Representatives of the private sector seldom complain that a government agency is getting things done too quickly but, in a Dec. 7 letter, a group of 11 trade associations representing derivatives market participants urged the CFTC and SEC to slow down and use more discretion in the promulgating and implementing of rules required by Dodd-Frank. While some issues included registration requirements and clearinghouses, time constrictions on firms were the biggest concern.
The group effectively asked the regulators to slow down so that firms have time to first comment on rules and to later implement them.
They say it is important for those writing the rules to “develop those rules through a process that is deliberative, gives all affected parties a reasonable opportunity to comment (and have their comments be given thoughtful consideration) and implements those rules in a manner that gives market participants sufficient time to do the work necessary to comply with new requirements.”
John Damgard, president of the Futures Industry Association, says, "It is better to get it done right than to get it done fast. I just want more time for people to reflect on the proposed regulations so we can comment with some sense of confidence."
He noted that many of his members and members of the other agencies who signed the letter are banks, and banking regulations require key people to take at least two months' vacation. Many people were out during the holidays, making it more difficult for banks to work through the rule proposals.
The group cites definitions as another example of their concerns. On Nov. 10, the CFTC approved issuance of proposed rules on topics including registration of swap dealers and major swap participants. However, definitions for swap dealers and major swap participants were not finalized until Dec. 1.
Additionally, they expressed concerns over the implementation time-frame for the new rules, saying that if regulators require too much change in too short of a time, it “increases the likelihood that market participants will be unable to comply. Their only alternative would be to stop entering into the transactions for which compliance is not immediately possible, thus leaving segments of the market with diminished or possibly no liquidity.”