Concurrence Statement on the Amendment to the July 17, 2011 Exemptive Order
Commissioner Scott D. O’Malia
May 10, 2012
I concur in support of the Commission’s proposal to further modify the temporary exemptive relief provided in the Commission’s final order dated July 14, 2011 (the “July 14 Order”).1 In the July 14 Order, the Commission addressed concerns raised by industry regarding the applicability of various regulatory requirements to agreements, contracts and transactions after the effective date of Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). Today’s proposal would, among other things, extend the temporary exemptive relief from last extension date (i.e., July 16, 2012) to December 31, 2012.2
Based on the Chairman’s statements at a recent industry conference,3 I am supportive of the Commission’s proposed amendment to the July 14 Order to the delay application until the end of the year or until the implementation. However, I understand that unless the Commission focuses on its priorities, it seems unlikely we can meet this schedule.
Assuming that we complete all Dodd-Frank Act-related rules, orders and guidance by the end of 2012, I think this proposed amendment is appropriate and will provide the industry with needed comfort that the new swaps regulatory regime will not unduly disrupt current market practices.
Notwithstanding today’s proposed amendment, I believe that market participants continue to seek guidance regarding the timing of the Commission’s remaining rules. I frequently hear that the Commission’s rules are not sequenced in a manner that provides them with the certainty they need to make budgeting, investment and hiring decisions.
For that reason, I have included along with my statement a list of the remaining Commission rules, orders and guidance, as well as a timetable of when I understand the Commission expects to vote on those rules, orders and guidance. I have developed this list and timetable based on my knowledge and through my conversations with Commission staff. I strongly urge the public to provide comments on this list and timetable. I also ask that the public answer whether: (1) the Commission’s year-end deadline is achievable; and (2) the sequencing of these rules, orders and guidance is appropriate?
While I support the proposed amendment to the July 14 Order, I believe that the Commission’s accelerated rulemaking schedule will likely result in many unforeseen perils. For example, to address many of the problems arising out of the Commission’s final rulemaking for large trader reporting for physical commodity swaps, the Commission issued temporary and conditional relief and a guidebook. These actions were intended to act as a Band-Aid fixing what the Commission could have addressed in the final rulemaking if it were not rushed.
1 See Effective Date for Swap Regulation, 76 Fed. Reg. 42508 (issued and made effective by the Commission on July 14, 2011; published in the Federal Register on July 19, 2011).
2 The proposed amendment to the July 14 Order also seeks to: (1) remove references to the entities terms in Sections 712(d) of the Dodd-Frank Act, including “swap dealer,” “major swap participant,” and “eligible contract participant” in light of the final, joint CFTC-Securities and Exchange Commission rulemaking further defining those terms on April 18, 2012; (2) allow the clearing of agricultural swaps; and (3) removing any reference to the exempt commercial market and exempt board of trade grandfather relief previously issued by the Commission.
3 See Commodity Futures Trading Commission Chairman Gary Gensler, Remarks before International Swaps and Derivatives Association’s 27 Annual General Meeting (May 2, 2012), available at http://www.cftc.gov/PressRoom/SpeechesTestimony/opagensler-112.
Last Updated: November 14, 2012