Gensler: Dodd-Frank swaps rules to be finalized in 2012

The Dodd-Frank swaps deadline has moved again. CFTC Chairman Gary Gensler gave a revised timetable for Dodd-Frank rulemaking that ends in the first quarter of 2012. The Commission also approved proposals outlining phased implementation schedules for clearing and trade execution requirements, along with trading documentation and margin requirements.

In his opening remarks at an open meeting in Washington D.C., Gensler listed the rules he would like to consider in 2011, as well as those slated for the opening months of 2012. He also made provisions for the necessary extensions this December: “Much like we did on July 14, this fall we also will consider further exemptive relief from the application of Dodd-Frank’s Title VII requirements. I’ve already directed staff to draft recommendations, with the relief appropriately tailored — for instance, taking into account the possible completion of entity and product definition rules.”

The Dodd-Frank rules to be addressed in 2011 are as follows:

  • Clearinghouse Rules
  • Data Record-keeping and Reporting
  • End-User Exception
  • Entity Definitions/Registration
  • External Business Conduct
  • Internal Business Conduct (Duties, Recordkeeping and Chief Compliance Officers)
  • Position Limits
  • Product Definitions/Commodity Options
  • Real-Time Reporting
  • Segregation for Cleared Swaps
  • Trading – Designated Contract Markets and Foreign Boards of Trade

Gensler anticipated addressing the remainder in 2012:

  • Capital and Margin
  • Client Clearing Documentation and Risk Management
  • Conforming Rules
  • Disruptive Trading Practices
  • Governance and Conflict of Interest
  • Internal Business Conduct (Documentation)
  • Investment of Customer Funds
  • Swap Execution Facilities
  • Segregation for Uncleared Swaps
  • Straight-Through Trade Processing

In addition to this timeline, the Commission approved 4-1 proposed compliance implementation schedules for the clearing and trade execution requirements in Section 2(h) of the CEA, and Trading Documentation and Margining Requirements in 4s of the CEA. These proposal clarify what rules would have to be in place before these CEA provisions go into effect, as well as how quickly they will be implemented for each participant category. (Find more details here.)

Not everyone was pleased with the proposed schedules. Scott O’Malia, long an advocate of such a timeline, praised the spirit but expressed a fear that “that the market will find that these proposals raise more questions than they answer.” He specifically cited provisions in the rule stating that compliance schedules would be used only when the Commission believes phasing is necessary based on the considerations given in the rule. The rules also cover  a very narrow spectrum of the total rules proposed, and contain no specific dates.

Read more about this Dodd-Frank implementation schedule.
Creative Commons License photo credit: Elisabeth Voglsam

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