Commission Relief Allows CME Market Participants to Transition Trading Activity Under More Reasonable Timeline

Commissioner Scott D. O’Malia

October 12, 2012.

Today the Commission has issued relief to energy and agriculture commodities traders to allow them to transition to futures markets and provide relief until the end of the year from counting their positions in exempt and agricultural products in determining whether or not they qualify as a swap dealer. Despite coming at the 11th hour, I am supportive of providing this relief as broad new Dodd-Frank regulations come into effect today. This relief will allow market participants in the CME market to transition their trading activity to futures markets under a more reasonable timeline.  The fact that market participants are fleeing the Commission’s swap regulations is proof that the Commission has not developed clear and cost-effective rules.  I will work to ensure that there is a smooth transition for market participants. The Commission must proceed in a reasonable manner to accommodate this transition to the futures markets and continue to serve its fundamental role of hedging commercial risk.

By the end of the day Commission staff will have released 18 no-action letters and Q&As in an attempt to provide temporary relief from the compliance deadline and clarify inconsistent or vague regulations as they become effective.  While this is a step in the right direction, the Commission should never have gotten to the point where it was forced to issue such last-minute piecemeal relief.  Good government should take a measured, well-thought out approach to developing a new regulatory regime. Instead, the Commission has promulgated thousands of pages of rulemakings in isolation and then resorting to this flurry of hurried staff interpretations in order to provide some measure of temporary comfort to the market.  From the beginning, I have asked the Commission to publish a clear and specific rulemaking timeline and an implementation plan to avoid this ad-hoc process of temporary relief and interpretations.

Last Updated: October 15, 2012