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July 26, 2006 aaeype og TM 52

Ms. Eileen A. Donovan

Acting Secretary

Commodity Futures Trading Commission
Three Lafayette Center

1155 21" Street, N.W.

Washington, D.C. 20581

Reference File # 2699.02
Rule Certification

Dear Ms. Donovan:

By letter dated July 20, 2006 (Reference File #2699.01), the Chicago Board of Trade (CBOT®)
submitted, pursuant to Commission Regulation 40.6(a), regulation changes with respect to
CBOT Denatured Fuel Ethanol futures. The amendments included revisions to CBOT
Regulations 1609.01 and 1690.01 to change the last trading day and load-out provisions for
Ethanol futures. The CBOT indicated its intention to implement these changes beginning with
the September 2006 Ethanol contract.

Based on subsequent discussions between Commission staff and CBOT staff, the CBOT is
supplementing its initial filing in this regard. The following provides further background
concerning industry support for the referenced contract changes.

An Ethanol Industry Meeting was held on June 5, 2006 at the CBOT to discuss the performance
of the CBOT Ethanol futures contract. The meeting was attended by over 40 participants from
26 firms representing all facets of the ethanol industry on both the buy and sell sides of the
market.

The meeting was held to address issues raised from both the buy and sell sides of the market.
The buy side dislikes when physical delivery occurs in the month following the delivery month.
The buy side would like assurances, or at least a high probability, that deliveries will occur in the
delivery month. The sell side dislikes the time constraints required to deliver ethanol to Chicago.
Rail delays can be detrimental to sellers making their delivery commitments.

Proposals to move the last trading day from the business day prior to the 15" calendar day to the
3" business day of the delivery month, and to require shippers to load out all cancelled
certificates within 17 days regardless of whether the ethanol is being shipped to Chicago or to the
buyer’s destination, were unanimously supported at the meeting. Moving the last trading day
forward in the delivery month provides buyers more assurance of receiving physical ethanol in
the delivery month if they cancel their outstanding certificates soon after delivery. Giving
shippers a fixed load-out period takes away the risk of delivery default due to delays on the
railroad over which the shipper has no control.


July 26, 2006
Ms. Eileen A. Donovan
Page Two

As mentioned above, both of these changes were supported unanimously at the meeting because
they lower risk for both buyers and sellers. Additionally, the meeting attendees recommended
implementation as soon as possible. The topic of implementing the changes on contracts with
open interest was discussed. Given the current market price curve, the attendees thought that any
impacts on price would be negligible. The attendees recommended the CBOT be aggressive in
implementing these changes and work with the CFTC to get implementation as soon as possible.

All meeting attendees were given an opportunity to respond in confidence to the meeting
outcome and the proposed changes. Only one seller has voiced a concern over implementation
with the September 2006 contract. This seller supports the changes, but complained over the
logistics of loading out the August contract and having to go directly into delivery of the
September contract. That said, this seller has not brought up any issues over these changes
affecting prices, only a logistical concern that would have to be faced whenever the changes are
implemented. In addition, CBOT staff contacted individually the market participants known to
have a history of trading the ethanol contract to ensure that September 2006 implementation was
agreeable. All recommended September 2006 implementation.

Given the strong market support for these changes to be implemented as soon as possible, CBOT
believes any costs that might occur because of price effects are more than compensated for by
the benefits of an improved contract that lowers risk for both buyers and sellers.

Any additional questions in this regard may be directed to Fred Seamon in the Business
Development Department (telephone 312-347-3808).

Sincerely,

Paul J. Draths
Vice President and Secretary

ce: Thomas M. Leahy, Jr. — Division of Market Oversight