RECElVED 

C.F.T.C. CMEGroup 

A CME/Chlcago Board ofTrade Company 1ffi1 AUG 2 '1 AH 7: 50 

Via Electronic Delivery 

Mr. David A. Stawik 

Secretary of the Commission 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, N.W. 

Washington, D.C. 20581 

SECTION 

August20,2007 

COMMENT 

• 

.. 

Craig S. Donohue 

Chref Executive Officer 

Re: Confidential Information and Commission Records and Information- 72 Fed. Reg_;. 

39764 (July 20, 2007) · · 

Dear Mr. Stawik: 

CME Group Inc. ("CME GroupTM") appreciates the opportunity to comment on the Commodity 

Futures Trading Commission's ("Commission") proposed amendments to the procedures for confidential 

treatment requests by derivatives transaction execution facilities ("DTEFs"), derivatives clearing 

organizations ("DCOs") and designated contract markets ("DCMs") (together, "registered entities") for 

products and rules that are certified to the Commission or submitted for Commission review and approval 

under Parts 40 and 41 of the Commission's regulations. 

CME Group is the world's largest and most diverse exchange. Formed by the 2007 merger of two 

DCMs, Chicago Mercantile Exchange Inc. ("CME®") and the Board of Trade of the City of Chicago, Inc. 

{"CBOT®"), CME Group serves the risk management needs of customers around the globe. As an 

international marketplace, CME Group brings buyers and sellers together on the CME Globex® electronic 

trading platform and on its trading floors. CME Group offers the widest range of benchmark products 

available across all major asset classes, including futures and options based on interest rates, equity 

indexes, foreign exchange, agricultural commodities, energy, and alternative investment products such as 

weather and real estate. CME is also the largest DCO in the world. 

Specifically, the Commission has proposed to require that DTEFs, DCOs, and DCMs file a 

detailed written justification simultaneously with any request for confidential treatment of product or rule 

submissions sent to the Commission, and that they segregate the confidential material in an appendix to 

the submission. The Commission has also proposed to permit, but not require, Commission staff to make 

an initial determination to grant or deny confidential treatment before receiving a request for such material 

under the Freedom of Information Act {"FOIA"). 

The Commission's stated purpose in proposing these amendments is to expedite the confidential 

treatment review process and to allow the Commission to provide the public with more immediate access 

to information that Commission staff determines to be non-confidential. The Commission has indicated 

that during the past two years there has been an increase in the number of confidential treatment 

requests filed by registered entities in connection with product and rule submissions. The Commission 

further noted that most of the confidentiality requests relate to market maker programs, particularly with 

respect to market maker's names, compensation, trade priorities, and bid/ask commitments. 
Mr. David A. Stawick 

Commodity Futures Trading Commission 

Page 2 

FOIA, among other things, protects information from disclosure if it is confidential commercial or 

financial information. 5 U.S.C. §552(b)(4). This same exemption from disclosure is contained in 

Commission Regulation 145.9(d)(1 )(ii). The Commission has noted that registered entities that submit 

confidential treatment requests under Regulation 145.9 typically cite this exemption on the basis that the 

release of the information would cause competitive harm to the registered entity. 

Regulation 145.9(d)(1) currently provides that an entity that submits a confidential treatment 

request to the Commission must specify the grounds on which confidential treatment is requested, but 

that it does not need to provide a detailed written justification of the request unless it is notified that a 

FOIA request seeks such information. If such notification is given, the submitter is given 10 business days 

thereafter within which to file a detailed written justification with the Commission and the FOIA requester 

(unless the time is extended for good cause shown). Regulation 145.9(e). 

If Commission staff makes an initial determination to deny the confidential treatment request, the 

submitter may appeal the determination to the Commission's General Counsel within 10 business days. 

Regulation 145.9(f). If the confidentiality request is granted, the FOIA requester may appeal to the 

General Counsel within 30 days. Regulation 145.7(i). In the former instance, the requester may respond 

to the appeal, Regulation 145.7(i)(5), and in the latter instance, the submitter may respond to the appeal. 

Regulation 145.9(g)(5). 

Section 15(a) of the Commodity Exchange Act, as amended, requires the Commission to 

consider the costs and benefits of any proposed new regulation. In discussing the statutory 

considerations, the only potential benefit noted by the Commission is that of efficiency by making nonconfidential information submitted by registered entities available to the public in a more timely manner. 

The Commission's proposal appears to rest on a presumption that a significant number of the confidential 

treatment requests made by registered entities are unjustified, and that the Commission is likely to 

determine that the information for which confidential treatment is sought is, in fact, non-confidential under 

the relevant statutory and regulatory standards. This is not a valid assumption. In particular, DCMs have a 

legitimate commercial and competitive interest in maintaining the confidentiality of specific information 

about the contractual obligations of, and incentives offered to, their market makers. 

The Commission also stated that it anticipated that the costs of compliance with the proposed 

procedures would be minimal. To the contrary, both registered entities and the Commission will incur 

significant costs in terms of the unnecessary use of their resources. CME Group believes that the current 

procedures should be retained in order to preserve efficiency in Commission processes, and to continue 

to ensure fairness to both registered entities submitting confidential information and FOIA requesters. 

The filing of a detailed written justification in advance of a FOIA request would place unnecessary 

burdens on registered entities. Regulation 145.9(e)(3) describes the requisite contents of a detailed 

written justification, including citations to prior determinations by the Commission, other federal agencies 

or courts concerning the relevant exemption from disclosure and factual affidavits, if applicable. 

Therefore. registered entities would be required to devote their resources to prepare potentially lengthy 

and time-consuming detailed written justifications when, in the vast majority of cases, it is unlikely that a 

FOIA request will ever be made. 

The Commission's proposal would also impose a significant burden on Commission staff if it were 

inundated with detailed written justifications for every confidential treatment request submitted in 

South Chicago, !llinms f312 3209 crrsgroup_corn 
Mr. David A. Stawick 

Commodity Futures Trading Commission 

Page3 

connection with a market maker program. It would impose an inordinate burden on the Assistant 

Secretary of the Commission for FOI, Privacy and Sunshine Acts Compliance and her staff if they were to 

analyze each of these detailed written justifications when they were received. It would impose an equally 

unnecessary burden on the staff of the Commission's General Counsel's Office if it were to decide 

appeals of initial determinations to deny confidential treatment requests when no FOIA request is 

pending, and is likely never to be received. 

On the other hand, if Commission staff can decide whether to make an initial determination with 

respect to the confidentiality request when it receives the confidential treatment request and the detailed 

written justification, but is not obligated to do so until a FOIA request is made, Commission staff can 

choose to avoid such a burden. However, for those registered entities that must submit the detailed 

written justification with every such confidential treatment request, the burden remains. Moreover, if the 

Commission were to delay its determination, it would defeat the purported purpose of the proposed 

amendment. 

Current Regulation 145.9(g) attempts to increase efficiency by providing that if both a submitter of 

information and a FOIA requester appeal to the General Counsel from a partial grant and a partial denial 

of a confidential treatment request, those appeals will be consolidated. If the General Counsel's Office 

were to consider an appeal by a submitter of a partial denial before a FOIA request is filed, and then 

consider an appeal by a FOIA requester of a partial grant at a later point, the General Counsel's Office 

could be examining the same facts twice, thereby decreasing efficiency. 

The Commission's proposal would also prejudice both FOIA requesters and registered entities 

submitting confidential information. The proposed amendments contemplate that a registered entity 

would be given the opportunity to appeal the denial of a confidential treatment request prior to the time 

when a FOIA request is made. However, this procedure would be unfair to a potential FOIA requester in 

that it would not have an opportunity to respond to the appeal, as it does under the current provisions of 

Regulation 145.9. 

The Commission has also noted that if it determines that a confidential treatment request should 

be granted, it may reconsider its determination if a FOIA request is later received for the material. If it 

were to do so, the Commission would be doubling its workload by reviewing the confidentiality request a 

second time. Moreover, if the Commission staff were to then change its mind and make a determination 

to deny the confidentiality request, the submitter would be subject to the burden of a duplicative process, 

caused by a potentially significant time lag between its submission of a detailed written justification and its 

appeal. Specifically, the registered entity may need to submit a new updated detailed written justification 

based on possible changed circumstances at the time of the appeal. 

In sum, there are numerous costs that would be imposed upon the Commission, registered 

entities and FOIA requesters if the proposed amendments were adopted. For the Commission, these 

costs would include the resources that would be devoted toward: (a) determining whether confidentiality 

requests were justified in numerous cases where a FOIA request may never be made; (b) considering 

separate appeals by a registered entity and a FOIA requester at two separate stages if a confidential 

treatment request were partially denied and partially granted; and (c) reconsidering an earlier grant of a 

confidential treatment request in appropriate circumstances when a FOIA request is made. For registered 

entities, the costs would include the resources that would be expended in: (a) preparing a detailed written 

justification in many cases where there will never be a FOIA request; and (b) pursuing an appeal of a later 
Mr. David A. Stawick 

Commodity Futures Trading Commission 

Page4 

denial of a confidential treatment request, when the request had previously been granted based on a 

detailed written justification that was filed at a considerably earlier time. Last, but not least, there would be 

prejudice to FOIA requesters who would not have the opportunity to oppose an appeal of the denial of a 

confidential treatment request at the time when it was filed. All of these costs must be considered by the 

Commission in the context of its Section 15(a) review of the costs and benefits of its proposal. 

The Commission has also proposed to adopt a provision in new Regulation 40.8 that would state 

that a registered entity's filing regarding a product's terms and conditions and the mechanisms for 

executing transactions on the DCM would be made publicly available at the time of submission and that 

requests for confidential treatment of such information would be denied. CME and the CBOT do not 

generally file confidential treatment requests in connection with submissions relating to terms and 

conditions of products or mechanisms for executing transactions. However, on occasion, one or the other 

DCM has made a confidentiality request when submitting draft terms and conditions of proposed new 

products or draft rules to Commission staff for the purpose of seeking guidance from Commission staff in 

the development process. If the Commission were to adopt its proposed provision, it should make it clear 

that it only relates to terms and conditions of products and mechanisms for executing transactions that 

have been formally submitted to the Commission for approval or pursuant to certification procedures. 

The Commission's proposed requirement that material deemed confidential must be segregated 

in an appendix to a confidential treatment request is unnecessary. Regulation 145.9(d)(4) and (d)(8) 

already set forth specific and detailed requirements for identifying the confidential information. 

CME Group believes that the Commission's proposal to amend the procedures for the 

submission of confidential treatment requests by registered entities for rules and products will create 

unnecessary burdens upon registered entities and the Commission, will decrease efficiency, and will 

impair the fairness of the process for both registered entities and FOIA requesters. CME Group urges the 

Commission not to adopt the proposed amendments for the reasons discussed above. We would be 

happy to discuss any of these issues with Commission staff. If you have any questions, please feel free 

to contact Anne Polaski, Associate Director, Regulatory Counsel, at (312) 435-3757 or 

apolaski@cmegroup.com. 

CSD/cf/7159.1tr 

20 South Waci<.er Dn·Je Chicago, i!tino1s 60606 T312 930 

Sincerely, 

&~j s: f)t'M~ Craig S. Donohue 

Chief Executive Officer 

CME Group Inc.