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Received CFTC Recard~ SeCtion 

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COMMENT 

Attantz Calgary Chicago Houston London Ne.,v York Singapore \IV1nnipeg 

BY ELECTRONIC TRANSMISSION 

Mr. David Stawick 

Secretary 

Commodity Futures Trading Commission 

1155 21st Street, NW 

Washington, DC 20581 

February 20,2009 

Re: Conflicts of Interest in Self-Regulation and Self-Regulatory Organizations 

Dear Mr. Stawick: 

ICE Futures U.S., Inc. ("ICE Futures" or the "Exchange") appreciates the 

opportunity to comment on the acceptable practices for Core Principle 15 insofar 

as they relate to the definition of the term "public director" proposed by the 

Commission and published in 74 Fed. Reg. 3475-3480 aanuary 21, 2009) (the 

"Amendments"). 

ICE Futures is a designated contract market (''DCM") under the Commodity 

Exchange Act that provides a marketplace for trading in agricultural, equity 

index and currency contracts. These markets are available to participants around 

the world through a technology infrastructure and trading platform operated by 

the Exchange's parent, IntercontinentalExchange, Inc., and an options trading 

floor maintained in New York. Participants in ICE Futures' markets represent a 

diverse range of traders including commercial hedgers, futures commission 

merchants, floor traders and other speculators. 

The Amendments resolve certain ambiguities that existed in the acceptable 

practices originally adopted in January 2007. The proposed acceptable practices 

also reflect the Commission's incorporation of some of the comments previously 

made with respect to the amendments that were proposed in March 2007. In 

ICE Futures U.S .• Inc. 

World Financial Center phooo 212 74S 4000 

One North End Ave lax 212 742 6931 ICE Future~ U.S., Inc .• i!l designated contract market 

~nder the Commodity Exchange Act. .n amended New York, NY 10282 onl1oo VN.w.thelCe com 
Mr. David Stawick 

February 20, 2009 

Page2 

particular, we commend the decision to free a DCM' s public directors from 

bright-line tests that would have been failed if the directors also served on the 

board of the DCM' s affiliates. 

The Commission has recognized from the outset that the material relationship 

test is the single most important element of the definition of public director. Each 

DCM must conduct a facts and circumstances analysis to determine whether the 

relationship between the DCM and a potential public director is "material" 

within the meaning of the acceptable practices. That is, determine whether the 

relationship reasonably could affect the independent judgment or decisionmaking of the director. For most of the disqualifying relationships in the.brightline test-officers and employees of the DCM or its affiliates, members of the 

DCM and officers and directors of such members-- the relationship is so 

obviously material that no reasonable disagreement could be said to exist on the 

question of precluding service as a public director. However, the conclusion is 

not so clear in the case of indirect compensation relationships and, for that 

reason, we believe they should be scrutinized under the materiality test alone. 

The bright-line test would exclude from the definition of public director any 

person who is an officer, director or partner of a firm which received more than 

$100,000 in combined annual payments from the DCM or any of its affiliates for 

legal, accounting or consulting services, subject to a one-year look back. Because 

this prohibition is so broad, and the dollar threshold so low, it needlessly sweeps 

into its net payments that would be considered de minimis by the firm being 

compensated and relationships that might not automatically create a conflict of 

interest. 

For example, as proposed, the acceptable practices would preclude a person who 

is serving as an independent director of a large consulting firm from serving as a 

public director of the DCM, even though the individual is a non-executive 

director whose compensation as such is not driven by the profitability of the 

consulting firm. The bright-line test eliminates any facts and circumstances 

analysis that could result in distinguishing between the independent director in 

the hypothetical above, and a director who is the CEO and majority shareholder 

of a small consulting firm. 

Setting the indirect compensation threshold at only $100,000 raises similar issues. 

Because the level is so low, the bright-line test excludes from service as public 
Mr. David Stawick 

February 20, 2009 

Page3 

directors individuals who may have no material relationship with the DCM. 

Payment of a $100,000 legal or consulting fee to a firm with $250 million in 

annual revenues would not give rise to the same considerations as payment of 

that amount to a firm with annual revenues of only $2.5 million. The DCM 

should be entrusted to evaluate all the relevant facts and circumstances, just as it 

must do for any other situation not covered by the bright-line test, and determine 

whether the independent judgment of a public director would be compromised 

by the indirect compensation arrangements. In the event that the Commission 

believes the appearance of a conflict of interest exists in a particular case, it can 

review the DCM' s decision using the records required to be maintained under 

the acceptable practices. 

To the extent that the Commission nonetheless determines to continue with the 

approach in the Amendments, we encourage it to significantly increase the dollar 

threshold for indirect compensation. In this respect the standards of the New 

York Stock Exchange for determining the independence of directors serving on 

the boards of listed-companies are instructive.1 The Exchange is not advocating 

adoption of the NYSE standards per se, but rather note that there is a wide range 

between the two standards and that a higher threshold would eliminate some of 

the concerns highlighted in this letter and would result in a more meaningful 

and effective safe harbor under Core Principle 15. 

Again, ICE Futures appreciates the opportunity for a dialogue on the elements of 

the acceptable practices and the careful consideration the Commission has given 

to this important issue. 

Sincerely, 

~~r~ ~clc{<?D Audrey R. Hirschfeld 

Senior Vice President and General Counsel 

1 In the case of indirect compensation, NYSE Rule 303A.02 (b)(v) precludes a person from being deemed 

'independent' with respect to a listed company if such person is an employee, or a family member is an 

executive officer, of a company that has made payments to, or .received payments from, the listed company 

for property or services exceeding the greater of$1 million or 2% of such other company's consolidated 

gross revenues.