[ppml] Markets, pricing, transparency, 2008-2 / 8.3.9

[michael.dillon at bt.com]

> >I think that the SEC's Fair Disclosure rules apply here, and 

> Michael - Are you saying that these principles should apply 
> (and ARIN should embody these in any system it proposes) or 
> that it's your preference that ARIN should seek to have the 
> SEC rules apply, and specifically encourage SEC enforcement?

I'm saying that if you are going to design a market, it makes 
sense to follow best practices, and design one similar to other
SEC-regulated markets. So, yes, ARIN should embody these principles
if it designs such a system, and I agree with Randy, that the 
enforcement body should be a 4th party. In the real world, you
have a buyer, a seller, a stock/commodities exchange, and the
SEC as regulator.

As far as seeking to have SEC rules apply and encouraging SEC
enforcement, I would rather not do that and not have a forma
market at all. However, given that some people want to have 
a market, if this is ultimately the decision taken by ARIN, 
then I believe that the *ONLY* way to reasonably avoid having
SEC regulatory oversight is to understand the applicable law,
design around it, and ask the SEC for a ruling that the ARIN
market is outside of SEC regulatory responsibility.

Of course, if someone gets a court decision saying that IP 
addresses are property, then all bets are off because if an
IP address is an asset, then the holder of an IP address block
has an equity, which means the contracts being sold on the market
are equity derivatives, and these are explicitly mentioned in 
the law.

> As mentioned early, it does not appear that the security or 
> commodities market regulations would govern anything in this 
> space (but we will, of course, get a formal opinion of any 
> recommended policy proposal).  If you are recommending the 
> answer to transparency *should be* SEC enforcement, please be 
> explicit.

Explicitly, I am recommending that the answer to transparency
is to have listing rules similar to those of organizations like
the NYSE, NSX, NASDAQ, CBOT, etc., along with enforcement of the
rules by a 4th party, which may or may not be the SEC. In fact, 
the market may or may not be in the USA. As I understand it, Canada
offers 10 separate provincial regulatory regimes, and there are
a number of Caribbean countries in ARIN as well. Or, since ARIN
does have a formal working relationship with ICANN, and ICANN already
has an oversight role in regard to addressing, it is conceivable
that they could fill the enforcement role. In the absence of a
law which all must follow (SEC), it would be necessary for all
buyers and sellers to contract for enforcement, either by contracting
with ICANN prior to engaging in transactions, or by including some
kind of mandatory arbitration provision in their contracts.

It would be interesting to look back in history to see how
this type of enforcement was handled prior to the existence
of regulators like the SEC. 

Also, Randy's ebay suggestion is not that crazy. In a stock exchange,
typically buyers and sellers do not simply arrange a deal and then
publish it. Instead, the seller publishes and offer, the buyer publishes

a bid, and then at some point, a deal is made and the result is
published.
This way observers see not only the final price, but also the movement
of bids and offers prior to the deal.

I'm still against moving towards a market since I don't think it is
needed
and I don't think there is enough time to create a proper transparent
market.

--Michael Dillon