Public Statements & Remarks

Opening Statement, Public Meeting on Proposed Rules Under Dodd-Frank Act

Commissioner Michael V. Dunn

December 1, 2010

Thank you all for joining us today for this important meeting regarding the implementation of the Dodd-Frank Act. Today’s meeting will address proposed rules regarding:

  • Core principles and other requirements for designated contract markets;
  • General regulations for derivatives clearing organizations;
  • Information management requirements for derivatives clearing organizations;
  • Reporting, recordkeeping and daily trading records requirements for swap dealers and major swap participants; and
  • The definition of “swap dealer,” “security-based swap dealer,” “major swap participant” and “eligible contract participant.

I will support publishing these proposed rules in their current form, but I am concerned that the rules addressing DCM core principles, as currently drafted, may be too prescriptive. If this rule was before us today as a final rule, I would have reservations voting for its release based on my firm belief that the CFTC should remain a principles based regulator, and not a prescriptive regulator. However, after meeting with our staff, it is my understanding that many of the provisions of the proposed DCM core principles are actually already being followed by industry or have become best practices over time. In essence, my understanding is that this proposed rule simply codifies what is already being done. It is my understanding that many in the industry desire the establishment of a safe harbor that will ensure that they are in fact meeting the intent of the core principle. However, I do not know this to be true and will look to the public comments on this proposed rule to guide my decision making process in regard to the final rule. Comments indicating that we are indeed merely codifying the best practices already in use and a safe harbor is needed for legal certainty, will influence my vote on a final rule.

The proposed rules also provide an extension of time for CFTC staff to review applications. Given the present staffing level, this may be warranted. However, it does not allow the agency to be as responsive to industry developments as would be desirable of an efficient and effective regulator. I will be guided by the funding level of the agency, when making final decisions on these proposals.

I am also very interested in reviewing the public’s comments on our entities definitions. These definitions, along with the product definitions that will be discussed in a couple of weeks, will finally let everyone know where they stand vis-à-vis the Dodd-Frank Act. Based on the interest in these definitions I have seen to date, I expect this proposed rule to receive a significant level of comments. I would like to remind everyone that these are proposed definitions and that, with your help, we can write final definitions that work for everyone. I would like to note Mr. Chairman the difficulty of arriving at mutually acceptable definitions with other agencies, and I would like to commend you for your personal involvement in moving this process forward.

Mr. Chairman, I put a great deal of faith in the process we follow under the Administrative Procedure Act. Recent reports that the agency is receiving forged comment letters are cause for alarm. I have today asked the Inspector General to investigate these charges and have further asked the Office of the Secretariat to develop a procedure for verification of comment letters sent to this agency.

I would like to once again thank the staff at the CFTC for all their hard work.

Last Updated: December 1, 2010