, on average over the sample period, a one 

percent rise in the Rockies natural gas price elicited 

a 0.176 percent increase in the NYMEX Henry Hub 

price, as well as a 0.254 percent to 0.276 percent 

To assess whether the NWR contract 

meets the price linkage criterion, 

Commission staff obtained price data 

from ICE and performed the statistical 

tests cited above. Staff found that, while 

the Rockies price is determined, in part, 

by the final settlement price of the 

NYMEX physically-delivered natural 

gas futures contract (a DCM contract), 

the Rockies hub price is not within 2.5 

percent of the settlement price of the 

corresponding NYMEX Henry Hub 

natural gas futures contract on 95 

percent or more of the days. 

Specifically, during the third quarter of 

2009, only 2.4 percent of the Rockies 

natural gas prices derived from the ICE 

basis values were within 2.5 percent of 

the daily settlement price of the NYMEX 

Henry Hub futures contract. In addition, 

staff found that the NWR contract fails 

to meet the volume threshold 

requirement. In particular, the total 

trading volume in the NYMEX 

physically-delivered natural gas 

contract during the third quarter of 2009 

was 14,022,963 contracts, with 5 

percent of that number being 701,148 

contracts. The number of trades on the 

ICE centralized market in the NWR 

contract during the same period was 

279,905 contracts (equivalent to 69,976 

NYMEX contracts, given the size 

difference).23 Thus, centralized-market 

trades in the NWR contract amounted to 

less than the minimum threshold. 

Due to the specific criteria that a 

given ECM contract must meet to fulfill 

the price linkage criterion, the 

requirements, for all intents and 

purposes, exclude ECM contracts that 

are not near facsimiles of DCM contracts 

even though the ECM contract may 

specifically use the settlement price to 

value a position, which is the case of the 

NWR contract. In this regard, an ECM 

contract that is priced and traded as if 

it is a functional equivalent of a DCM 

contract likely will have a price series 

that mirrors that of the corresponding 

DCM contract. In contrast, for contracts 

that are not look-alikes of DCM 

contracts, it is reasonable to expect that 

the two price series would be divergent. 

While the Rockies hub and the Henry 

Hub are both supply centers, they are 

located in two different areas of the 

United States. Moreover, the Rockies 

hub is somewhat isolated and the two 

hubs are not directly connected to each 

other. These differences contribute to 

the divergence between the two price 

series and, as discussed above, increase 

the likelihood that the ‘‘basis’’ contract is 

used for material price reference. 

i. Federal Register Comments 

As noted above, ICE and EI addressed 

the question of whether the NWR 

contract is a SPDC. EI noted that the 

NWR and NYMEX natural gas contracts 

are not economically equivalent and 

that the NWR contract’s volume is too 

low to affect the NYMEX natural gas 

futures contract. ICE opined that the 

NWR contract’s trading volume is too 

low to affect the price discovery process 

for the NYMEX natural gas futures 

contract. In addition, ICE states that the 

NWR contract simply reflects a price 

differential between the Rockies and the 

Henry Hub; ‘‘there is no price linkage as 

contemplated by Congress or the CFTC 

in its rulemaking.’’ 

ii. Conclusion Regarding the Price 

Linkage Criterion 

Based on the above, the Commission 

finds that the NWR contract does not 

meet the price linkage criterion because 

it fails the price relationship and 

volume tests provided for in the 

Commission’s Guidance. 

3. Material Liquidity Criterion 

To assess whether the NWR contract 

meets the material liquidity criterion, 

the Commission first examined volume 

and open interest data provided to it by 

ICE as a general measurement of the 

NWR market’s size and potential 

importance, and second performed a 

statistical analysis to measure the effect 

that changes to NWR prices potentially 

may have on prices for the NYMEX 

Henry Hub Natural Gas (a DCM 

contract), the ICE PG&E Citygate 

Financial Basis contract (an ECM 

contract) and the Malin Financial Basis 

contract (an ECM contract).24

The Commission’s Guidance 

(Appendix A to Part 36) notes that 

‘‘[t]raditionally, objective measures of 

trading such as volume or open interest 

have been used as measures of 

liquidity.’’ In this regard, the 

Commission in its October 22, 2009, 

Federal Register notice referred to 

second quarter 2009 trading statistics 

that ICE had submitted for its NWR 

contract. Based upon on a required 

quarterly filing made by ICE on July 27, 

2009, the total number of NWR trades 

executed on ICE’s electronic trading 

platform was 3,013 in the second 

quarter of 2009, resulting in a daily 

average of 47.1 trades. During the same 

period, the NWR contract had a total 

trading volume on ICE’s electronic 

trading platform of 276,187 contracts 

and an average daily trading volume of 

4,315 contracts. Moreover, the open 

interest as of June 30, 2009, was 349,931 

contracts, which included trades 

executed on ICE’s electronic trading 

platform, as well as trades executed off 

of ICE’s electronic trading platform and 

then brought to ICE for clearing.25

Subsequent to the October 22, 2009, 

Federal Register notice, ICE submitted 

another quarterly notification filed on 

November 13, 2009,26 with updated 

trading statistics. Specifically, with 

respect to its NWR contract, 2,950 

separate trades occurred on its 

electronic platform in the third quarter 

of 2009, resulting in a daily average of 

44.7 trades. During the same period, the 

NWR contract had a total trading 

volume on its electronic platform of 

279,905 contracts (which was an 

average of 4,241 contracts per day).27 As 

of September 30, 2009, open interest in 

the NWR contract was 345,683 

contracts.28 Reported open interest 

included positions resulting from trades 

that were executed on ICE’s electronic 

platform, as well as trades that were 

executed off of ICE’s electronic platform 

and brought to ICE for clearing. 

In Appendix A to Part 36, the material 

liquidity criterion for SPDC 

determination specifies that an ECM 

contract should have a material effect on 

another contract. To measure the effect 

that the NWR contract potentially could 

have on a DCM contract, or on another 

ECM contract, Commission staff 

performed a statistical analysis 29 using 

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Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices 23709 

increase in the other two modeled natural gas 

prices. These multipliers of response emerge with 

noticeable statistical strength or significance. Based 

on such long run sample patterns, if the Rockies 

price rises by 10 percent, then the price of NYMEX 

Henry Hub natural gas futures contract, as well as 

those for the Alberta and HSC hubs, each would 

rise by about 1.5 percent to 2.5 percent. The 

relatively small magnitude of the multipliers likely 

reflects the fact that the Rockies hub is isolated and 

not directly connected to the Henry Hub. 

30Natural gas prices at the Rockies, PG&E 

Citygate and Malin trading centers were obtained by 

adding the daily settlement prices of ICE’s NWP 

Rockies Financial Basis, PG&E Citygate Financial 

Basis and Malin Financial Basis contracts, 

respectively, to the contemporaneous daily 

settlement prices of the NYMEX Henry Hub 

physically-delivered natural gas futures contract. 

31 73 FR 75892 (December 12, 2008). 

32Supplemental data supplied by ICE confirmed 

that block trades in the third quarter of 2009 were 

in addition to the trades that were conducted on the 

electronic platform; block trades comprised 44.4 

percent of all transactions in the NWR contract. 

33See 73 FR 75888, 75893 (Dec. 12, 2008). 

34 44 U.S.C. 3507(d). 

daily settlement prices (between January 

2, 2008, and September 30, 2009) for the 

NYMEX Henry Hub natural gas contract 

(a DCM contract) and price levels for the 

Rockies, PG&E Citygate and Malin 

market centers.30 The simulation results 

suggest that, on average over the sample 

period, a one percent rise in the Rockies 

natural gas price elicited a 0.254 percent 

to 0.276 percent increase in the PG&E 

Citygate and Malin hub natural gas 

prices, and a 0.176 percent increase in 

the NYMEX Henry Hub natural gas 

price. 

i. Federal Register Comments 

As noted above, ICE and EI addressed 

the question of whether the NWR 

contract is a SPDC. ICE stated in its 

comment letter that the NWR contract 

does not meet the material liquidity 

criterion for SPDC determination for a 

number of reasons. 

First, ICE opined that the Commission 

‘‘seems to have adopted a five trade-perday test to determine whether a contract 

is materially liquid. It is worth noting 

that ICE originally suggested that the 

CFTC use a five trades-per-day 

threshold as the basis for an ECM to 

report trade data to the CFTC.’’ In this 

regard, the Commission adopted a five 

trades-per-day threshold as a reporting 

requirement to enable it to 

‘‘independently be aware of ECM 

contracts that may develop into 

SPDCs’’ 31 rather than solely relying 

upon an ECM on its own to identify any 

such potential SPDCs to the 

Commission. Thus, any contract that 

meets this threshold may be subject to 

scrutiny as a potential SPDC; the 

threshold is not intended to define 

liquidity in a broader sense. As noted 

above, the Commission is basing a 

finding of material liquidity for the ICE 

NWR contract, in part, on the fact that 

there were nearly 45 trades per day on 

average in the NWR contract during the 

third quarter of 2009, which was far 

more than the five trades-per-day 

threshold that is cited in the ICE 

comment. In addition, the Commission 

notes that the number of contracts per 

transaction in the NWR contract is high 

(approximately 95 contracts per 

transaction) and thus, as noted, trading 

volume (measured in contract units) is 

substantial. The NWR contract also has 

substantial open interest. 

ICE also stated that ‘‘the statistics 

[provided by ICE] have been 

misinterpreted and misapplied.’’ In 

particular, ICE stated that the volume 

figures used in the Commission’s 

analysis (cited above) ‘‘include trades 

made in all 120 months of each 

contract’’ as well as in strips of contract 

months, and a ‘‘more appropriate 

method of determining liquidity is to 

examine the activity in a single traded 

month or strip of a given contract.’’ 

Furthermore, ICE noted that for the 

NWR contract, ‘‘28% of the trades 

actually executed in the ICE platform 

occurred in the single most liquid, 

usually prompt, month of the contract.’’ 

EI also expressed its belief that the 

contract months should be evaluated 

individually. 

It is the Commission’s opinion that 

liquidity, as it pertains to the NWR 

contract, is typically a function of 

trading activity in particular lead 

months and, given sufficient liquidity in 

such months, the NWR contract itself 

would be considered liquid. ICE’s 

analysis of its own trade data confirms 

this to be the case for the NWR contract, 

and thus, the Commission believes that 

it applied the statistical data cited above 

in an appropriate manner for gauging 

material liquidity. 

In addition, ICE and EI both stated 

that the trades-per-day statistics that it 

provided to the Commission in its 

quarterly filing and which are cited 

above includes 2(h)(1) transactions, 

which were not completed on the 

electronic trading platform and should 

not be considered in the SPDC 

determination process. The Commission 

staff asked ICE to review the data it sent 

in its quarterly filings. In response, ICE 

confirmed that the volume data it 

provided and which the Commission 

cited in its October 22, 2009, Federal 

Register notice, as well as the additional 

volume information it cites above, 

includes only transaction data executed 

on ICE’s electronic trading platform.32

The Commission acknowledges that the 

open interest information it cites above 

includes transactions made off the ICE 

platform. However, once open interest is 

created, there is no way for ICE to 

differentiate between ‘‘on-exchange’’ 

versus ‘‘off-exchange’’ created positions, 

and all such positions are fungible with 

one another and may be offset in any 

way agreeable to the position holder 

regardless of how the position was 

initially created. 

ii. Conclusion Regarding Material 

Liquidity 

Based on the above, the Commission 

concludes that the NWR contract meets 

the material liquidity criterion in that 

there is sufficient trading activity in the 

NWR contract to have a material effect 

on ‘‘other agreements, contracts or 

transactions listed for trading on or 

subject to the rules of a designated 

contract market * * * or an electronic 

trading facility operating in reliance on 

the exemption in section 2(h)(3) of the 

Act’’ (that is, an ECM). 

4. Overall Conclusion 

After considering the entire record in 

this matter, including the comments 

received, the Commission has 

determined that the NWR contract 

performs a significant price discovery 

function under two of the four criteria 

established in section 2(h)(7) of the 

CEA. Although the Commission has 

determined that the NWR contract does 

not meet the price linkage criterion at 

this time, the Commission has 

determined that the NWR contract does 

meet both the material liquidity and 

material price reference criteria. 

Accordingly, the Commission will issue 

the attached Order declaring that the 

NWR contract is a SPDC. 

Issuance of this Order signals the 

immediate effectiveness of the 

Commission’s authorities with respect 

to ICE as a registered entity in 

connection with its NWR contract,33

and triggers the obligations, 

requirements—both procedural and 

substantive—and timetables prescribed 

in Commission rule 36.3(c)(4) for ECMs. 

V. Related Matters 

a. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(‘‘PRA’’) 34 imposes certain requirements 

on Federal agencies, including the 

Commission, in connection with their 

conducting or sponsoring any collection 

of information as defined by the PRA. 

Certain provisions of Commission rule 

36.3 impose new regulatory and 

reporting requirements on ECMs, 

resulting in information collection 

requirements within the meaning of the 

PRA. OMB previously has approved and 

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23710 Federal Register / Vol. 75, No. 85 / Tuesday, May 4, 2010 / Notices 

35 7 U.S.C. 19(a). 

36 5 U.S.C. 601 et seq. 

37 66 FR 42256, 42268 (Aug. 10, 2001). 

38 7 U.S.C. 1a(29). 

39Because ICE already lists for trading a contract 

(i.e., the Henry Financial LD1 Fixed Price contract) 

that was previously declared by the Commission to 

be a SPDC, ICE must submit a written 

demonstration of compliance with the Core 

Principles within 30 calendar days of the date of 

this Order. 17 CFR 36.3(c)(4). 

1 74 FR 52210 (October 9, 2009). 

assigned OMB control number 3038– 

0060 to this collection of information. 

b. Cost-Benefit Analysis 

Section 15(a) of the CEA 35 requires 

the Commission to consider the costs 

and benefits of its actions before issuing 

an order under the Act. By its terms, 

section 15(a) does not require the 

Commission to quantify the costs and 

benefits of an order or to determine 

whether the benefits of the order 

outweigh its costs; rather, it requires 

that the Commission ‘‘consider’’ the 

costs and benefits of its actions. Section 

15(a) further specifies that the costs and 

benefits shall be evaluated in light of 

five broad areas of market and public 

concern: (1) Protection of market 

participants and the public; (2) 

efficiency, competitiveness and 

financial integrity of futures markets; (3) 

price discovery; (4) sound risk 

management practices; and (5) other 

public interest considerations. The 

Commission may in its discretion give 

greater weight to any one of the five 

enumerated areas and could in its 

discretion determine that, 

notwithstanding its costs, a particular 

order is necessary or appropriate to 

protect the public interest or to 

effectuate any of the provisions or 

accomplish any of the purposes of the 

Act. The Commission has considered 

the costs and benefits in light of the 

specific provisions of section 15(a) of 

the Act and has concluded that the 

Order, required by Congress to 

strengthen federal oversight of exempt 

commercial markets and to prevent 

market manipulation, is necessary and 

appropriate to accomplish the purposes 

of section 2(h)(7) of the Act. 

When a futures contract begins to 

serve a significant price discovery 

function, that contract, and the ECM on 

which it is traded, warrants increased 

oversight to deter and prevent price 

manipulation or other disruptions to 

market integrity, both on the ECM itself 

and in any related futures contracts 

trading on DCMs. An Order finding that 

a particular contract is a SPDC triggers 

this increased oversight and imposes 

obligations on the ECM calculated to 

accomplish this goal. The increased 

oversight engendered by the issue of a 

SPDC Order increases transparency and 

helps to ensure fair competition among 

ECMs and DCMs trading similar 

products and competing for the same 

business. Moreover, the ECM on which 

the SPDC is traded must assume, with 

respect to that contract, all the 

responsibilities and obligations of a 

registered entity under the CEA and 

Commission regulations. Additionally, 

the ECM must comply with nine core 

principles established by section 2(h)(7) 

of the Act—including the obligation to 

establish position limits and/or 

accountability standards for the SPDC. 

Section 4(i) of the CEA authorizes the 

Commission to require reports for 

SPDCs listed on ECMs. These increased 

responsibilities, along with the CFTC’s 

increased regulatory authority, subject 

the ECM’s risk management practices to 

the Commission’s supervision and 

oversight and generally enhance the 

financial integrity of the markets. 

c. Regulatory Flexibility Act 

The Regulatory Flexibility Act 

(‘‘RFA’’) 36 requires that agencies 

consider the impact of their rules on 

small businesses. The requirements of 

CEA section 2(h)(7) and the Part 36 

rules affect ECMs. The Commission 

previously has determined that ECMs 

are not small entities for purposes of the 

RFA.37 Accordingly, the Chairman, on 

behalf of the Commission, hereby 

certifies pursuant to 5 U.S.C. 605(b) that 

this Order, taken in connection with 

section 2(h)(7) of the Act and the Part 

36 rules, will not have a significant 

impact on a substantial number of small 

entities. 

VI. Order 

a. Order Relating to the ICE NWP 

Rockies Financial Basis Contract 

After considering the complete record 

in this matter, including the comment 

letters received in response to its 

request for comments, the Commission 

has determined to issue the following: 

The Commission, pursuant to its 

authority under section 2(h)(7) of the 

Act, hereby determines that the NWP 

Rockies Financial Basis contract, traded 

on the IntercontinentalExchange, Inc., 

satisfies the statutory material liquidity 

and material price reference criteria for 

significant price discovery contracts. 

Consistent with this determination, and 

effective immediately, the 

IntercontinentalExchange, Inc., must 

comply with, with respect to the NWP 

Rockies Financial Basis contract, the 

nine core principles established by new 

section 2(h)(7)(C). Additionally, the 

IntercontinentalExchange, Inc., shall be 

and is considered a registered entity 38

with respect to the NWP Rockies 

Financial Basis contract and is subject 

to all the provisions of the Commodity 

Exchange Act applicable to registered 

entities. 

Further, the obligations, requirements 

and timetables prescribed in 

Commission rule 36.3(c)(4) governing 

core principle compliance by the 

IntercontinentalExchange, Inc., 

commence with the issuance of this 

Order.39

Issued in Washington, DC on April 28, 

2010, by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. 2010–10304 Filed 5–3–10; 8:45 am] 

BILLING CODE P 

COMMODITY FUTURES TRADING 

COMMISSION 

Order Finding That the ICE PG&E 

Citygate Financial Basis Contract 

Traded on the 

IntercontinentalExchange, Inc., 

Performs a Significant Price Discovery 

Function 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Final order. 

SUMMARY: On October 9, 2009, the 

Commodity Futures Trading 

Commission (‘‘CFTC’’ or ‘‘Commission’’) 

published for comment in the Federal 

Register 1 a notice of its intent to 

undertake a determination whether the 

PG&E Citygate Financial Basis (‘‘PGE’’) 

contract, traded on the 

IntercontinentalExchange, Inc. (‘‘ICE’’), 

an exempt commercial market (‘‘ECM’’) 

under sections 2(h)(3)–(5) of the 

Commodity Exchange Act (‘‘CEA’’ or the 

‘‘Act’’), performs a significant price 

discovery function pursuant to section 

2(h)(7) of the CEA. The Commission 

undertook this review based upon an 

initial evaluation of information and 

data provided by ICE as well as other 

available information. The Commission 

has reviewed the entire record in this 

matter, including all comments 

received, and has determined to issue 

an order finding that the PGE contract 

performs a significant price discovery 

function. Authority for this action is 

found in section 2(h)(7) of the CEA and 

Commission rule 36.3(c) promulgated 

thereunder. 

DATES: Effective date: April 28, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Gregory K. Price, Industry Economist, 

Division of Market Oversight, 

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