The Commodity Futures Trading Commission granted JPMorgan Chase & Co., Barclays Plc and six other lenders a three-month delay to meet swaps-clearing rules, according to a person with knowledge of the decision.
The delay is intended to help banks comply with time limits that require them to accept trades in less than two minutes, said the person, who asked not to be identified because the discussions are private. Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc., Morgan Stanley and UBS AG also asked for and received the extension from the original Oct. 1 deadline, the person said.
Companies in the $639 trillion swaps market have requested and obtained grace periods to comply with rules that the CFTC is now implementing under the 2010 Dodd-Frank Act. Last month, Commissioner Scott O’Malia said the agency would issue 18 no- action letters and other guidelines granting temporary relief from regulations as the industry and the CFTC couldn’t meet the target dates.
The CFTC time limit of two minutes goes down to one minute 90 days after the clearing rule determination is published in the Federal Register.
Steve Adamske, a CFTC spokesman, said he couldn’t immediately comment. Scott Helfman, a spokesman for Citigroup, and Katherine Herring of Credit Suisse, declined to comment. Representatives of the other banks said they were unable to immediately comment.
The requested extensions ranged from three banks saying they could meet the requirement by Dec. 31 to others that said the median of all trades could be accepted or rejected within 90 seconds by the 90-day deadline after the Federal Register publication, according to a letter to Citigroup from Ananda Radhakrishnan, director of the CFTC’s division of clearing and risk, that was obtained by Bloomberg News.
“One of the firms stated it currently has over 70 percent of the market share for customer trades,” the letter said. The CFTC “believes that if the entity with the most volume is able to comply” by Dec. 31 “then acceptance or rejection within the same timeframe is technologically practicable for firms with lesser volume.”
Radhakrishnan gave the banks until Jan. 1, 2013 to accept trades within two minutes, according to the letter.
LCH.Clearnet Group Ltd., owner of the world’s largest interest-rate swap clearinghouse, was granted a six-month delay to upgrade its systems to accept trades in less than a minute, Bloomberg News reported earlier today.