CFTC Open Meeting, December 20, 2011

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Gavel.png FINAL ORDER: On December 19, 2011, the CFTC issued a final order granting no-action relief until July 16, 2012 for certain Dodd-Frank Act related provisions.
Gavel.png FINAL RULES: Real-Time Public Reporting of Swap Transaction Data and Swap Data Recordkeeping and Reporting Requirements
Dodd-Frank Timeline, Order to Address Effective Date for Swap Regulations, CFTC
2nd Proposal Date Comment Deadline Extension Date
May 16, 2012 May 30, 2012 December 31, 2012
Dodd-Frank Timeline, Swap Data Recordkeeping and Reporting Requirements
Final Rule Issue Effective Date No-Action Relief, Part 43/45 No-Action Relief, Part 23
January 13, 2012 March 13, 2012 July 1, 2013 (IRS, CDS); Aug. 19 for other swaps June 30, 2013
Dodd-Frank Timeline, Real Time Public Reporting of Swap Transaction and Pricing Data
Final Rule Issue Effective Date Compliance Date
December 20, 2011 March 9, 2012 December 31, 2012

The Commodity Futures Trading Commission (CFTC) approved the following Dodd-Frank related rules at an open meeting on December 20, 2011:

Note: Originally scheduled as an agenda item for this meeting was a final rule on the effective date for swap regulation. On December 19, 2011, the rule was instead released as a final order, not requiring commission approval. For more information, click HERE.

Archived webcast:

Meeting Summary and Links to Related Documents

Both rulemakings passed with unanimous consent. See commissioners' statements below.

Speakers

Chairman Gary Gensler; whose statements include:

  • Gensler begins with a recap of 2011 rulemakings, including a list of finalized rules.
  • Support for the reporting and recordkeeping rule, as it "will ensure that complete, timely, and accurate data on all swaps is available to the Commodity Futures Trading Commission and other regulators."
  • Support for the real-time public reporting rule, as it "will give the public critical information on the pricing of transactions – similar to what has been working for decades in the securities and futures markets."

Commissioner Jill Sommers, whose statements include:

  • "I supported the data recordkeeping and reporting requirements proposed rules last November, and I intend to vote for the final rules today."
  • "I did not vote for the real-time reporting proposed rules last December. Among my concerns were differences between our proposed rules and the SEC’s proposed rules, the block trade provisions, and the 15 minute time delay for reporting block trades. I am pleased that we will be re-proposing the block provisions, and that we have substantially revised the time delay provisions."
  • "I intend to vote for the real-time reporting rules but do have a number of questions for the team. I would like to hear about our cooperation and coordination with domestic and international regulators and whether we expect there to be any inconsistencies; how the timing of reporting requirements will work in the context of transactions that are executed and confirmed between parties in time zones half-way around the world; and whether we have any analysis that suggests the time delays we are setting in these final rules are the correct time delays."
  • Sommers concludes with a concern about the use of the term "economically equivalent swaps" in the rulemakings without any strict definition of the term. She would like to see a specific definition included in rulemakings in order to provide clarity.

Commissioner Bart Chilton, whose statements include:


Commissioner Scott O'Malia, whose statements include:

  • "I remain concerned by some of the complexity, which is amplified by the fact that several key definitions have yet to be finalized and that re-proposals are waiting in the wings to fill gaps. However, I believe it is an appropriate time to put these rules out in order to permit the technology build-outs to begin on both sides of the market."
  • "The cost-benefit analyses of both rules identify that each rule will impose costs of more than $100 million on the American economy, thus making each rule a major rule. Mr. Chairman, this brings the current total of major rules promulgated by the Commission to seven, which means that just this handful of Dodd-Frank rules may have a minimum impact on the American economy of at least $700 million."
  • O'Malia's support for the swap data reporting and recordkeeping rule identifies three positive changes from the proposed rule: the elimination of redundant reporting, staggered reporting timelines depending on the asset class and counterparty, and that the final rule "now leaves certain technical decisions to the market."
  • O'Malia supports the real-time reporting rule, saying that, although he was skeptical of the rule when first proposed, the final rule addresses concerns raised by commenters.

Commissioner Mark Wetjen, whose statements include:

  • "Congress itself recognized that post-trade transparency, though essential, could impair market liquidity in some circumstances and instructed that our final reporting rules account for this risk. We are therefore faced with potentially conflicting objectives. Congress directed us “to make swap transaction and pricing data available to the public,” but it also directed that we protect the anonymity of counterparties and avoid reporting requirements and timelines that diminish liquidity or adversely affect pricing."
  • "I am pleased that the regulations were revised to differentiate between market participants and to further differentiate between asset classes, with important anonymity protections for swaps in certain physical commodities."

References

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