July 14, 2011
I concur with the Commission’s decision to use its exemptive authority under section 4(c) of the Commodity Exchange Act (CEA) to provide temporary relief from certain provisions of the Dodd-Frank Act. This order will provide much needed legal certainty to the market, at least until December 31, 2011, while the Commission continues its efforts to adopt final rules under the Dodd-Frank Act. Whereas I support the Commission in providing legal certainty, albeit limited, I am disappointed in the lack of harmonization between our order and the exemptive relief that the Securities and Exchange Commission (S.E.C.) provided. I am also disappointed that the final order ignored a number of comments from market participants, those that have most at stake in each of the Commission’s decisions. I hope that this order does not foreshadow the direction of final rulemakings to come.
Lack of Harmonization
In general, the S.E.C.’s order provides exemptive relief until the relevant final rulemaking is implemented. The Commission’s order provides such relief only until December 31, 2011. I proposed an amendment that would have conformed the two orders that the Commission rejected. The S.E.C. is a full partner in many of our rulemakings; it only makes sense to develop identical relief policies. The C.F.T.C.’s sunset provision is based on an arbitrary date and cuts short the very legal certainty that this order purports to provide. Moreover, participants from every aspect of our market – including investor advocates, a designated contract market and derivatives clearing organization, a potential swap execution facility, and multiple trade associations representing intermediaries – commented that the December 31, 2011, expiration date is unnecessary. In contrast, only one commenter supported the expiration date.
Comments from Market Participants
In addition to not heeding market participants with respect to the expiration date, the Commission has also not addressed the public’s requests for an implementation plan. I have repeatedly asked the Commission to set forth an implementation plan for public notice and comment. S.E.C. Chairman Shapiro indicated, in her prepared remarks before the House Financial Services Committee, that the S.E.C. is working on an implementation plan that will include opportunity for public comment. This Commission has already begun voting on final rules, but we have yet to see a proposed implementation plan.
Market participants bear the burden of implementing the multitude of reforms that the Commission is proposing. We cannot pretend that Dodd-Frank has any chance of meeting its goals if we do not work with the public to implement the regulatory requirements.
The Commission is currently planning to meet on August 4th to consider several final rules. I strongly urge the Commission to put forward an implementation plan for public comment during the month of August. This provides a perfect opportunity to receive comment on rule order and implementation, without delaying the Commission schedule this fall. If we wait until September, we will only have ourselves to blame.
Last Updated: July 14, 2011