Dodd-Frank Act - Effective Date for Swap Regulation - Comment Letters

From MarketsReformWiki
Jump to: navigation, search
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

Comment letters addressing the effective date for swap regulation, the proposed implementation delay approved at the CFTC June 14, 2011 open meeting, and extended at the CFTC Open Meeting, May 10, 2012.

CME Group - May 30, 2012

Effective Date Amendments: Second Amendment to July 14, 2011, Order for Swap Regulation
May 30, 2012

In the letter, CME Group believes that the agricultural swaps provisions in the proposed order will "advance key Dodd-Frank goals, including promoting the exchange trading and clearing of swaps, increasing market transparency and reducing counterparty credit risk."

CME Group does request, however, clarify the "ambiguity" regarding the termination of relief contingent on the finalization of rulemakings, especially those on DCMs and SEFs.

Read comment letter.png

American Bankers Association - May 30, 2012

Effective Date Amendments: Second Amendment to July 14, 2011, Order for Swap Regulation
May 30, 2012

The American Bankers Association believes that "it is critical to extend or establish a compliance date for Section 2(e) that ensures it does not come into effect before insured depository institutions have received adequate guidance from the Commission on how to comply with this important provision." The concern is that banks may not have adequate information about some of the central components of loan underwriting and may lead to a disruption in the lending markets.

The letter also stresses the importance of gathering significant information about the costs and benefits of the temporary relief.

Read comment letter.png

Fifth Third Bank - May 30, 2012

Effective Date Amendments: Second Amendment to July 14, 2011, Order for Swap Regulation
May 30, 2012

In the letter, Fifth Third stresses the importance of the Eligible Contract Participant definition, and how there remain unanswered questions on how an ECP determination should be made. The bank requests that the commission propose guidance these questions be answered prior to the effective date.

The bank believes that compliance with Dodd-Frank provisions should not become mandatory until 60 days after guidance has been issued.

Read comment letter.png

MarketAxess - June 29, 2011

Proposed Order Regarding Effective Date for Swap Regulation
June 29, 2011

From the comment letter:

  • "...some factors are outside of the Commission’s control, including agency resources to a certain extent. Because of this, MarketAxess would prefer an order providing a temporary exemption that would last until such time as the CFTC has adopted and implemented its final rules."
  • "MarketAxess additionally recommends that the CFTC provide greater transparency by proposing for public comment a schedule of final rule implementation. The absence of this schedule has created uncertainty among market participants regarding the Commission's plan for phasing in its final rules and has thereby made it more difficult for market participants to make critical decisions regarding resource commitments and allocations."
Read comment letter.png

CME Group - July 1, 2011

Proposed Order Regarding Effective Date for Swap Regulation
July 1, 2011

From the comment letter:

"In addition to recommending that the exemptive relief expire on the sooner of July 16, 2012 or final, effective rules governing the provision at issue, we recommend that the Commission:

  • interpret Section 754 of Dodd-Frank to include Category 2 provisions, thereby treating Category 1 and 2 provisions the same under the Proposed Order;
  • provide 4(c) relief to Exempt Commercial Markets (“ECMs”) and Exempt Boards of Trade (“EBOTs”) that begin operating on or after July 16; and
  • confirm that additional exemptive relief is not needed for a DCM to list swaps for trading on or after July 16 so long as those products are regulated as futures products and market participants trading those products are regulated as futures market participants.
Read comment letter.png

Minneapolis Grain Exchange - July 1, 2011

Proposed Order Regarding Effective Date for Swap Regulation
July 1, 2011
From the Comment Letter:

"MGEX believes that the same reasoning behind the exemptive authority under section 4(c) of the Commodity Exchange Act (“CEA”) and section 712 of the Dodd-Frank Act can equally apply to the core principles for DCMs and DCOs as well as other provisions in which the Commission has put forth significant proposed rulemakings. Since it appears the Commission will not be publishing final rulemakings addressing the new and modified core principles for DCOs and DCMs prior to July 16, the CFTC should grant temporary relief from the requirements of the Dodd-Frank Act..."

Read comment letter.png

FIA/ISDA/SIFMA/ICI/IIB/ABA - July 1, 2011

Proposed Order Regarding Effective Date for Swap Regulation
July 1, 2011

The comment letter was submitted by the following associations:

  • American Bankers Association
  • ABA Securities Association
  • Futures Industry Association
  • Institute of International Bankers
  • International Swaps and Derivatives Association
  • Investment Company Institute
  • Securities Industry and Financial Markets Association

The comment letter makes several requests of the Commission, including the clarification of the categorization of provisions, the granting of relief for additional "self-effectuating" provisions, the adoption of "permanent exemptions for and contract, agreement or transaction proposed to be excluded from the definition of 'swaps,' and confirmation that retail forex swaps rules will not become effective until "the relevant rulemakings have been completed."

Read comment letter.png


Alternative Investment Management Association - July 1, 2011

Proposed Order Regarding Effective Date for Swap Regulation
July 1, 2011

From the comment letter:

  • "AIMA notes that the Release does not eliminate the uncertainty surrounding the requirement in amended section 5b(a) of the CEA that no person may clear “swaps” unless registered as a derivatives clearing organization (DCO), absent an applicable exemption."
  • "...it is not necessary to impose a ‘sunset clause’ of 31 December 2011 on the temporary relief it proposes."
  • "One area where we have significant concern regarding the rulemaking is in relation to the definition of ‘eligible contract participant’, which is referred to in certain of the Dodd-Frank Act provisions...An incorrect definition in this regard may have significant impacts on entities who must comply with rules that rely on this term and, therefore, we support exemptive relief from any rule that relies on the amended definition until further, and much more detailed consideration of the consequences of this change can be given."
Read comment letter.png

Working Group of Commercial Energy Firms - July 1, 2011

Proposed Order Regarding Effective Date for Swap Regulation
July 1, 2011

Summary of key points from the comment letter:

  • The Working Group supports the American Bar Association’s general arguments on the broad scope of authority available to the

CFTC to provide exemptive relief.

  • The Commission should use its authority to provide temporary relief for all entities transacting or operating under the existing provisions of CEA Section 2.
  • The Working Group requests clarification of the term "eligible contract participant" (ECP) during the period of exemption.
  • The Commission should announce whether it will extend the temporary order beyond December 31, 2011 "not later than November 1, 2011."
Read comment letter.png

State Street Corporation - June 28, 2011

Proposed Order Regarding Effective Date for Swap Regulation
June 28, 2011
From the comment letter:

"...while the text of the Release indicates that electronic trading facilities that operate, either currently or at any point during the Relief Period, under Section 2(d)(2) of the CEA would fall within the scope of the Order, footnote 39 could be interpreted to exclude such facilities, many of which currently operate platforms for the trading of interest rate, foreign currency and credit default swaps, from the scope of the Order.

"Thus, in order to resolve any potential ambiguity on this point, we respectfully request that the final Commission Order delete footnote 39 and make clear that an electronic trading facility that operates in compliance with the requirements of Sections 2(d)(2) and 2(e) of the CEA, as in effect prior to July 16, 2011, will be permitted to conduct business operations on a temporary basis during the Relief Period, without regard to whether the electronic trading facility is currently operating or instead commences operations at some point during the Relief Period."

Read comment letter.png

References

MarketsReformWiki Sponsors

RSM US LLP ADM Investor Services Cinnober Fidessa