The Commodity Futures Trading Commission (CFTC) met to discuss rules related to swaps compliance and swap block trades today, Feb. 23. In the 24th meeting to discuss Dodd-Frank rules, the Commission took up one final rule and one proposed rule.
The final rule discussed dealt with recordkeeping, reporting and compliance rules within a swaps office, particularly the role of a chief compliance officer and required firewalls between research and trading arms of a company. Once again, issue was taken that the definition of “swap” had not been finalized and therefore many of these rules could not be fully implemented until that takes place. Commissioner Bart Chilton particularly took exception to this as it relates to the delay of implementing position limits. Commissioners Scott O’Malia and Jill Sommers voted against the final rule.
The proposed rule looks at appropriate minimum block size for large notional off-facility swaps and block trades. Additionally, the rule sets forth provisions to protect the anonymity of the participants. Commissioners O’Malia and Sommers voted against the proposed rule.
In her opening statement, Sommers expressed frustration with the way the CFTC has handled Dodd-Frank rulemaking. “The rules should not only reflect input from the majority, but from the Commission as a whole and these rules do not do that. We consistently reject reasoned comments from industry professionals with little justification in our cost benefit analysis to support those rejections,” she says. “I have been hopeful over the past year that things would change when we started finalizing rules, and especially the rules that are so integral to the new regulatory framework, but things have not changed. I am no longer optimistic; I do not believe that these rules have a chance of withstanding the test of time, and instead believe that this Commission will be consumed over the next few years using our valuable resources to rewrite rules that we knew or should have known would not work when we issued them.”