Eleven financial trade associations including the FIA have urged the Commodity Futures Trading Commission and the Securities and Exchange Commission to use their discretion in setting the effective dates for the new derivatives regulations mandated by the Dodd-Frank Act. In a letter submitted to the two agencies on Dec. 7, the associations said participants in derivatives markets need sufficient time to do the work necessary to comply with the new clearing, execution and reporting requirements. They said they are concerned that “market participants will be asked to do too much in too short a time” and warned that some participants may simply stop trading if they cannot comply in time, leading to reduced liquidity and increased risks. The associations therefore urged regulators to take into account the “practical realities” facing market participants and to phase in the application of new regulatory requirements over “a reasonable period of time” determined through discussions with market participants.
The 11 associations also urged the two agencies to adjust the rulemaking process so that the definitions of swap dealers and major swap participants come before the requirements that depend on those definitions. In their letter they noted that the CFTC has proposed rules that would apply to swap dealers and major swap participants before the terms have been addressed, and said this makes it difficult for many firms to know whether they should submit comments on particular rules. The associations therefore recommended extending the deadlines for commenting on proposed rules so that they are at least no earlier than the deadlines for commenting on the proposed definitions.
“We are committed to working with the SEC and CFTC to develop and implement the rules mandated by Dodd-Frank and we strongly support completion of these efforts in a prompt and timely fashion,” said the 11 associations. “We urge the Commissions to use their discretion to propose, adopt and implement rules in a sequence that will achieve these important goals.”
The 11 associations are: American Bankers Association, ABA Securities Association, The Clearing House Association, Financial Services Forum, Financial Services Roundtable, Futures Industry Association, Institute of International Bankers, International Swaps and Derivatives Association, International Swaps and Derivatives Association, Investment Company Institute, Managed Funds Association, and Securities Industry and Financial Markets Association.