KANSAS CITY 

BOARD OF TRADE 

Received CFTC 

R~~P Section 

?;17! 07 09-~ 

August17,2009 

SENT VIA E-MAIL 

secretary@cftc.gov 

Mr. David Stawick COMMENT 

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:::0 Secretary of the Commission 

Commodity Futures Trading Commission 

Three Lafayette Centre 

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1155 21st Street, N.W. 

Washington, D.C. 20581 

Re: Account Ownership and Control Report, 74 Fed. Reg. 31642 (July 2; 

2009) 

Dear Mr. Stawick: 

In response to your request for public comment on the Ownership and Control 

Report, ("OCR") the Kansas City Board of Trade ("KCBT") offers the following: 

KCBT agrees that the CFTC staff must have the information necessary to 

conduct effective oversight, ensure market integrity and protect customers from 

fraud and abuse. KCBT has found that the anonymity of the market participants 

in electronic trading has made it difficult to identify traders and trading accounts 

quickly. It has been our experience that some clearing members struggle with 

identifying the user and/or account number for a particular trade unless other 

information is given. to them (e.g. session ID, firm ID, trader I D). Market 

transparency is a cruCial element of any market surveillance system. The 

integration of large trader and trade register data into the OCR will exponentially 

increase market transparency. Once the implementation of the OCR takes 

place, both the CFTC and the Exchange Compliance staffs will benefit greatly 

from the wealth of information at their disposal regarding the identity of market 

participants and the relationships that exist among them. 

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However, KCBT believes that the most efficient way for the information to be 

submitted to the CFTC is for the futures commission merchants and clearing 

members ("reporting entities") to submit the information directly, just as they 

currently do with KCBT large trader reporting. The CFTC could use their existing 

large trader reporting system to accomplish the goals of the OCR by requiring 

each futures commission merchant and clearing member to report the required 

information for any account with an open position. The reporting entities would 

report the trading account number as reported in the Trade Capture Report and 

the special account number (if one has been assigned for large trader purposes). 

1\0AIW OF T!IADJ: OF KANSAS CiTY, MISSOU!U. ]~;c. 'i 800 M,IIN STRELT SU/Tfo :H)~ KANSAS CiTY, MISSOURI 64112 {816) 753-7500 

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Mr. David Stawick 

August 17, 2009 

Page 2 of4 

CFTC Form 102 (Identification of "Special Accounts") reflects many of the 

specific data points required by the OCR. Therefore, the CFTC is already in 

possession of much of the required information for large traders. Once a master 

file is established by the reporting entities for all accounts holding an open 

position, then the CFTC could require weekly changes to be submitted on a test 

basis. Depending on the volume of changes being submitted, the CFTC could 

adjust the reporting frequency accordingly. By having aU open positions reported 

on a daily basis, the CFTC would be able to aggregate the positions across aU 

reporting entities and have a more detailed report of each account's true position. 

As an example, the current reportable level for wheat futures is 150 contracts. If 

an account has 100 contracts open on each of three (3) different FCMs books, 

none of the FCMs would currently be required to report the account. However, if 

all open positions are required to be reported, then the CFTC could aggregate 

the positions and know the account had a position of 300 contracts. 

Requiring each contract market to report the information for every active account 

would result in duplication as the same account number may trade in similar 

commodities across multiple exchanges. (e.g. the same account number trades 

KCBT, CME and MGE wheat contracts). Thus, the KCBT, CME and MGE would 

all be reporting the information for the same account. In addition, there are 

currently certain KCBT clearing members (for open interest reporting purposes) 

that have their home office (Chicago or New York) report their positions to their 

Kansas City branch office who in turn reports to the Clearing Corporation. lfthis 

same logic was used for the OCR then the information would have to be reported 

three times (home 0ffice to branch office to KCBT to CFTC) before reaching the 

CFTC. 

Each reporting entity could incur significant programming costs to ensure their 

reporting systems are compatible with each contract market. This potential 

problem could be eliminated by having the reporting entities report directly to the 

CFTC large trader reporting system for which their systems are already 

compatible. It makes the most sense to require the reporting entities system be 

compatible with one entity (CFTC) versus requiring their system be compatible 

with multiple contract markets. If the CFTC requires each contract market to 

report the information, then each contract market could incur significant server 

storage and programming costs to ensure they have the ability to store the 

information received and to ensure that their reporting systems are compatible 

with the CFTC. Thus you would have programming and server storage costs at 

each level, whereas if the information was submitted by each reporting entity 

directly to the CFTC, you could eliminate one layer of these costs. It seems the 
Mr. David Stawick 

August 17, 2009 

Page 3 of 4 

best method for reporting would be for the information to be submitted by the 

futures commission merchants and clearing members directly to the CFTC. 

If the CFTC mandates that the information be reported by the contract markets, 

then the most efficient way would be for the reporting entities to report the 

required information to their DSRO who would in turn report to the CFTC. This 

would ensure that no duplication of reporting would occur. 

In response to your specific questions, we offer the following: 

1. KCBT does not feel that any other information is necessary for inclusion 

into the OCR. 

2. The life cycle of the information would start at the executing clearing firm 

and then be reported to either the exchange or the carrying FCM if the 

account is an omnibus account or a give-up account. The FCMs that 

carry the accounts on their books would possess the information at the 

root level. The KCBT would draw the information required by the OCR 

from futures commission merchants and clearing members. KCBT 

anticipates using a document request letter to obtain the information. 

3. The OCR information will be difficult to obtain from omnibus accounts and 

give-up accounts because the underlying accounts are not carried on the 

clearing member's books. 

4. KCBT believes that submitting the OCR via SFTP instead of FTP is the 

most efficient way to transmit the required information because of SFTP's 

built in security features. FIXML would make the most sense for 

consistency since the trade capture report is already submitted via FIXML. 

5. Once the master file is established by each clearing member, the CFTC 

could require weekly changes to be submitted on a test basis. Depending 

on the volume of changes being submitted, the CFTC could adjust the 

reporting frequency accordingly. The initial master file will be a very time 

consuming exercise for the futures commission merchants and clearing 

members. Therefore a significant amount of lead time should be 

budgeted so as to give the futures commission merchants and clearing 

members sufficient time to produce the file. 
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Mr. David S1awick 

August 17, 2009 

Page 4 of 4 

6. Futures commission merchants and clearing members will need to report 

the raw data. We are not in a position to state with any certainty what 

additional measures the firm's will have to take to transmit the information 

or what the dollar and staff-hour cost of those measures would be. If the 

firm's current sys1em is not compatible with every exchange then this 

could cause dramatic programming costs. This question would best be 

answered by the reporting entities themselves. 

7. We are currently not in a position to state with any certainty what the time 

frame and the costs would be for the exchange to provide the OCR. Part 

of the consideration would be the media type that the CFTC would require 

the Exchanges to submit the information on. If our systems are not 

compatible then this could dramatically increase the cost of the OCR. 

Once more details become available, we will be in a better position to 

estimate the time frame necessary for completion and the costs 

associated with such. 

8. This question may best be answered by the small businesses themselves. 

KCBT appreciates the opportunity to comment on the Ownership and Control 

Report. If you have any questions please feel free to contact me at 816-753-

7500 or jott@kcbt.com. 

:Joseph Ott 

Vice President - Compliance