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COMMENT 0 

Via Electronic Mail 

Mr. David Stawick 

Secretary 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, N.W. 

Washington, D.C. 20581 

February 20, 2009 

Re: Comment Letter on Regulatory Governance 

Proposed Amendments to Public Director Definition 

74 FR 3475 (JanuaQ' 21. 2009) 

Dear Mr. Stawick: 

;._ _; 

CBOE Futures Exchange, LLC ("CFE") supports the above-referenced proposal by the 

Commodity Futures Trading Commission ("CFTC") to proceed with the implementation of the 

Acceptable Practices relating to futures exchange governance and minimizing conflicts of interest 

in futures exchange decision-making. As we have stated in our previous comment letters relating 

to the Acceptable Practices dated September 7, 2006 and April 25, 2007, CFE believes that the 

Acceptable practices will have a positive impact in both of these areas and will serve to enhance 

the self-regulatory process. 

CFE is also in agreement with all but one of the proposed changes to the definition of 

public director set forth in the CFTC's proposa1. In particular, CFE supports the changes to that 

definition in the CFTCs proposal that were suggested by CFE in its April 25, 2007 comment 

letter which clarify (i) the types of payments that would disqualify a person from serving as a 

public director, (ii) that a person who serves as a director of a futures exchange affiliate is not 

disqualified from serving as a public director of the futures exchange if the person otherwise 

qualifies to serve in that capacity, and (iii) that receipt of director compensation from a futures 

exchange affiliate does not disqualify the recipient from serving as a public director of the futures 

exchange if the person otherwise qualifies to serve in that capacity. These changes make clear 

that a public director of the National Futures Association (''NFA") is not disqualified from 

serving as a public director of CFE because NF A provides regulatory services to CFE and that 

public directors of CFE affiliate Chicago Board Options Exchange may also serve as public 

directors of CFE. These changes are beneficial to futures exchange governance because they 

enable the governing boards of CFE and other futures exchanges to include individuals of this 

kind as public directors and thus to receive the benefit of their experience, expertise, and public 

perspective. 

CFE is not, however, in agreement with the elimination by the CFTC's proposal of the 

previous disqualification of an employee of a member of a futures exchange from serving as a 

public director of that futures exchange. The currently proposed definition of public director 

retains the previous disqualification of a futures exchange member and an officer or director of a 

futures exchange member from serving as a public director of that exchange. The CFTC has 

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400 South LaSalle Street Chicago, Illinois 60605-1023 www.cboe.com/cfe 

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Mr. David Stawick 

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stated that one of the primary objectives of the Acceptable Practices is to insulate the regula to!)' 

functions of a futures exchange via public directors who are not conflicted by industl)' ties and 

that the most significant contribution made by public directors to future exchange decisionmaking is precisely their outside, non-industl)' perspective. Permitting a member employee to 

serve as a futures exchange public director, and allowing for the possibility that all 35% of the 

public directors of a futures exchange could be member employees, is inconsistent with that goal. 

In CFE's view, an employee of a member has just as much unity of interest with the member as 

an officer or director of the member given that the employee is under the control of the member 

and likely receives most, if not all, of the employee's compensation from the member. For these 

reasons, CFE strongly believes that an employee of a member of a futures exchange should be 

disqualified in all instances from serving as a public director of that exchange and thus that the 

CFTC should revise the definition of public director to add back that disqualification. 

CFE is available to provide any further input desired by the CFTC regarding these issues. 

Please contact Arthur Reinstein in our Legal Division at (312) 786-7570 if you have any 

questions regarding our comments. 

Very truly yours, 

w ~ ) ~_Jpe-~)~ 

William J. Bro~ Chairman of the Board 

CBOE Futures Exchange, LLC