CFTC Open Meeting, July 19, 2011

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Dodd-Frank Timeline, Customer Clearing Documentation and Timing of Acceptance for Clearing
Final Rule Issue Effective Date Compliance Date, FCMs, DCMs, DCOs Compliance Date, SEFs
April 9, 2012 October 1, 2012 October 1, 2012 TBA
Dodd-Frank Timeline, Clearing Member Risk Management
Final Rule Issue Effective Date Compliance Date, Rule 1.73 Compliance Extension, Bunched Orders
April 9, 2012 October 1, 2012 June 1, 2013 September 1, 2013
Dodd-Frank Timeline, Process for Review of Swaps for Mandatory Clearing
Final Rule Issue Effective Date Compliance Date
November 2, 2010 September 26, 2011 September 26, 2011
Dodd-Frank Timeline-Provisions Common to Registered Entities
Proposal Date Final Rule Issue Effective/Compliance Date
November 2, 2010 July 27, 2011 September 26, 2011
Dodd-Frank Timeline, Investment of Customer Funds
Final Rule Issue Effective Date Compliance Deadline
December 19, 2011 February 17, 2012 June 18, 2012

The Commodity Futures Trading Commission (CFTC) discussed the following Dodd-Frank related rules at an open meeting held on July 19, 2011:

The commission had originally planned to discuss and approve its final rulemaking on whistleblower provisions, but the rule was subsequently postponed to the August 4, 2011 open meeting.

Archived webcast:

Meeting Summary and Links to Related Documents

Customer Clearing Documentation proposal passed 3-2, with Commissioners Sommers and O'Malia voting against (see Commissioners's statements below).

Clearing Member Risk Management proposal passed 3-2, with Commissioners Sommers and O'Malia voting against (see Commissioners's statements below).

Final rule on Review of Swaps for Mandatory Clearing passed 5-0.

Final rule on Provisions Common to Registered Entities (Part 40) passed 5-0

Final rule on Removal of References to Credit Ratings passed 5-0.

Speakers

Chairman Gary Gensler; whose statements include:

  • "Though the [2008 Financial] crisis had many causes, it is clear that the swaps market played a central role. Swaps added leverage to the financial system with more risk being backed by less capital. They contributed, particularly through credit default swaps, to the bubble in the housing market and helped to accelerate the financial crisis. They contributed to a system where large financial institutions were thought to be not only too big to fail, but too interconnected to fail."
  • Support for customer clearing documentation proposal, as it will "foster bilateral clearing arrangements between customers and their futures commission merchants" and act as a re-proposal for a February rule regarding straight-through processing (STP);
  • Support for clearing member risk management provision; and
  • Support for all three final rulemakings.

Commissioner Scott O'Malia, whose statements include:

  • "I support the final rules as they are noncontroversial process rules. However, I have serious concerns with both proposed rules as they rely on weak statutory authority, poorly articulate a necessity for either rule and are neither justified nor required under the Dodd-Frank Act. Today’s draft rules regarding client documentation and clearing member risk standards were never mentioned previously during these months of intense rulemaking and seem to be fabricated from whole cloth. This is unacceptable."
  • "I have grown increasingly frustrated with the rulemaking process because there appears to be no specific plan or strategy for implementing these rules, nor do we appear to be following President Obama’s direction to ensure that the federal rulemaking process be done in the most transparent, responsible and accountable fashion."
  • "The failure to produce a final rule schedule and implementation plan the next time the Commission meets on August 4th will render public input irrelevant as the Commission barrels through with final rules this fall."
  • O'Malia reiterated his request for reforms to the rulemaking process to include a streamlined access to final and proposed rules.
  • O'Malia requested that the commission host a public roundtable to discuss the issues raised in the proposals.
  • "I would rather see the Commission dedicate resources towards developing real-time trade surveillance capabilities, rather than developing a redundant oversight function that will require additional resources we don’t possess."
  • O'Malia closed with a reiteration of his request that the commission publish an implementation schedule.

Commissioner Michael Dunn, whose statements include:

  • "I am concerned that the final rule regarding Part 40 is too prescriptive and does not adhere to our principle-based approach...I have stated my concern that budget constraints and the efforts of those who would delay, weaken, or eliminate Dodd-Frank would force us to be more prescriptive than we would otherwise be in promulgating our final rules."
  • "With all of the Commission’s new responsibilities under Dodd-Frank, this is not the time for us to make significant changes to regulations pertaining to the futures industry which functioned properly during the financial crisis. We need to focus our limited resources on regulations that will provide real safeguards to our financial service industry."

Commissioner Jill Sommers, whose statements include:

  • "As I have said many times, formulating and sharing with the public a thoughtful plan on how the Commission will logically sequence its consideration of final rules, along with a transparent implementation plan that will allow for a reasonable phased-in approach, is critical...we run the risk of unnecessarily increasing uncertainty among market participants by rolling out final rules in a piecemeal fashion, one meeting at a time."
  • Regarding the meeting's proposed rules, "I question whether our proposals recognize the complexity of the issues and the amount of work done on sensible industry-driven solutions. As I have said before, I would like to see this Commission finish the job of implementing the requirements of Dodd/Frank before we turn to these discretionary items."

Commissioner Bart Chilton was not in attendance. He voted yes (by proxy) to all rules and rule proposals.

References

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