CFTC Open Meeting, January 13, 2011

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Dodd-Frank Timeline, Position Limits for Derivatives
Interim and Final Rule VACATED BY COURT ORDER Re-proposed Rule Issue Comment Deadline (reopened July 3, 2014)
November 18, 2011 September 28, 2012 November 5, 2013 August 4, 2014
Dodd-Frank Timeline, Swap Trading Relationship Documentation for Swap Dealers and Major Swap Participants
Proposal Date Comment Deadline Final Rule Issue
February 8, 2011 June 3, 2011 August 27, 2012

The Commodity Futures Trading Commission (CFTC) public meeting focused on the issuance of proposed rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act on the following topics:

  • the issuance of a proposed rulemaking regarding position limits for derivatives;
  • the issuance of a proposed rulemaking regarding swap trading relationship documentation requirements for swap dealers and major swap participants; and
  • the adoption of a final rule that addresses requirements for derivatives clearing organizations, designated contract markets and swap execution facilities regarding the mitigation of conflicts of interest. *This item was subsequently tabled until a future meeting.[1]

Archived webcast:

Meeting Summary

Topics of Discussion with CFTC Position Limits Team

  • Large trader positions and surveillance thereof
  • Hedge exemptions
  • Emergency liquidation procedures

Motion to issue proposed rule carries, 4-1 (Commissioner Sommers voted against)

Topics of Discussion with CFTC Swaps Documentation Team

  • Bilateral swaps agreements vs. Swaps clearing house
  • "Swap Dealers" and "Major Swap Participants"
  • Valuation disputes
  • Disputes should be relegated first to senior managers, and then to regulators
  • Valuation disputes at the core of AIG exposure
  • Counterparties must agree to consistent terms of valuation methodology, including provisions for deriving valuation off illiquid assets
  • "Systemically Important" entities as defined by Title II of Dodd-Frank

Motion to issue proposed rule carries 5-0

Related Documents

Position Limits for Derivatives

Read comment letters.png
Read proposed rule.png

Proposed Rule on Swap Trading Relationship Documentation for Swap Dealers and Major Swap Participants

Read comment letters.png
Read proposed rule.png

Speakers

Chairman Gary Gensler; whose statements include:

  • A commendation to Commissioner Dunn in honor of 25 years of service to the CFTC.
  • Support for both the position limits proposal and swaps documentation proposal.

Commissioner Michael V. Dunn, whose statements include:

  • Support for both the position limits proposal and swaps documentation proposal.
  • Commission must ascertain the extent to which position limits affect speculation and orderly market flow.
  • Concern for potential budget constraints of Commission if new responsibilities under Dodd-Frank are not accompanied by additional resources.

Commissioner Jill Sommers; whose statements include:

  • Support for swaps documentation proposal
  • Opposition to position limits proposal, citing:
  • Proposal is incomplete in its scope
  • Concern that position limits may drive business to other markets outside CFTC jurisdiction, thereby increasing systemic risk.

Commissioner Bart Chilton, present through a remote link, who supports both proposals

Commissioner Scott O’Malia; whose statements include:

  • Commission needs more data on swaps prior to supporting additional regulation

References

  1. Open Meeting on Ninth Series of Proposed Rules under the Dodd-Frank Act. CFTC. Retrieved on May 31, 2011.

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