The CFTC’s limited enforcement authority under the Volcker Rule provisions includes recordkeeping and reporting, as well as examination of those books and records. In addition, the CFTC could order violators of the proprietary trading prohibition to terminate the activity and dispose of their investment. The banking regulators, particularly the Federal Reserve, have broader enforcement authority under the Banking Holding Company Act. The Federal Reserve also has authority regarding the possible extension of the time period for conforming with the rules.
The banking regulators and the SEC proposed the joint rule in October, and the CFTC did so January 11. The reason for the CFTC’s delay was a matter of the capacity of the Commission to give the rule consideration. Over the past year, the CFTC has been working diligently to implement the Dodd-Frank Act. To date, the Commission has held 23 public meetings on Dodd-Frank rules, considered more than 50 proposals and finalized 25 rules.
As with all of our rules, the CFTC is working to implement the Volcker Rule in a thoughtful, balanced way – not against a clock. The Commission is specifically requesting comments from the public regarding the costs and benefits and economic effects of the proposed rule, and we will carefully consider all of the incoming comments.
In your January 6 invitation letter to me, you asked a number of questions associated with Volcker Rule implementation. The Commission’s rulemaking solicits public comment regarding the topics addressed in your letter.
In adopting the Volcker rule, Congress prohibited banking entities from proprietary trading, an activity that may put taxpayers at risk. At the same time, Congress permitted banking entities to engage in market making, among other activities. One of the challenges in finalizing a rule is achieving these dual objectives. It will be critical to hear from the public on how to best achieve Congress’ mandate. The public has been invited to comment on the CFTC’s proposal for 60 days, and I very much look forward to the substantial public input I anticipate we will receive on this rule.
Thank you, and I would be happy to take questions.