By Electronic Mail 

January 21, 2009 

Mr. David A. Stawick 

Secretary to the Commission 

Commodity Futures Trading Commission 

1155 21st Street, NW 

Washington, DC 20581 

Futures Industry Association 

2001 Pennsylvania Ave. NW 

Suite 600 

Washington, DC 20006-1823 

COMMENT 

202.466.5460 

202.296.3184 fax 

www.fi.•turesindustry.org 

Received CFTC 

Records Section 

'/dd/!J1 

c . 

:,.,.1 

Re: Proposed Rules for Trading Off the Centralized Market 

73 Fed.Reg. 54097 (September 18, 2008)- Supplemental Statement 

Dear Mr. Stawick: 

The Futures Industry Association ("FIA'') has had an opportunity to review the letter filed 

by CME Group Inc. ("CME Group") in connection with the Commodity Futures Trading 

Commission's.-("Commission's") request for comments on the proposed amendments to 

Commission rule 1.38 and the related proposed guidance on Core Principle 9 

("Guidance"). 1 FIA is pleased that, in general, CME Group's views mirrored those 

expressed by FIA in its comment letter, in particular as they relate to the Commission's 

proposals with respect to block trades between affiliates and transitory EFPs. 2 Moreover, 

we both agree that any action on the Commission's proposal should be deferred (although 

for somewhat different reasons). 

Nonetheless, we oppose CME Group's suggested revisions to the Guidance as it relates to 

the appropriate minimum size of block trades. Although CME Group generally supports 

the Commission's proposal that "the acceptable minimum block trade size should be a 

number larger than the size at which a single buy or sell order is customarily able to be 

filled in its entirety at a single price in that contract's centralized market," CME Group 

recommends a radically different approach when a designated contract market ("DCM") 

lists for trading a contract that is "substantially identical" to one traded on at1other DCM. 

In these circumstances, "where the Commission's suggested formulation is being relied 

Letter from Craig S. Donohue, Chief Executive Officer, CME Group, to David A. Stawick, 

Secretary to the Commission, dated January 5, 2009. 

Letter from John M. Damgard, President, Futures Industry Association, to David A. Stawick, 

Secretary to the Commission, dated January 5, 2009. 

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Mr. David A. Stawick 

January 21, 2009 

Page 2 

upon by a DCM for purposes of falling within the acceptable practices safe harbor, a DCM 

should be required to set its n::tinimum block trade size at a level that would be appropriate 

for the most liquid substantially identical contract that is trading on any centralized DCM 

market." 

We respectfully submit that adoption of the CME Group recommendation would violate 

section 15(b) ofthe Commodity Exchange Act ("Act"), which requires the Commission 

"in issuing any order or adopting any Commission rule or regulation [ ], or in requiring or 

approving any bylaw, mle, or regulation of a contract market," to "take into consideration 

the public interest to be protected by the antitrust laws and endeavor to take the least 

anticompetitive means of achieving the objectives of [the Act]." Adoption of the CME 

Group recommendation would inhibit competition by effectively allowing the CME Group 

to set the minimum block trade size for any DCM listing a "substantially identical 

contract" to one traded on a CME Group DCM. This is especially the case, since CME 

Group controls over 95 percent of all trading on DCMs in the US. The competing DCM 

would be precluded from attempting to attract market participants and liquidity to its new 

market by establishing a lower block trading threshold than the CME Group wmlld desire 

even though that lower threshold would meet the "customarily able to be filled" standard 

in the Commission's proposal for the less liquid competing DCM. CME Group's 

recommendation would add on to the Commission's proposal an inherently anticompetitive barrier to innovation that would harm challenger DCMs from competing, for 

no apparent policy reason other than to blunt competition. 

FIA urges the Commission not to adopt the CME Group's recommendation consistent with 

Section 15(b) of the Act. Each DCM should be able to decide, under the Commission's 

guideline, what block trading minimum makes sense for its market without interference, let 

alone a veto, from its competitor exchanges. 

Conclusion 

We appreciate the opportunity to this supplemental statement and request that this letter be 

included in the public comment file on to the proposed amendments to rule 1.38 and the 

proposed Guidance on Core Principle 9. 
Mr. David A. Stawick 

January 21, 2009 

Page 3 

cc: Honorable Michael Dunn, Acting Chairman 

Honorable Walter L. Lukken, Commissioner 

Honorable Jill E. Sommers, Commissioner 

Honorable Bart Chilton, Commissioner 

Division of Market Oversight 

Richard A. Shilts, Acting Director 

Gabrielle A. Sudik, Special Counsel