Received CFTC 

~l~~SecUon r~;ltol 

Via Electronic Mail 

Ms. Eileen A. Donovan 

Acting Sucretnry 

Commodity Futures Trading Commission 

Three Lafayette Centre 

II 55 21st Street, N.W. 

Washington, D.C. 20581 

August 20, 2007 

Re: Comment Letter on Proposal to Amend Procedures for 

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Dear Ms. Donovan; 

COMMENT 

CBOE Futures Exchange, LLC ("CFE'') appreciates the opportunity to provide its 

comments with respect to the above-referenced release ("Release") regarding ct1ntidential 

treatment requests in the context of product and ntlc submissions. CPE generally supports the 

proposal, with one enhancement that CFE believes should be incorporated as described below, 

and commends the Commodity Futures Trading Commission (''CFTC") fl.)r addressing this 

important issue. 

In the Release, the CFTC has proposed a rule making that >vould provide the exclusive 

means of requesting conlidential treatment for product and rule submissions filed under parts 40 

and 41 of the CFTC's regulations. The proposed rule making would also codify that requests for 

coniidcntial.trcatment for filings regarding (l) a product's tcnns and conditions and (2) the 

mechanisms for executing transactions on or through t.he facilities of a contract market, made at 

the time of the submission, would be automatically denied. 

As background in the Release, the CFTC specifically cites to the increase in requests for 

contidential treatment over the past two years and notes that these requests were mostly made in 

connection with market maker incentive plans ("MMPs"). t By highlighting MMPs, CFE has 

inferred that a primary impetus for the current rule making proposal stems from this category of 

requests for confldential treatment. For the reasons set forth below. CFE believt~s that requests 

for confidential treatment regarding MMPs and other compensation and incentive plans should 

also be automatically denied and that their terms should be disclosed in the publicly submitted 

rule submissions. 

As CFF previously noted in connection with a Freedom of Infbnnation Act. ("FOIA") 

request made by CFE related to an MMP. filings regarding MMPs should be not be a!Torded 

1 The CFTC described the type of infbrmation contained in MMPs for which registered entities have 

requested confidential treatment, ~"~' the name of the market makers, the compensation provided by the 

registered cll!ity to the market makers, trade priorities CL~,. percentage of the order flow). and the bid/ask 

spr~:ad leveL 72 FRat 39765. 

400 South LaSalle Street Chicago, Illinois 60605·1 023 wwvv.cboe com 
Ms. Eileen A. Donovan 

Page 2 of2 

confidential treatment and such information should be made public because MMPs and other 

compensation and incentive plans are "rules" as defined in CFTC Rule 40. I. MMPs and other 

compensation and incentive plans are rules because they govem the conduct, and entail enhanced 

obligations in exchange for compensation, of certain market participants that chose to participate 

in those programs. Additionally, full disclosure of incentive payment information is essential 

because incentive payment programs may have terms and conditions that could alfect the contrm.:t 

prices that are received in the market offered by the futures exchange implementing the program. 

Incentive plans to market makers are a core element in reviewing the overall market quality 

offered by a contract market and should be disclosed so that public customers and other market 

participants can review the incentive payment program terms. 

In connection with the above-referenced FOIA request by related to an MMP, the 

CFTC's Office of General Counsel upheld the denial of a request for con11dcntial treatment on 

the grounds that MMPs and other compensation and incentive plans should be not be all'lm.ied 

confidential treatment and that such information should be made public.2 In affirming an earlier 

denial of confidential treatment with respect to the MMP, the CFTCs Office of General Counsel 

noted: 

MMPs arc considered "rules" under Commission regulations and prt;sumptively 

public. The Division of Market Oversight bclic'ves that market participants 

should have the opportunity to evaluate the payment structures of MMPs, since 

they may affect the quality of price quotations provided by market makers. 

Accordingly, compensation and lm:entrve information related to otht~r programs 

has been made available on the Commission's website. 

For the reasons set fortJ1 above, CFE supports the proposed rule makit1g and also urges 

the CFTC to adopt a rule provision codifying that requests for confidential treatment for filings 

regarding MMPs and qther compensation and incentive plans be automatically denied. 

Please feel free to contact Arth'ur Reinstein in our Legal Division at (312) 786-7570 or 

Jennifer Klcbcs at 12) 786-7466 if you have any questions regarding our C(lnunents. 

Very truly yours, 

Andrew 

&L·~ Lowenthal 

Managing Director 

CBOE Futures Exchange, LLC 

2 S~t; October 27,2005 letter !rom CFTC's Oft1ce of General Counsel regarding Confidential Treatment f~w 

freedom oflnlbrmation Act Nos. 05-0138 and 05-0139.