CFTC swaps rules inconsistent: O’Malia

Shortcuts and inconsistent outcomes...

Deadlines Looming

O’Malia said he is frustrated that rules are being adjusted after they have been approved and with deadlines looming. “If that is what has transpired, I can assure you this is not good government,” he said.

The CFTC has approved two databases, DTCC Data Repository LLC and ICE Trade Vault LLC, to collect information on interest- rate, credit, energy and other swaps to improve access for the public and regulators.

There are three or four additional applications to become swap data repositories, CFTC Chairman Gary Gensler said in a telephone interview yesterday.

The agency has also published a vague set of guidelines for the international scope of its rules that applied “unprecedented regulatory reach” and also “trample on foreign regulatory authority,” O’Malia said.

The CFTC’s June proposal could lead to conflicts between regulators, according to letters submitted to the agency by overseas regulators. Letters were sent by the U.K.’s Financial Services Authority, European Commission, European Securities and Markets Authority, Financial Services Agency in Japan, the Bank of Japan, Bank of France and Swiss Financial Market Supervisory Authority.

The Hong Kong Monetary Authority, Monetary Authority of Singapore and the Comissao de Valores Mobiliarios, Brazil’s national securities regulator also submitted letters.

Confused Objective

“This rule couldn’t do more to confuse the objective of coordinated global oversight,” O’Malia said. The CFTC should re-draft the regulation and release it as a formal rule proposal instead of interpretive guidance, he said.

Bart Chilton, one of three Democrats at the CFTC, said the agency should quickly complete regulations for governing conflicts-of-interest at clearinghouses and trading platforms.

“The time has come, and we need to get a final rule out there that does what I’ve been talking about: make sure that banks don’t put their own interests in front of their customers,” Chilton said in a remarks prepared for delivery at the Hard Assets Investment Conference in Chicago.

Bloomberg News

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