Chatham Financial Corp

8/2/2019 Chatham Financial Corp

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Mr. DaviSecretar

United SThree La1155 21s

Washing

R

Dear Mr.

Chatham

U.S. Co

ProposeSwap EDodd-Fr

Act”).

Introdu

Chatham

all businin conne

hedging

reportinmarket,

transpar

venue fo

The Imp

The authcrisis, an

letters a

unnecess

exceptiosmall ba

exemptiand tradi

the proc

increasincould ari

d A. Stawicof the Co

tates Commfayette Cent Street, N

ton, DC 205

e: “Process ake a Swa

Stawick:

Financial

mmodity F

Rulemakinecution Fa

ank Wall St

tion

is a consul

ss sectors ttion with t

process, fr

and accouhatham ha

ncy in the

r managing

act on End

ors of thed do not po

nd colloqui

arily burde

from thenks, pensio

n, etc.) willng require

ess for ma

g hedging cse due to th

k mission

odity Futurre

81

for a DesigAvailable

orp. (“Chat

tures Tradi

g (“NPR”) cility To M reet Refor

ting compa

hat employeir day-to-

om structur

ting. Throadvocated

erivatives

risk.

Users

odd-Frank se a system

es that pol

ed by new

Act’s mandfunds, ent

not be ableents will e

ing a swa

osts and adfollowing:

s Trading C

nated Cont o Trade” (

ham”) is pl

ng Commi

ertaining t ke a Swapand Cons

y that wor

over-the-coay busines

ing and ex

ghout thefor effectiv

arket, whil

ct recogniic risk. Ac

icy makers

egulations.

atory cleariities that do

to avail thetend to tho

“availabl

inistrative

ommission

act Market RIN numbe

ased to res

sion (the

the “Proce Availablemer Protec

s with over

nter (“OTes. Chatha

ecuting he

olicy debatregulation

e also ensu

ed that endordingly, t

should str

While man

ng and tradnot fit wit

selves of tusands of e

to trade”

burdens. In

or Swap E3038–AD1

ond to the

Commissio

ss for a De o Trade” i

ion Act (th

one thousa

”) derivatim assists its

ges to pro

over regulthat reduce

ring that th

users did ney have re

ive to ens

y end users

ing requirein the narr

e exceptiond users. I

could nega

creased cos

F

ecution Fa8)

request for

n”) regardi

ignated Cossued unde

e “Dodd-Fr

nd compani

es to manaclients wit

viding on-

ation of thes systemic r

market re

ot contributeatedly em

ure that en

will qualif

ents, otherowly crafte

. Consequf not imple

tively impa

s and admi

ebruary 13,

cility To

comments b

ng its Noti

ntract MarTitle VII

ank Act” or

es from vir

e risks theall facets

oing valua

OTC derivisk and incr

ains an eff

e to the finhasized th

d users ar

for the end

end userscaptive fi

ntly, the cleented care

ct end use

istrative bu

2012

y the

e of

et orf the

“the

ually

facef the

ions,

tiveseases

icient

ncialough

not

user

(e.g.,ance

aringfully,

rs by

rdens



• o

• E

tr

S

Additionrequirem

SEF/DC

executeIf the sw

not suffian illiqui

For thesthe poten

Liquidit

Some mwould b

suitable

that thefeasible.

subject tcreation43 and P

clearing

We stron

clearing

the essen

sufficienCommitt

IC

d

Cs

f

t

a“

swap subjn a swap e

ay not havake the sw

nd users wil

ade” and co

EF/DCM th

ally, evenents still m

. As an

subsequenap dealer is

iently liquid venue wil

reasons, wtial for unn

y

rket particisubject to t

or trading o

ommissionThe Comm

the clearinof the propoart 45 repor

but not trad

gly support

requirement

tial need fo

tly liquid.ee Chairma

interpretinommission

etermining

ommissionap to be tr

cility, but a

e facility. T

mount of liqlisting” of t

ct to the clecution fac

sufficientp “availabl

l be require

uld also be

at is first to

end usersy be impac

end user ex

t swap in threquired to

d to be tradl be passed

e urge the Ccessary cos

ants anticiphe clearing

n a SEF/DC

’s approachission has c

g requiremesal for a proing require

d on a SEF

the approac

is in fact su

swaps only

his principlLincoln, w

g the phraseshould take

hether a s

should evalded on the

lso whether,

he Commis

uidity suche swap by a

aring requirlity (“SEF”

liquidity onto trade”.

to expend

ubject to th

make a give

that are eted indirectl

ecutes hed

e market totransact th

d on a SEFn to end us

ommissionts due to de

ate that onlequirement

M. While t

acknowledafted nume

nt may be scess to desients put fo

DCM.

h of having

itable for tr

to be desig

has also bho noted:

“makes thea practical r

ap executio

ate not justacility, or i

as a practic

ion could c

hat the swaswap exec

ement may) or design

each of the

resources to

e burden an

n swap “av

empt froy by the re

es with a

lay off their offsettin

DCM, thers and hed

to ensure threased liqui

the most stand would

his is one p

e the possibrous rules w

bject to thenate swaps

rth scenario

a separate t

ding on a S

nated as ava

en emphasi

swap availather than a

n facility “

whether theentifies the

al matter, it

onsider, for

p can actualtion facility

not have suted contrac

swap exec

monitor th

d costs of n

ilable to tra

the manuirement f

wap dealer

isk associatswap on a

ost incurreing will be

e “availablidity and inc

andardizedherefore au

ssible scen

ility that othich sugges

trading reqas “availab

s where a s

st to ensure

EF/DCM.

ilable for tr

zed by then

ble to tradeformal or l

akes the s

swap execswap as a c

is in fact p

example, w

ly be traded, in and of i

fficient liqut market (“

ution facilit

swaps dee

eding to co

de”.

atory clearr swaps to

, the swap

ed with theSEF/DCM

as a resultome more e

to trade” preased oper

and highly ltomatically

rio, we beli

er scenariot that a subs

uirement, hele to trade”.ap would b

that a swap

his approac

ding if thos

Senate Agri

” it is intengalistic app

ap availabl

tion facilitandidate for

ssible to tra

hether there

on the faciltself, witho

idity to be tCM”), and

ies (“SEFs”

ed “availa

nect to the

ing and trbe executed

dealer will

end user’sand that s

of transactixpensive.

rocess miniational burd

iquid swapsbe deemed

eve it prude

are similar

et of swaps

nce the verLikewise,

e subject to

subject to t

h acknowle

e swaps are

culture

ed that theroach. Thus

to trade,” t

permits thetrading on

de the swap

is a minimu

ity. The mert a minimu

2

raded /or it

that

le to

latest

adingon a

often

wap.ap is

g on

izesens.

nt

ly

art

e

dges

, in

he

he

on

m

e



a

E

To addre

intendedsingle fa

deems re

Consequoutcome

We urge

deemed

relevant.process t

they beli

being codetermin

establishdetermin

appropri

Operati

End user

sign up a

or more

year. Fu

concerneSEF/DC

if the enswap tha

must be

allow forcompeti

process t

requiresend user

1 156 CON2 Page 777sellers; (2) DCMs, or of number of will supportdispositive,

mount of liq

xecution R

ss the need

to ensure stor would

levant - the

ently, as sucthat are av

the Commi

available t

We believhat allow m

ve the tradi

sidered fore if a swap

ed in the evation. This

te for exec

nal and L

s subject to

nd connect

EFs/DCM

rthermore, i

d that end uthat has

user has ct becomes r

ept in chec

competingg SEFs/DC

hat inadvert

nd users cwith no ap

. REC. S 5923 (32 Federal Regihe frequency o bilateral transaesting firm or i trading in the sas the DCM or

uidity to ma

quirement.”

or liquidity

aps are suf e dispositiv

process ma

h the proporse to the b

sion to ens

trade” rath

end usersarket partici

ng require

the tradinghould be m

nt a swap bwould help

tion on a S

gistical Bu

the clearing

with SEFs/

is worth th

SEF/DCM

sers may neade a relev

ntracted witquired to tr

and provid

SEFs/DCMMs, further

ently promo

mply in a sreciable be

aily ed. July 15,ter / Vol. 76, Nr size of transacctions; (4) The dicative bids anwap; or (8) Any EF may conside

ke trading1

on SEFs/D

iciently liqe - and the e

allow for l

ed rule maest interests

re the key l

r just than

ould benefiants to off

ent should

requirementde ‘availab

ecomes unsensure that

F/DCM.

dens

requiremen

CMs. It is

relatively

s can quickl

d to sign unt swap ty

h a particulade on such

e end users

s to ensure tromoting r

tes a SEF/D

ort timefranefit.

2010) (stateme

. 240 The eight ions on SEFs, Dumber and typd offers; (7) Wh

other factor thr any one facto

ossible, sho

Ms, the Co

id to be traighth criteri

ss liquid pr

es it feasiblof end user

iquidity fact

llowing an

t by havingr input – bo

ot apply du

. This shoule to trade”

itable to trwaps that a

will be req

not yet clea

mall numb

y make swa

with multie “availabl

r SEF/DCa venue. T

sufficient ti

hey are ablebust comp

CM to bene

e, risks cre

nt of Senator Blfactors are: “(1CMs, or of bilats of market paether a SEF’s trt the SEF or DC or several fact

uld not be s

mmission p

ed on a SEa is essentia

oducts to be

e that the prs.

ors are alw

other facto

proper checth qualitati

e to the rela

ld be true dand a simila

de on a SEre made “av

uired to co

that the ti

r of swaps

ps “availabl

ple SEFs/Dto trade.”

, and thate SEF/DC

me to comp

to match thtition for th

fit from a fi

ating unnec

lanche Lincoln)) Whether therral transaction

rticipants; (5) Tading system orM may considerrs to make a s

ufficient to

roposed eig

/DCM.2

lly anything

made “avai

ocess may r

ys satisfied

r the SEF/D

ks and balae and quant

tive illiquidi

ring the initr process sh

/DCM afteailable to tr

mit resourc

e and cost t

many end u

e to trade,”

Ms, or chahis may be

EF/DCM dself-certif

ly. Such ti

e product oe benefit of

rst mover ad

essary burd

are ready and s; (3) The tradine bid/ask sprea platform or a D relevant. No siap available to

rigger the T

t criteria

owever sinthe SEF/D

lable to trad

esult in

before a sw

CM deems

ces in theitative – wh

ty of a prod

ial processould be

the initialde” are ind

es to resear

o set up wit

ers execute

e are

se the latestparticularl

es not offeication proc

e may also

ferings of end users.

vantage, or

ns and cost

illing buyers ag volume on SEd; (6) The usual CM’s trading fagle factor woul

trade.” 3

rade

ce noM

e”.

ap is

en

uct

o

ed

h,

one

per

true

ass

s for

d s, cility d be



With res

required

(includin

first mad

(includinfirst mad

aware, v

self-certia 30 day

From a lmonitor

perhaps

subject t

all mark

span a grannual p

burdensis deeme

able to c

researchand insti

to make

latest SE

Even wit

just to encould be

Econom

The proexecutio

and/or a

economi

hedgingbecause

economiexacerba

3 Pages 674 Page 7775 Page 7776 Page 7777 Page 777

ect to the ti

to trade on

g the 45 da

e available

g the 10 dae available

ice concer

fication propublic com

gistical perhe various

aily or wee

the “avail

t participan

eater time pocess for e

me, wouldd “available

mply with

new SEFs/ ute process

he same sw

F/DCM.

h extended

sure they come unnec

ically Equi

osed rule stfacilities

y economi

equivalen

are not inahey are sim

ally equivte the conc

94 and 67295, 31, Federal Regi33, Federal Regi31, Federal Regi37, Federal Regi

ming and pr

SEF/DCM

review per

o trade5) an

review pero trade). B

s and take s

esses shoulent period

spective, it iebsites of

kly - to see i

ble to trade

ts, one appr

eriod to facid users to c

t least alignto trade” en

he trading r

CMs if nees to compl

ap “availabl

eriods of ti

mply with tssarily bur

alent

ates, “Uponnd designa

cally equiv

y test shou

vertently silar in som

alent provierns related

Federal Registerster/Vol. 76, Noster/Vol. 76, Noster/Vol. 76, Noster/Vol. 76, No

ocess speci

as quickly

iod for the

d as quickly

iod for theth scenario

teps to com

d be subjectin all cases.

s worth notiarious SEF

f a swap th

designatio

ach to ease

litate broadheck which

with otherd users sho

equirement.

ded, negotia. Addition

e to trade”

me, end use

he trading rensome an

a determinted contract

lent swap,

ld be suffi

bject to threspects to

ions wereto liquidit

/Vol. 75, No. 21. 240 . 240 . 240 . 240

ied in Part

s 75 days v

ommission

as 40 days

ommissions would pro

ly. Both th

to at least

ng that thous, DCMs, an

y may need

. While th

this logistic

market awaswaps are “

uarterly orld then hav

This amou

te contractslly, this tim

nd prevent

rs could be

quirementspotentially

tion that amarkets li

shall make

iently gran

SEF/DCMother swap

interpretedand oper

1

0.5 and Par

ia voluntary

and the 30

via the self-

6 and the 30vide little ti

e voluntary

90 day rev

sands of end the Com

to execute

re may be

al burden w

reness. Foravailable to

annual busie 6 to 9 mo

nt of time w

connect, lee period wil

nd users fr

equired to c

. Without acostly for e

wap is avaisting or off

those swap

ular so that

trading wis made avai

too broadltional burd

t 40.63

a sw

submission

day period

certification

day periode for end u

submission

iew by the

users willission on a

o manage ri

ultiple app

ould be to h

example, atrade,” whil

ness procesths to ensur

ould enable

arn how tol permit oth

m needing

ommit signi

dditional tind users.

lable to traering for tr

s available

customize

hout sufficilable on a S

y, it woulens that w

ap could be

by a SEF/

after the sw

process

after the swsers to beco

for approva

ommission

be requiredregular basi

sk will be

roaches to n

ave the pro

uarterly ore still poten

es. Once ae they will

end users t

se the systeer SEFs/DC

to chase the

ficant resou

e, complia

e, all otherading such

to trade.”7

swaps use

ent liquiditEF/DCM.

only serhave iden

4

CM

p is

p isme

l and

with

tos -

otify

ess

ially

swape

mMs

rces

ce

swapswap

The

d for

justIf the

e totified



above.

broad or

Conclus

Chatham

for makiWe look

the deriv

Sincerel

Ted McManagin

Chatham

e urge th

unclear eco

on

appreciates

g a swap “forward to

atives mark

,

ulloughg Director

Financial

Commissi

omic equiv

the opportu

available toworking wi

t without pl

orp.

n to preve

alency test.

nity to com

trade” becath the Com

acing an un

t such unn

ment on the

se it will aission to h

due burden

cessary bu

proposed r

fect all partelp implem

on end user

rdens associ

le impleme

icipants in tent rules th

or the larg

ated with o

nting the pr

he swaps mt will stren

r economy.

5

verly

ocess

rket.gthen

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Chatham Financial Corp