External Meetings: Meeting with Air Transport Association

On February 2, 2011, Commission staff met with the Air Transport Association (“ATA”) to discuss the real-time reporting proposed rulemaking.  Specifically, the ATA is concerned that there will not be long enough time delays for trading in illiquid markets or in the less liquid segments of the forward curve.  They suggested that the definition of large notional swaps (and block trades) should reflect both size and tenor, and that the time delay should reflect liquidity or lack thereof.   They suggested that the 5% threshold in the distribution test should be increased (in certain illiquid markets all trades may be block trades or large notional swaps).  The time period suggested for reporting such trades should be the lesser of the time it takes a dealer to cover its risk and 24 hours after the trade is executed.  ATA said that it is hard to discern a benefit to the market of getting the information fast (e.g., 15 minutes vs. 24 hours) versus the risk of releasing the info to the market and being front-run.  In this regard, according to ATA, anonymity is dependent on size, location, and tenor of the transaction, and that rapid reporting would cause wider bid/ask spreads and a decrease in liquidity.