Best Practices for Energy Price Indices © Copyright 2003, CCRO. All rights reserved. 16 V. CONTRACTUAL ARRANGEMENTS A robust legal framework, including explicit contractual arrangements between data providers and index developers and between data providers and their counterparties, should be in place before a company submits data to an index developer. Such contractual agreements should be designed to protect the confidentiality of competitive information while permitting the development of robust indices. Recommended here are the elements of a suitable contractual arrangement between an index developer and a data provider. 5.1 Elements of a Suitable Contractual Arrangement 5.1.1 Submit Data Only if Contractual Arrangements Are in Place Data should be provided only to index developers that have been approved by the data provider to receive such information and that have entered into appropriate contractual arrangements with the data provider. During the transition period until contractual arrangements are in place, data providers and index developers should endeavor to continue supplying data and developing indices, but should seek legal counsel on this decision. Anonymity of the submitting party should be maintained unless otherwise compelled by law. 5.1.2 Ensure Contractual Arrangements Include a Confidentiality Agreement Between the Data Provider and the Index Developer to Protect Against Release of Data The appropriate contractual arrangements should include a confidentiality agreement to protect the proprietary nature of the information provided by the data provider and to protect against its release or misuse by the index developer. This should allow for appropriate distribution to support audit requirements but should restrict all other internal and external distributions. 5.1.3 Ensure Contractual Arrangements Include a Sole Purpose Clause and Clarify Data Ownership The contractual arrangements should include an agreement by the index developer that it will use data submitted for the sole purpose of constructing an index. The contract should clarify that the submitting data provider continues to own the raw data submitted and that the index developer owns any resulting index or other created products. Establishing a formal agreement between the company providing data and the index developer is a recommended best practice. The agreement should address items including the confidentiality, permitted uses, and ownership of the data and the process for collecting, verifying, and submitting the data. An example of an agreement is provided as Exhibit B in the appendix. 5.1.4 Change Master Trading Agreements Existing contractual agreements between market participants, such as master trading agreements, may not allow for the release of confidential information, in particular counterparty name and buy/sell indicator. The CCRO therefore recommends that data providers amend existing contracts when necessary in order to allow the release of such information to index developers for the sole purpose of index construction. Energy market participants may provide release statements to