Please see below and attached on developments in the CFTC rule making.

Sincerely,

Michelle Hershel
Director of Regulatory Affairs
Florida Electric Cooperatives Assoc.
2916 Apalachee Parkway
Tallahassee, FL  32301
(850)877-6166 ext.3
(850)656-5485 (fax)

-----Original Message-----
From: Russell Wasson [mailto:russell.wasson@nreca.coop]
Sent: Wednesday, February 23, 2011 11:15 AM
To: Finance Community Listserv
Subject: [fincom] NFP Coalition comment letters to the CFTC

From the Cooperative.com Finance Community Listserv:
Colleagues, attached you will find the three comment letters we filed last night with the CFTC.  In summary, we noted the following:

End User Exception

The Commission should streamline the regulatory requirements for utilizing the end-user exception.

The Commission should not establish unnecessary transaction hurdles for non-financial entities hedging commercial risk.

The Commission should not make it more cumbersome to transact in non-cleared swaps with other non-financial entities than with financial entities.

The Commission should clarify the âcheck the boxâ swap-by-swap representations as they apply to non-cleared swaps.

The rules should include safe harbors for reporting parties for administrative and inadvertent reporting errors or delays that have no material effect on the relevant swap markets, and for any reporting party that relies in good faith on representations made to it by the non-reporting party.

The rules should give broad deference to non-financial entities hedging commercial risk.

The Commission should not limit the ability of non-financial entities to hedge commercial risks through âaffiliatedâ entities. Moreover, the Commission should clarify in its rules that the defined term âaffiliateâ or âaffiliatedâ includes the unique ways in which NFP Electric End Users maintain affiliate relationships.

All comment periods should remain open until all the basic rules under title vii of the Dodd-Frank Act have been promulgated. Thereafter, once the rules are finalized, the Commission should provide extended transition periods tailored to the needs of non-financial entities in the diverse markets for different categories, classes and types of swaps used as commercial risk management tools.

The Commission must consider the overall impact of its rules promulgated under the act on small entities.

Entities Definitions

The Commission should confirm in the rules that an eligible commercial entity is an eligible contract participant for swaps referencing or derived on a commodity in which the ECE transacts in connection with its business.

The Commission should adopt the broad and commercially practicable definition of âhedging or mitigating commercial risk,â and should clarify in rule 1.3(ttt) that a NFP electric end user has âcommercial riskâ

The Commission should clarify proposed rule 1.3(ppp) to expressly exclude from the definition of âswap dealerâ a member of or participant in a related NFP EEU group acting on behalf of another member of or participant in the same related NFP EEU group (or on behalf of such other member or participantâs retail energy customer).

The Commission should clarify proposed rule 1.3(ppp) to expressly exclude from the definition of âswap dealerâ a NFP electric end user or an affiliate (including an entity principally owned by NFP electric end users) acting for or on behalf of one or more other NFP electric end users, or an energy infrastructure project or entity.

The Commission should simplify the âde minimusâ exception from the definition of âswap dealerâ.

Swap Data Repositories

The proposed rules in part 49 should not use the term âend userâ and should differentiate between the way in which an SDR will interact with different types of reporting entities (at least to distinguish non-financial entities) â all âreporting entitiesâ are not the same and should not be treated the same by SDRs.

Proposed rule 49.11 should only require the SDR to confirm with âbothâ swap counterparties swap transaction data for non-cleared swaps which are not executed on a registered entity.

Proposed rule 49.15 should be revised to clarify what information the SDR is reporting to the Commission about âdata submitted to meet the real-time swap data reporting obligations of part 43 of this chapterâ.

The Commissionâs proposed rules under part 49 should be revised to require the SDR to distinguish what data it receives from other registered entities, from swap dealers and major swap participants (with whom it will likely have electronic interfaces), and what data it receives from non-SD/ MSP counterparties, including non-financial entities, in order to enable the SDR to fulfill its different obligations under the act in respect of each âdata streamâ.

The provisions of CEA section 49.17 should be revised to protect the confidentiality rights of non-financial entities, which have no âprudential regulators,â to protect the non-financial entityâs âentity data,â which should only be used for the commissionâs purposes in monitoring the end-user exception, and to implement CEA section 2(a)(13)(e).

The ânon-discriminatory access and feesâ approach, as reflected in proposed rule 49.27, will place inequitable and inappropriate burdens on those non-financial entities that require only end user access to limited portions of the swap markets to hedge commercial risks.

Please let me know if you have any questions.

Russ

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