CFTC seeks public comment on Wall Street Reform rule-writing for derivatives market

CFTC seeks public comment on Wall Street Reform rule-writing for derivatives market

By Agri-Pulse Staff

© Copyright Agri-Pulse Communications, Inc.



Washington, Aug. 26 - The Commodity Futures Trading Commission (CFTC) published a Federal Register notice Thursday seeking public comments regarding what's needed in the rules to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law a month ago. Along with other reforms, the new law will regulate the over-the-counter (OTC) derivatives marketplace for the first time.

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The CFTC notice explains that “the views of interested parties may be considered in the pre-proposal process but will not be treated as official comments on specific proposed rule-makings. . . the Commission has made electronic mailboxes available for any submissions interested parties wish to make. Interested parties are advised that all submissions will be published on the Commission's Web site without review and without removal of the submitter's identifying information.”

The Commission will accept submissions on each rule-making topic until it publishes a proposed rule-making for that topic in the Federal Register. Current plans call for the CFTC to complete its proposed rules by the end of December. After that, the CFTC will accept official comments on the proposed rule-making until the close of each rule's official comment period, typically after 30, 60 or 90 days.

The Dodd-Frank Act authorizes the Commission to, among other things:

  • “Regulate OTC derivatives dealers by subjecting them to capital and margin requirements to lower risk in the financial system, by requiring them to meet robust business conduct standards to lower risk and promote market integrity, and by requiring them to meet record-keeping and reporting requirements so that regulators can police the markets.”

  • “Increase transparency in the derivatives marketplace by requiring standardized derivatives to be traded on regulated exchanges or swap execution facilities, instead of trading out of sight of the public.”

  • “Lower risk by moving standardized derivatives into central clearinghouses.”

The CFTC has identified 30 areas in the Dodd-Frank Act in which it consider that rule-making will be necessary and states that it “has received inquiries from interested persons wishing to submit their views on those areas” and that it “welcomes the views of all interested parties.”

The Commission has created e-mail addresses for 29 of the 30 rule-making areas to facilitate the acceptance of submissions from interested parties. In addition, the Commission has established a mailbox for general comments on the Commission's rule-makings under the Dodd-Frank Act that either do not fit into one of the issue areas or that cover more than one area.

To submit comments on any of the rule-writing areas, the public can go to: www.cftc.gov/LawRegulation/OTCDerivatives for information. For specifics on the rules issues and the e-mail addresses for submitting comments relating to each specific issue, go to: www.cftc.gov/ucm/groups/public/@lrfederalregister/documents/file/2010-21269a.pdf

For more on what's at stake in writing the new derivatives rules, Agri-Pulse subscribers can read comments from Prof. Michael Greenberger of the Maryland School of Law on page 9 of this week's newsletter.

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