53720 Federal Register / Vol. 74, No. 201 / Tuesday, October 20, 2009 / Notices 

1 74 FR 12178 (Mar. 23, 2009); these rules became 

effective on April 22, 2009. 

Written comments on this application 

should be submitted to the Chief, 

Permits, Conservation and Education 

Division, at the address listed above. 

Comments may also be submitted by 

facsimile to (301)713–0376, or by email 

to NMFS.Pr1Comments@noaa.gov. 

Please include the File No. in the 

subject line of the email comment. 

Those individuals requesting a public 

hearing should submit a written request 

to the Chief, Permits, Conservation and 

Education Division at the address listed 

above. The request should set forth the 

specific reasons why a hearing on this 

application would be appropriate. 

FOR FURTHER INFORMATION CONTACT: 

Amy Sloan or Tammy Adams, 

(301)713–2289. 

SUPPLEMENTARY INFORMATION: The 

subject amendment to Permit No. 87– 

1851–01 is requested under the 

authority of the Marine Mammal 

Protection Act of 1972, as amended (16 

U.S.C. 1361 et seq.) and the regulations 

governing the taking and importing of 

marine mammals (50 CFR part 216). 

Permit No. 87–1851–00, issued to Dr. 

Costa on January 29, 2007 (72 FR 5680), 

authorizes tagging studies and 

physiological research on seals in 

Antarctica, including crabeater seals 

(Hydrurga leptonyx), Weddell seals 

(Leptonychotes weddellii), and Ross 

seals (Ommatophoca rossii). The permit 

also authorizes research on California 

sea lions (Zalophus californianus) to 

investigate foraging, diving, energetics, 

food habits, and at-sea distribution 

along the California coast. Incidental 

harassment of California sea lions, 

harbor seals (Phoca vitulina), northern 

elephant seals (Mirounga augustirostris), 

and northern fur seals (Callorhinus 

ursinus) in California is authorized. The 

permit expires on January 31, 2012. 

Permit No. 87–1851–01, issued on 

January 13, 2009 (74 FR 4374), 

authorizes the permit holder to expand 

the geographic area where research is 

conducted in Antarctica to include the 

Weddell Sea, for the duration of the 

permit. 

The permit holder is requesting the 

permit be amended to include 

authorization for expanding the 

geographic range where research is 

conducted in Antarctica to include the 

Ross Sea and to increase the number of 

Weddell seals captured, sedated, tagged, 

and sampled from 10 animals per year 

to 40 animals per year. 

In compliance with the National 

Environmental Policy Act of 1969 (42 

U.S.C. 4321 et seq.), an initial 

determination has been made that the 

activity proposed is categorically 

excluded from the requirement to 

prepare an environmental assessment or 

environmental impact statement. 

Concurrent with the publication of 

this notice in the Federal Register, 

NMFS is forwarding copies of this 

application to the Marine Mammal 

Commission and its Committee of 

Scientific Advisors. 

Dated: October 14, 2009. 

Tammy C. Adams, 

Acting Chief, Permits, Conservation and 

Education Division, Office of Protected 

Resources, National Marine Fisheries Service. 

[FR Doc. E9–25212 Filed 10–19–09; 8:45 am] 

BILLING CODE 3510–22–S 

COMMODITY FUTURES TRADING 

COMMISSION 

Notice of Intent, Pursuant to the 

Authority in Section 2(h)(7) of the 

Commodity Exchange Act and 

Commission Rule 36.3(c)(3), To 

Undertake a Determination Whether 

the Henry Financial Swing Contract; 

Henry Financial Basis Contract; and 

Henry Financial Index Contract, 

Offered for Trading on the 

IntercontinentalExchange, Inc., 

Perform Significant Price Discovery 

Functions 

AGENCY: Commodity Futures Trading 

Commission. 

ACTION: Notice of action and request for 

comment. 

SUMMARY: The Commodity Futures 

Trading Commission (‘‘CFTC’’ or 

‘‘Commission’’) is undertaking a review 

to determine whether the Henry 

Financial Swing (‘‘HHD’’) contract; 

Henry Financial Basis (‘‘HEN’’) contract; 

and/or Henry Financial Index (‘‘HIS’’) 

contract, offered for trading 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’’), perform significant price 

discovery functions. Authority for this 

action is found in section 2(h)(7) of the 

CEA and Commission rule 36.3(c) 

promulgated thereunder. In connection 

with this evaluation, the Commission 

invites comment from interested parties. 

DATES: Comments must be received on 

or before November 4, 2009. 

ADDRESSES: Comments may be 

submitted by any of the following 

methods: 

• Follow the instructions for 

submitting comments. Federal 

eRulemaking Portal: http:// 

www.regulations.gov. 

• E-mail: secretary@cftc.gov. Include 

Henry Financial Swing (HHD) contract; 

Henry Financial Basis (HEN) contract; 

and/or Henry Financial Index (HIS) 

contract in the subject line of the 

message, depending on the subject 

contract(s) to which the comments 

apply. 

• Fax: (202) 418–5521. 

• Mail: Send to David A. Stawick, 

Secretary, Commodity Futures Trading 

Commission, Three Lafayette Centre, 

1155 21st Street, NW., Washington, DC 

20581. 

• Courier: Same as mail above. 

All comments received will be posted 

without change to http:// 

www.CFTC.gov/. 

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. Email: gprice@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 

On March 16, 2009, the CFTC 

promulgated final rules implementing 

provisions of the CFTC Reauthorization 

Act of 2008 (‘‘Reauthorization Act’’) 1

which subjects ECMs with significant 

price discovery contracts (‘‘SPDCs’’) to 

self-regulatory and reporting 

requirements, as well as certain 

Commission oversight authorities, with 

respect to those contracts. Among other 

things, these rules and rule amendments 

revise the information-submission 

requirements applicable to ECMs, 

establish procedures and standards by 

which the Commission will determine 

whether an ECM contract performs a 

significant price discovery function, and 

provide guidance with respect to 

compliance with nine statutory core 

principles applicable to ECMs with 

SPDCs. These rules became effective on 

April 22, 2009. 

In determining whether an ECM’s 

contract is or is not a SPDC, the 

Commission will consider the contract’s 

material liquidity, price linkage to other 

contracts, potential for arbitrage with 

other contracts traded on designated 

contract markets or derivatives 

transaction execution facilities, use of 

the ECM contract’s prices to execute or 

settle other transactions, and other 

factors. 

In order to facilitate the Commission’s 

identification of possible SPDCs, 


cprice-sewell on DSKGBLS3C1PROD with NOTICES
Federal Register / Vol. 74, No. 201 / Tuesday, October 20, 2009 / Notices 53721 

2The Commission may commence this process on 

its own initiative or on the basis of information 

provided to it by an ECM pursuant to the 

notification provisions of Commission rule 

36.3(c)(2). 3Where appropriate, the Commission may choose 

to interview market participants regarding their 

impressions of a particular contract. Further, while 

they may not provide direct evidentiary support 

with respect to a particular contract, the 

Commission may rely for background and context 

on resources such as its October 2007 Report on the 

Oversight of Trading on Regulated Futures 

Exchanges and Exempt Commercial Markets (‘‘ECM 

Study’’). http://www.cftc.gov/stellent/groups/ 

public/@newsroom/documents/file/pr5403– 

07_ecmreport.pdf. 4 7 U.S.C. 2(h)(7)(C). 

Commission rule 36.3(c)(2) requires that 

an ECM operating in reliance on section 

2(h)(3) promptly notify the Commission 

and provide supporting information or 

data concerning any contract: (i) that 

averaged five trades per day or more 

over the most recent calendar quarter; 

and (ii) (A) for which the ECM sells 

price information regarding the contract 

to market participants or industry 

publications; or (B) 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 price of 

another agreement. 

II. Determination of a SPDC 

A. The SPDC Determination Process 

Commission rule 36.3(c)(3) 

establishes the procedures by which the 

Commission makes and announces its 

determination on whether a specific 

ECM contract serves a significant price 

discovery function. Under those 

procedures, the Commission will 

publish a notice in the Federal Register 

that it intends to undertake a 

determination as to whether the 

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.2

After prompt consideration of all 

relevant information 3, the Commission 

will, within a reasonable period of time 

after the close of the comment period, 

issue an order explaining its 

determination. Following the issuance 

of an order by the Commission that the 

ECM executes or trades an agreement, 

contract, or transaction that performs a 

significant price discovery function, the 

ECM must demonstrate, with respect to 

that agreement, contract, or transaction, 

compliance with the core principles 

under section 2(h)(7)(C) of the CEA 4

and the applicable provisions of Part 36. 

If the Commission’s order represents the 

first time it has determined that one of 

the ECM’s contracts performs a 

significant price discovery function, the 

ECM must submit a written 

demonstration of its compliance with 

the core principles within 90 calendar 

days of the date of the Commission’s 

order. For each subsequent 

determination by the Commission that 

the ECM has an additional SPDC, the 

ECM must submit a written 

demonstration of its compliance with 

the core principles within 30 calendar 

days of the Commission’s order. 

B. Henry Financial Swing Contract 

The HHD contract is a daily contract 

that is cash settled based on the spot 

index price for natural gas at the Henry 

Hub, as published by Platts in the 

‘‘Daily Price Survey’’ table of Gas Daily. 

The Platts index price is based on fixedprice cash market transactions that are 

voluntarily reported by traders. The size 

of the HHD contract is 2,500 million 

British thermal units (‘‘mmBtu’’), and 

the unit of trading is any multiple of 

2,500 mmBtu. The HHD contract is 

listed for 65 consecutive calendar days. 

Based upon a required quarterly 

notification filed on July 27, 2009 

(mandatory under Rule 36.3(c)(2)), the 

ICE reported that, with respect to its 

HHD contract, 5,246 separate trades 

occurred in the second quarter of 2009, 

resulting in a daily average of 82.0 

trades. During the same period, the HHD 

contract had a total trading volume of 

242,968 contracts (which was an 

average of 3,796.4 contracts per day). As 

of June 30, 2009, open interest in the 

HHD contract was 20,173 contracts. 

It appears that the HHD contract may 

satisfy the material liquidity, arbitrage, 

and material price reference factors for 

SPDC determination. With respect to 

material liquidity, trading in the HHD 

contract averaged over 3,500 contracts 

on a daily basis with more than 80 

separate transactions each day. 

Moreover, the open interest at the end 

of the second quarter in 2009 was 

significant. Because the HHD contract 

specifies the Henry Hub, the contract’s 

prices series may be highly correlated 

with that of the New York Mercantile 

Exchange’s physically-delivered Natural 

Gas contract and/or the ICE’s Henry 

Financial LD1 Financial Fixed Price 

contract, thus increasing the 

opportunity for arbitrage. In regard to 

material price reference, while it did not 

specifically address the natural gas 

contracts under review, the ECM Study 

stated that, in general, market 

participants view the ICE as a price 

discovery market for certain natural gas 

contracts. Natural gas contracts based on 

actively-traded hubs are transacted on 

the ICE’s electronic trading platform, 

with the remainder being completed 

over-the-counter and potentially 

submitted for clearing by voice brokers. 

In addition, the 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, the ICE offers 

‘‘Henry Hub End of Day’’ and ‘‘OTC Gas 

End of Day’’ data packages with access 

to all price data or just 12, 24, 36, or 48 

months of historical data. 

C. Henry Financial Basis Contract 

The HEN contract is a monthly 

contract that is cash settled based on the 

difference between the bidweek price 

index for a particular calendar month at 

the Henry Hub, as published by Platts 

in its Inside FERC’s Gas Market Report, 

and the final settlement price of the 

New NYMEX’s physically-delivered 

Henry Hub natural gas futures contract 

for the same calendar month. The Platts 

bidweek price is based on fixed-price 

cash market transactions that are 

conducted during the last five business 

days of the month and are voluntarily 

reported by traders; bidweek 

transactions specify the delivery of 

natural gas during the following 

calendar month. The size of the HEN 

contract is 2,500 mmBtu, and the unit 

of trading is any multiple of 2,500 

mmBtu. The HEN contract is listed for 

up to 72 calendar months. 

Based upon a required quarterly 

notification filed on July 27, 2009 

(mandatory under Rule 36.3(c)(2)), the 

ICE reported that, with respect to its 

HEN contract, 538 separate trades 

occurred in the second quarter of 2009, 

resulting in a daily average of 8.4 trades. 

During the same period, the HEN 

contract had a total trading volume of 

78,870 (which was an average of 1,232.3 

contracts per day). As of June 30, 2009, 

open interest in the HEN contract was 

128,504 contracts. 

It appears that the HEN contract may 

satisfy the material liquidity, price 

linkage, and material price reference 

factors for SPDC determination. With 

respect to material liquidity, trading in 

the HEN contract averaged more than 

1,000 contracts on a daily basis, with 

nearly 10 separate transactions each 

day. In addition, the open interest in the 

subject contract was substantial. In 

regard to price linkage, the final 

settlement of the HEN contract is based, 

in part, on the final settlement price of 

the NYMEX’s physically-delivered 

natural gas contract, where the NYMEX 

is registered with the Commission as a 

designated contract market (‘‘DCM’’). In 

regard to material price reference, while 

it did not specifically address the 


cprice-sewell on DSKGBLS3C1PROD with NOTICES
53722 Federal Register / Vol. 74, No. 201 / Tuesday, October 20, 2009 / Notices 

5 17 CFR Part 36, Appendix A. 

6 44 U.S.C. 3507(d). 7 7 U.S.C. 19(a). 

natural gas contracts under review, the 

ECM Study stated that, in general, 

market participants view the ICE as a 

price discovery market for certain 

natural gas contracts. Natural gas 

contracts based on actively-traded hubs 

are transacted on the ICE’s electronic 

trading platform, with the remainder 

being completed over-the-counter and 

potentially submitted for clearing by 

voice brokers. In addition, the 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, the ICE 

offers ‘‘Henry Hub End of Day’’ and 

‘‘OTC Gas End of Day’’ data packages 

with access to all price data or just 12, 

24, 36, or 48 months of historical data. 

D. Henry Financial Index Contract 

The HIS contract is a monthly 

contract that is cash settled based on the 

arithmetic average of the daily natural 

gas prices at the Henry Hub, as quoted 

in the ‘‘Daily Price Survey’’ table of 

Platts’ Gas Daily during the specified 

month, less the Platts bidweek price that 

is reported in the first issue of Inside 

FERC’s Gas Market Report in which the 

natural gas is produced. The Platts 

prices are based on fixed-price cash 

market transactions that are voluntarily 

reported by traders. The size of the HIS 

contract is 2,500 mmBtu, and the unit 

of trading is any multiple of 2,500 

mmBtu. The HIS contract is listed for 36 

calendar months. 

Based upon a required quarterly 

notification filed on July 27, 2009 

(mandatory under Rule 36.3(c)(2)), the 

ICE reported that, with respect to its HIS 

contract, 550 separate trades occurred in 

the second quarter of 2009, resulting in 

a daily average of 8.6 trades. During the 

same period, the HIS contract had a 

total trading volume of 79,330 contracts 

(which was an average of 1,239.5 

contracts per day). As of June 30, 2009, 

open interest in the HIS contract was 

127,346 contracts. 

It appears that the HIS contract may 

satisfy the material liquidity, and 

material price reference factors for SPDC 

determination. With respect to material 

liquidity, trading in the HIS contract 

averaged over 1,200 contracts on a daily 

basis with more than 8 separate 

transactions each day. In addition, the 

open interest in the subject contract was 

substantial. In regard to material price 

reference, while it did not specifically 

address the natural gas contracts under 

review, the ECM Study stated that, in 

general, market participants view the 

ICE as a price discovery market for 

certain natural gas contracts. Natural gas 

contracts based on actively-traded hubs 

are transacted on the ICE’s electronic 

trading platform, with the remainder 

being completed over-the-counter and 

potentially submitted for clearing by 

voice brokers. In addition, the 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, the ICE 

offers ‘‘Henry Hub End of Day’’ and 

‘‘OTC Gas End of Day’’ data packages 

with access to all price data or just 12, 

24, 36, or 48 months of historical data. 

III. Request for Comment 

In evaluating whether an ECM’s 

agreement, contract, or transaction 

performs a significant price discovery 

function, section 2(h)(7) of the CEA 

directs the Commission to consider, as 

appropriate, four specific criteria: Price 

linkage, arbitrage, material price 

reference, and material liquidity. As it 

explained in Appendix A to the Part 36 

rules,5 the Commission, in making 

SPDC determinations, will apply and 

weigh each factor, as appropriate, to the 

specific contract and circumstances 

under consideration. 

As part of its evaluation, the 

Commission will consider the written 

data, views, and arguments from any 

ECM that lists the potential SPDC and 

from any other interested parties. 

Accordingly, the Commission requests 

comment on whether the HHD, HEN, 

and/or HIS contracts perform significant 

price discovery functions. Commenters’ 

attention is directed particularly to 

Appendix A of the Commission’s Part 

36 rules for a detailed discussion of the 

factors relevant to an SPDC 

determination. The Commission notes 

that comments which analyze the 

contracts in terms of these factors will 

be especially helpful to the 

determination process. In order to 

determine the relevance of comments 

received, the Commission requests that 

commenters explain in what capacity 

are they knowledgeable about the 

subject contracts. Moreover, because 

three contracts are included in this 

notice, it is important that commenters 

identify to which contract(s) their 

comments apply. 

IV. Related Matters 

A. Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(‘‘PRA’’) 6 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 final 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 

assigned OMB control number 3038– 

0060 to this collection of information. 

B. Cost-Benefit Analysis 

Section 15(a) of the CEA 7 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 action. 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 bulk of the costs imposed by the 

requirements of Commission Rule 36.3 

relate to significant and increased 

information-submission and reporting 

requirements adopted in response to the 

Reauthorization Act’s directive that the 

Commission take an active role in 

determining whether contracts listed by 

ECMs qualify as SPDCs. The enhanced 

requirements for ECMs will permit the 

Commission to acquire the information 

it needs to discharge its newlymandated responsibilities and to ensure 

that ECMs with SPDCs are identified as 

entities with the elevated status of 

registered entity under the CEA and are 

in compliance with the statutory terms 

of the core principles of section 

2(h)(7)(C) of the Act. The primary 

benefit to the public is to enable the 

Commission to discharge its statutory 

obligation to monitor for the presence of 

SPDCs and extend its oversight to the 

trading of SPDCs. 

Issued in Washington, DC, on October 14, 

2009 by the Commission. 

David A. Stawick, 

Secretary of the Commission. 

[FR Doc. E9–25174 Filed 10–19–09; 8:45 am] 

BILLING CODE 6351–01–P 


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