CMEGroup 

A CME/Chicago Board ofTrade Company 

September 15, 2008 

VIA ELECTRONIC MAIL 

David Stawick 

Secretary of the Commission 

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Received CFTC 

Records Section 'i/ tlaf-o <;] .·· 

Commodity Futures Trading Commission 

Three Lafayette Centre 

1155 21st Street, NW 

Washington, DC 20581 

secretary@cftc.gov 

Richard H. Lamm 

Managing Director. Regulatory Counsel 

Legal and Market Regulation 

Re: Confidential Information and Commission Records and Information - 73 Fed. Reg. 44939 

(Aug. 1. 2008) 

Dear Mr. Stawick: 

CMEGi"oup, Inc. ("CME moup")apprecTafes the opportunity to comment on the Commoaity Futures 

Trading Commission's (the "Commission") re-proposal with respect to proposed amendments to 

procedures under which derivatives transaction execution facilities ("DTEFs"), derivatives clearing 

organizations ("DCOs") and designated contracts markets ("DCMs") (collectively, "registered entities") 

may request confidential treatment for products and rules submitted via certification procedures or for 

Commission review and approval under Parts 40 and 41 of the Commission's Regulations, and to amend 

Commission Regulation 145.9(b) to clarify that its procedures for requesting confidential treatment do not 

apply to submissions filed under Parts 40 and 41. 

CME Group is the world's largest and most diverse derivatives exchange. CME Group serves the risk 

management needs of customers around the globe. CME is also the largest DCO in the world. As an 

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

trading platform and on trading floors in Chicago and New York. CME Group offers the widest range of 

ben~hmark products available across all major asset classes, including futures and options based on 

interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, and alternative 

investment products such as weather and real estate. 

Background 

On July 20, 2007, the Commission published a notice of proposed rulemaking to amend the procedures 

pursuant to which registered entities request confidential treatment for materials submitted under Parts 40 

and 41. Urider the proposed amendments, Commission Regulation 40 .8( c) would provide that registered 

entities requesting confidential treatment for submissions under Parts 40 and 41 must file with the 

submission a detailed written justification, and that Commission staff may make an initial determination to 

grant or deny confidential treatment rather than waiting until a request is received under the Freedom of 

Information Act ("FOIA"). In August 2007, CME Group and New York Mercantile Exchange, Inc. 

20 South Wacker Drive Chicago, Illinois 60606 r 312 930 2041 F 312 930 3323 richard.lamm@cmegroup.com cmegroup.com 
Mr. David Stawick 

September 15, 2008 

Page2 of 3 

("NYMEX") each submitted comments in response to the notice of proposed rulemaking. 1 On August 1, 

2008, the Commission published a notice of proposed rulemaking that. inter alia, (i) re-proposed 

Regulation 40.8(c) to clarify that an initial staff determination to deny confidential treatment can be 

appealed to the Office of General Counsel and that such an appeal will stay release of the material at 

issue, and (iT) proposed amendments to Regulation 145.9(b) to clarify that procedures therein for 

requesting confidential treatment are inapplicable when confidential treatment is sought under Parts 40 

and 41. The Commission further proposed to add new paragraph (d) to Regulation 40.8, which would 

state: "Commission staff will not consider requests for confidential-treatment of information that is req~ired 

to be made public under Section 5(d)(7) of the Act or Commission Regulations 40.3(a)(7) or 40.5(a)(8)." 

Section 5(d)(7) of the Act is DCM Core Principle 7, which requires a board of trade to "make available to 

market authorities, market participants, and the public information concerning (A) the terms and 

conditions of the contracts of the contract market; and (B) the mechanisms for executing transactions on 

or through the facilities of the contract market." The phrase "mechanisms for executing transactions" is 

not defined in the Act, the Commission's existing Regulations or the proposed amended Regulations. 

Nevertheless, the Commission has stated that the phrase "generally include[s] such information as 

trading algorithms, market maker programs and information from an exchange's rulebook that pertain to 

or impact trading." 73 Fed. Reg. 44941, n.17 (Aug. 1, 2008). 

Because the reproposal states that comments. submjtled in response to the July 20, 2007 notice .need not 

be resubmitted, we will not repeat all of the comments made in CME Group's and NYMEX's August 2007 

submissions. However, the Commission now seeks comments on one issue raised in NYMEX's August 

2007 submission: confidential treatment requests for algorithms or similar proprietary trading tools that 

are mechanisms for executing transactions. As explained below, CME Group believes that summary 

denial of confidential treatment to all information relating to a registered entity's algorithms or similar 

proprietary trading tools would be inappropriate. 

Confidential Treatment of Mechanisms for Executing Transactions 

The stated purpose of the proposed amendments is to enhance the Commission's ability to provide the 

public with immediate access to materials filed under Parts 40 and 41 that do not merit confidential 

treatment. Although the Commission has stated that it considers market maker programs to be 

"mechanisms for executing transactions" within Core Principle 7, it has acknowledged that such programs 

may include commercially valuable information deserving of confidential treatment. For example, FOIA 

exemption (b )(4) protects from disclosure non-public commercial or financial information where its release 

could cause competitive harm to the submitt_er. As the Commission has explained, access to certain 

information regarding market maker programs "could give an unfair advantage to potential counterparties 

of market makers as well as providing other markets with a competitive edge when setting up their own 

market maker programs and negotiating agreements with potential market makers." Therefore, the 

Commission concluded that summary denial of confidential treatment to all information relating to market 

maker programs would be "inappropriate." 

' On August 22, 2008, CME Group announced that it completed its acquisition of NYMEX Holdings, Inc., the parent company of 

NYMEX. 

20 South Wad<er DrP•e Chicago. Illinois 60606 T 312 930 2041 F 312 930 3323 rd<ard.lamm@cmegroup.com cmegroup.com 
Mr. David Stawick 

September 15, 2008 

Page3 of 3 

The Commission should reach the same conclusion with respect to other mechanisms for executing 

transactions, including trading algorithms or similar proprietary trading tools. In its letter to the 

Commission dated August 23, 2007 commenting on the proposed amendments published in July 2007, 

NYMEX noted that algorithms or similar proprietary trading tools may merit confidential treatment. As 

with certain aspects of market maker programs, certain confidential information relating to a registered 

entity's trading algorithms or proprietary trading tools may fall within FOIA exemption (b)(4), as its release 

could cause competitive harm to the submitter. 

In response to NYMEX's letter, the Commission invited public comment "with respect to specific types of 

trading tools that should be given consideration under a request for confidential treatment." At present, 

the Commission should simply provide general guidance that summary denial of confidential treatment to 

all information relating to a registered entity's algorithms or similar proprietary trading tools would be 

inappropriate. The Commission should not attempt to determine in the context of a rulemaking whether 

confidential treatment is merited for any specific types of trading tools. Rather, the Commission should 

make such a determination when presented with a request for confidential treatment from a registered 

entity, together with a detailed written justification as required under the proposed amendments. 

CME Group thanks the Commission for the opportunity to comment on this matter. We would be happy 

to discuss any ()f these issues with the Commission. lfyou have any comments or questions, please feel 

free to contact me at (312) 930-2041 or Richard.Lamm@cmegroup.com; or Lisa Dunsky, Director and 

Associate General Counsel, at (312) 338-2483 or Lisa.Dunsky@cmegroup.com. 

Sincerely, 

~+J,~. 

Richard H. Lamm 

cc: Susan Nathan, Senior Special Counsel (via e-mail) 

20 Sauth \Nacker Drive Chicago. il!ino!s 60606 T 312 930 2041 F 312 930 3323 rfchard.lam!Tl@cmegroup.com cmegroup.com