October 1, 2010
Today we begin the first steps of implementing the Dodd Frank Act - this country's most significant financial reform bill during my government service. While Congress worked for nearly two years crafting this legislation, they have charged us with implementing it in 360 days. For an agency the size of the CFTC, with very limited fiscal and human resources at its disposal, this will be a Herculean task.
Under the leadership of Chairman Gensler, almost a third of the CFTC staff has been working in thirty areas to develop the rules necessary to implement this legislation. We will be holding a series of public meetings this fall to consider rules in an effort to meet the timeline mandated by Congress.
Congress has worked hard, our staff is working hard and now it is the time for the public to go to work. In most cases we will be adopting proposed regulations. There will be a period of time for the public to comment on these proposals and then we will adopt final regulations taking the public’s comments into account.
If we are to get it right, it is imperative that we have a firm understanding of how the regulations created will impact the markets we regulate and those who use them. It is the role of the public to help us understand that impact. Your input begins now. Please take time to review and comment on these proposed rules to ensure that we succeed together.
Due to the Congressionally mandated deadlines, comment periods may be much shorter than what we might desire and extensions on comment periods may not be feasible. It is therefore crucial that those desiring to have input into this process, do so as soon as possible. Your comments are important in shaping the final outcome of the regulation.
As a Commissioner I intend to be liberal in letting proposed regulations be published. This includes proposals I may not entirely agree with. I intend to keep an open mind and take into consideration the public’s comments when making a decision on a final rule.
As staff works to prepare these proposed rules, I would ask them to keep two concepts in mind.
First, I believe that the principle based regulatory regime the Commission currently adheres to works well. It is no coincidence that with the advent of principles based regulation, the markets we oversee experienced a new wave of innovation and explosive growth due in no small part to the nimbleness of the CFTC. To the extent possible, I will ask that staff continue to follow our principles based regime and forego prescriptive rules that mandate a one size fits all approach.
Second, I also believe that there are several approaches this agency can take to implement Dodd-Frank and still follow the intentions of its drafters. I would ask the staff to present alternatives in proposed regulations that would allow the public to comment on more than just one solution and allow the Commissioners to have choices in the final rules adequately considered by the public.
I would be remiss if I did not mention one other externality that will have a major impact on this rule making process - adequate funding of the CFTC is essential to fulfill the mandates of Congress. During the debate over this legislation, the CFTC was asked to provide an estimate of the cost of implementation of various provisions of the bill. This estimate was based on being funded at current requested level for FY 2011 with additional resources to reflect the burdens imposed by the new law. Without full funding it will be impossible to meet all of the new law’s mandates and continue to fulfill our duties under the current law.
This puts the Commission in the position of choosing what parts of Dodd-Frank we actually have the resources to implement and whether we can do so while continuing to fulfill the core mission of the agency. I would ask that staff provide an estimate of the cost of each proposed regulations and an analysis detailing whether the CFTC can delegate duties to SROs to fulfill the mandates of Congress. Further, I would ask that staff, working in concert with the Chairman, provide the Commissioners with a list prioritizing regulations base upon available funding. It is also important that if the implementation of Dodd-Frank means that certain services the CFTC provides will no longer be provided, those service are made public.
Finally, I would ask that the staff begin to determine what rules and regulations the CFTC can rescind as a result of the adoption of these new rules and I would encourage future CFTC Commissions to review these new Dodd-Frank rules within three years of enactment to determine if they are doing what they were designed to do.
I want to thank the Chairman for his leadership and the hard work of the dedicated employees of the CFTC in preparing these and future proposals.
Last Updated: January 18, 2011