June 14, 2011
Good morning. This meeting will come to order. This is a public meeting of the Commodity Futures Trading Commission (CFTC) to consider issuance of a proposed order to granting exemptive relief from certain requirements of the Commodity Exchange Act (CEA), as amended by the Dodd-Frank Act, that become effective on July 16, 2011.
In addition, the Commission will vote to schedule future Commission meetings in July and August to consider the issuance of final rulemakings under the Dodd-Frank Act.
Before we hear from the staff, I’d like to thank Commissioners Mike Dunn, Jill Sommers, Bart Chilton and Scott O’Malia for all their thoughtful work to implement the Dodd-Frank Act. Commissioner Chilton could not be with us today because he is speaking at the European Commission Bureau of European Policy Advisors.
I also want to thank the hardworking staff of the CFTC – and specifically Dan Berkovitz, Terry Arbit, Harold Hardman and Carlene Kim – for preparing the recommendation that we will hear today.
I’d like to welcome members of the public, market participants and members of the media to today’s meeting, as well as welcome those listening to the meeting on the phone or watching the live webcast.
The proposed order, as well as a fact sheet and “Questions and Answers” document, will be posted on our website shortly.
I intend to support the proposed order regarding the effective dates of certain Dodd-Frank Act provisions.
The Dodd-Frank Act has a deadline of 360 days after enactment for completion of the bulk of our rulemakings – July 16, 2011. Both the Dodd-Frank Act and the Commodity Exchange Act (CEA) give the CFTC the flexibility and authority to address the issues relating to the effective dates of Title VII. We have coordinated closely with the SEC on these issues.
Section 754 of the Dodd-Frank Act states that Subtitle A of Title VII – the Subtitle that provides for the regulation of swaps – “shall take effect on the later of 360 days after the date of the enactment of this subtitle or, to the extent a provision of this subtitle requires a rulemaking, not less than 60 days after publication of the final rule or regulation implementing such provisions of this subtitle.”
Thus, those provisions that require rulemakings will not go into effect until the CFTC finalizes the respective rules. This is a substantial portion of the derivatives provisions under Dodd-Frank. Furthermore, they will only go into effect based on the phased implementation dates included in the final rules. Today we are releasing a list of the provisions of the swaps subtitle that require rulemakings.
There are other provisions of Title VII that do not require rulemaking and will take effect on July 16. The proposed order that we are considering today would provide relief until December 31, 2011, or when the definitional rulemakings become effective, whichever is sooner, from certain provisions that would otherwise apply to swaps or swap dealers on July 16. This includes provisions that do not directly rely on a rule to be promulgated, but do refer to terms that must be further defined by the CFTC and SEC, such as “swap” and “swap dealer.”
The proposed order also would provide relief through no later than December 31, 2011, from certain CEA requirements that may result from the repeal, effective on July 16, 2011, of some of sections 2(d), 2(e), 2(g), 2(h) and 5d.
There have been suggestions to delay implementation of the derivatives reforms included in the Dodd-Frank Act. That is not what today’s proposed order is. Instead, it provides the time necessary for the Commission to complete the rulemaking process to implement the Dodd-Frank Act.
Some might ask: why six months? Six months will provide the Commission with the opportunity to re-examine the status of final rulemaking in light of the changed regulatory landscape at the time. It would allow us, if appropriate at the time, to tailor relief from certain provisions of the Dodd-Frank Act at the end of the year.
It is important to note, however, that until the CFTC completes its rule-writing process and implements and enforces those new rules, the public remains unprotected.
The proposed order will be open for public comment for 14 days after it is published in the Federal Register so that we can receive and consider comments and finalize an order before the July 16, 2011, deadline.
Before we hear from the staff on the rulemakings that we will consider today, I will recognize my fellow Commissioners for their opening statements.
Last Updated: June 14, 2011