April 3, 2014
I thank the Commission staff for holding this public roundtable to discuss issues concerning end-users and the Dodd-Frank Act.
I have consistently advocated for the protection of end-users from Dodd-Frank’s expansive regulatory reach.1 Similarly, members of Congress have attempted to clarify to the Commission that end-users should be exempted from Dodd-Frank’s swap provisions.2 Unfortunately, the Commission has failed to follow the express direction of Congress in promulgating its rules. As a result, end-users are getting caught up in the Commission’s rules or are spending too much time and resources to get the necessary reassurance from the Commission that they are entitled to the protection that Congress afforded them in Dodd-Frank.
Today’s roundtable will discuss three topics: 1) Commission regulation 1.35 concerning recordkeeping, 2) forward contracts with embedded volumetric optionality, and 3) the special entity de minimis threshold for swap dealing to government-owned electric utilities. These three topics are good examples of how the Commission has failed to consider the impact of its rules on end-users.
I remain optimistic that the Commission will work to address end-users’ concerns. I was pleased that the Commission staff issued revised relief a few weeks ago to exclude utility operations-related swaps from the calculation of the de minimis threshold.3 The relief was a step in the right direction to address the impact on certain utilities that are special entities. Today’s roundtable is another positive step in addressing end-users’ concerns. I hope that the Commission will revise its rules to better protect end-users as Congress envisioned.
1 Testimony of the Honorable Scott D. O’Malia Before the Subcommittee on General Farm Commodities and Risk Management House Committee on Agriculture, July 23, 2013, available at http://www.cftc.gov/PressRoom/SpeechesTestimony/opaomalia-28; Keynote Address by Commissioner Scott D. O’Malia, State of the Industry 2014 Conference, Commodity Markets Council, January 27, 2014, available at http://www.cftc.gov/PressRoom/SpeechesTestimony/opaomalia-32.
2 Letter from Senator Debbie Stabenow and Congressman Frank Lucas to CFTC Chairman Gary Gensler (March 29, 2012); Letter from Senators Christopher Dodd and Blanche Lincoln to Congressmen Barney Frank and Collin Peterson (June 30, 2010).
3 CFTC Letter No. 14-34, March 21, 2014, available at http://www.cftc.gov/ucm/groups/public/@lrlettergeneral/documents/letter/14-34.pdf.
Last Updated: April 3, 2014