CFTC Open Meeting, August 4, 2011
|Proposal Date||Final Rule Issue||Effective Date*|
|December 23, 2010||September 1, 2011||October 31, 2011|
|Final Rule Issue||Effective Date||Proposed Amendment|
|August 4, 2011||October 24, 2011||August 30, 2016|
|Final Rule Issue||Effective Date||No-action Deadline|
|August 10, 2011||December 31, 2011||December 31, 2012|
The Commodity Futures Trading Commission (CFTC) discussed the following Dodd-Frank related rules at an open meeting on August 4, 2011:
- Proposed rules on Customer Clearing Documentation and Timing of Acceptance for Clearing and Clearing Member Risk Management;
- Final rule on swap data repositories;
- Final rule on whistleblower provisions; and
- Final rule on agricultural swaps.
Meeting Summary and Links to Related Documents
Final rule on Swap Data Repositories Rule Passed 4-1, with Commissioner Sommers voting against.
Final rule on Whistleblower Provisions Rule Passed 4-1, with Commissioner Sommers voting against.
Final rule Agricultural Swaps Rule passed 5-0.
The final order of business was the setting of the commission's meeting schedule to consider additional Dodd-Frank-related rules. The commission approved the following meeting dates:
- September 8, 2011
- September 22, 2011 (This meeting was subsequently canceled to give the commission additional time to complete final rulemaking on position limits).
- October 4, 2011 (This meeting was subsequently canceled to give the commission additional time to complete final rulemaking on position limits).
- October 18, 2011
- November 1, 2011
- November 17, 2011
The vote was 3-2 in favor of the schedule, with Commissioners O'Malia and Sommers voting against the schedule. The two had previously expressed concern that the commission has not adequately prepared a comprehensive timeline for the finalization of rulemakings.
Chairman Gensler said that, while the exact order of rulemakings is not set, the tentative plan is to consider these rules next:
- Position Limits (September/October);
- financial resource requirements for derivatives clearing organizations (DCOs) (September/October);
- business conduct standards for swap dealers and major swap participants (October/November);
- The "transparency package," which includes:
- Also working with the SEC on swap definitions, which includes entity definitions, product definitions, and end-user exemptions.
Chairman Gary Gensler; whose statements include:
- Support for SDR rule, as it "implements congressional direction that the Commission and other regulators have direct access to the information maintained by SDRs," "requires SDRs to verify the accuracy and completeness of all of the swaps data they accept," and "will enhance transparency in the swaps market and help reduce systemic risk."
- Support for the CFTC Whistleblower Program, as it "encourages people to assist the CFTC in identifying, investigating and prosecuting potential violations of the Commodity Exchange Act."
- Support for agricultural swaps rule, stating "The public comments the CFTC received overwhelmingly supported treating agricultural swaps the same as other swaps brought under regulation by the Dodd-Frank Act. Agricultural producers, processors, merchants and handlers will benefit from the ability to use agricultural swaps to hedge their risk and from the transparency of the Dodd-Frank Act."
Commissioner Scott O'Malia, whose statements include:
- "I intend to support the Swap Data Repository, Agricultural Swaps, and Whistleblower rules, because they reach the right results. I oppose scheduling any further meetings until a comprehensive rulemaking implementation schedule is available for public comment."
- "Recognizing the importance of SDRs to the regulatory infrastructure of the Dodd-Frank Act, this final rulemaking establishes a robust – yet flexible – approach towards SDR registration."
- "...in rulemaking – as in much else in life – the ends do not always justify the means. As the Commission moves forward, I hope that the Commission begins to think more critically about the final rulemaking process, and whether that process best serves the American people."
- "In this economic environment, the Commission should be more conscious than ever in ensuring that the benefits of its rulemakings justify their costs. Cost-benefit analysis should be central to every Commission proposal, ..."
Commissioner Michael Dunn, whose statements include:
- Regarding SDRs, "I have grave concerns about this rule based solely on the fact that SDRs will not be required to have independent directors on their boards. To date, I have not received a sufficient answer from staff why public directors are necessary to mitigate conflicts of interest at DCOs, DCMs and SEFs, but are not needed at SDRs."
- Regarding whistleblower provisions, "I commend the rule writing team on fashioning a rule that provides ample protection to whistleblowers, who risk retaliation from their employers in order to do the right thing and bring critical information to the Commission."
Commissioner Jill Sommers, whose statements include:
- "I believe it is a mistake for us to begin the process without a plan to logically sequence our consideration of final rules along with a transparent implementation plan. As a result, I intend to vote against setting any additional meeting dates to consider final Dodd-Frank rules until sequencing and implementation plans are in place.
- Support for agricultural swaps rule, as "it makes sense to me to treat Ag Swaps like all other swaps."
- The rules require SDRs to establish automated systems for monitoring, screening and analyzing swap data, but we do not address the specific functions we expect SDRs to perform in this respect. The rules also fail to address how the Commission will handle the aggregation of data for surveillance and regulatory purposes, or how those duties will be divided between the Commission and SDRs.
- "I believe that this [whistleblower] rule does not sufficiently address the potential for thousands of new tips or complaints and how this new office will prepare for this outcome. I understand establishing this office is required by Dodd-Frank but I do not think we appropriately evaluated the increased costs to the agency of not choosing a less burdensome approach."
Commissioner Bart Chilton, whose statements include:
- Support for all three rules.
- Regarding the whistleblower rule: "This new provision will be an important tool in the Commissions’ enforcement arsenal. It can give needed incentives for folks—precisely the people we want to hear from, those who have an eye “from the inside” on essential information about nefarious schemes—to come forward, with needed protections."
- Regarding the SDR rule: Chilton refers to it as "letting the sun shine in" to dark markets for swaps trading.