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David A. Stawick, Secretary 

Commodity Futures Trading Commission 

Three Lafayette Centre 

115521stStreet, NW 

Washington, DC 20581 

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28 December 2008 

COl~MENT 

Re: CMEICBOT Section 4(c) Petition 

Dear Mr. Stawick: 

Newedge USA, LLC (Newedge USA), on behalf of the entire worldwide Newedge organization (Newedge), 

takes pleasure in submitting this comment in support of the application of the Chicago Mercantile Exchange 

(CME} and the Board of Trade of the City of Chicago (CBOT) to permit qualified participants who enter into 

over the counter (OTC) corn basis swaps and OTC calendar swaps for corn, wheat and soybeans to submit 

those contracts to CME for clearing. The Commodity Futures Trading Commission (CFTC) should also issue 

an order authorizing the CME and clearing member future commission merchants (FCMs), such as Newedge 

USA, to commingle customer funds used to margin, secure or guarantee these contracts with other funds in 

segregated accounts. 

As background, Newedge USA is a wholly owned subsidiary of Newedge Group, which itself is a joint venture 

between Societe Generale and Calyon, itself a subsidiary of Credit Agricole. Newedge -one of the world's 

largest exchange-traded derivatives' brokerage organizations -- is a member of over 80 derivative and stock 

exchanges worldwide, and it has offices in offices in 16 different countries. Worldwide, Newedge.specializes in 

the brokering on behalf of customers of exchange traded derivatives, all securities products (including equities 

and fixed income), and OTC instruments (including FX); it engages in only minimal proprietary trading 

activities. 

In general, Newedge supports the trend to centrally clear OTC contracts that meet two important criteria: 

1. the clearing facility is well managed (e.g., including fair governance) and is a financially viable 

counterparty to all cleared transactions. A clearing facility must also advance three main 

features: price transparency, effective risk monitoring and effective risk control; and 

2. the participation of clearing members who hold ultimate customers' accounts, who meet uniform 

strict guidelines established by the relevant clearing facility and a government regulator (such as 

the CFTC), who provide an additional level of security and control to the clearing process. 

Newedge USA, llC 

630 Fifth Avenue 

Suite 500 

New York, NY 10111 

TEL 646 557 9000 

FAX 646 557 8480 

A subsidiary of Newedge Group 

Member SIPC and FINRA www.newedgegroup.com 
The absence of either criterion renders the clearing function significantly less robust. It is the connection 

between the two that makes clearing effective, and only proposals that meet BOTH criteria should be approved 

by regulators such as the CFTC. Otherwise the public interest is not served, and "centralized clearing" . 

becomes a catchphrase only, and not as an effective process that protects both participants and, ultimately, 

the public at large. 

The CME and CBOT proposal is precisely the type of proposal that should be wholeheartedly embraced by the 

CFTC. Not only will it permit useful OTC contracts to be centrally cleared by the CME through its highly 

respected clearing house, but it requires such contracts to pass through clearing members that meet rigorous 

standards established both by the CME and the CFTC. Thus two levels of risk monitoring and control will exist 

for each contract- between the CME and its clearing member, and between each clearing member and its 

customer. This check and balance will help ensure that only qualified participants enter into the clearing 

process and in a responsible way. 

For these reasons, Newedge respectfully requests that the CFTC approve the petition of the CME and CBOT 

to permit qualified participants who enter into OTC corn basis swaps and OTC calendar swaps for corn, wheat 

and soybeans to submit those contracts to the CME for clearing. The CFTC should also issue an order 

authorizing CME and clearing member future commission merchants, such as Newedge USA, to commingle 

customer funds used to margin, secure or guarantee these contr. c ith other funds in segregated accounts. 

Thank you for your consideration. Feel free to contact the unde ·gned at 6 557 8458 or at 

garv.dewaal@newedqeqroup.com if you require any further infor ation.