SteelBenchmarker™ Designed to Withstand Regulatory Scrutiny

In response to growing steel price volatility, WSD in 2005 created the SteelBenchmarker™ system to track the price movements of HRB, CRC, rebar and plate in the USA, Europe, China and the world export market. In April 2006, we began to publish our results on a semi-monthly basis. In addition, since February 2007, we have been tracking three grades of steel scrap in the United States.

We now believe our indexes have earned the right to be your “index of choice” for steel market pegging and steel futures transactions, especially for hot-rolled band and cold rolled coil in the United States. Our index is the most attractive because: a) it has two years of twice-per-month steel product price history for HRB and CRC; b) it has received widespread acceptance; c) it has demonstrated an extremely high correlation with the market; and d) it has followed “best practices” from inception. The “index of choice” in this new age of price volatility must be designed to accommodate the requirements of the governmental regulators – i.e., not raise anti-trust or anti-competitive behavior issues.

Today’s monthly physical price deals, along with the small number of “over the counter” deals in which there is forward hedging, currently appear to be flying “under the radar” of governmental regulators. However, if a steel price index were to become the basis for settlement of billions of dollars of financial and physical contracts, the index might be subject to great scrutiny. The integrity of the index becomes paramount. The index cannot be one originally designed to simply plot the monthly price movement of HRB on a non-robust, non-confidential and loose methodology basis. Steel buyers and sellers, we believe, must select an index that is incorruptible, robust, consistent, unimpeachable and designed to perform reliably under the severest market pressures. SteelBenchmarker™ was built to meet these tests – www.steelbenchmarker.com.

Please consider these SteelBenchmarker™ characteristics and other strengths:

• Most wide-ranging list of benchmark prices in the industry including several products and steel scrap for the USA (not available elsewhere).
• Over 750 registered price data providers, including steel buyers, sellers and users.
• Inputs only from active participants in the physical steel market, i.e., mills, fabricators, traders, service centers and end users. Tied solely to the steel market.
• No inputs accepted from financial traders, hedge funds and other non-market participants.
• A large pool of price contributors that are equally weighted by a secure offsite computer. Eliminates the influence of any one contributor or market sector. Safety in numbers.

Regulatory Compliance

• Designed to meet the anti-trust tests of the Department of Justice, the Federal Trade Commission and the European Community Competition Laws. For legal counsel’s opinion please go to www.steelbenchmarker.com/files/SteelBenchmarkerOperationsManual.pdf.
• Data providers and price assessment inputs are confidential. Price providers input their assessment of the market; SteelBenchmarker™ does not seek transaction prices or any variation of the same. Use of these prices could raise issues with the FTC/DOJ, WSD believes.
• No direct communication between data providers and WSD. No advance knowledge.
• No attempt to obtain actual transaction data, or to weigh it, which WSD and its attorneys view as serious “red flags” when it comes to regulatory compliance. No editorial influence.