Dodd-Frank swap rules delayed as CFTC eases transition

Delays intended to 'smooth the transition'

Unanswered Questions

The CFTC has also used the letter process to resolve policy questions that were unanswered in final regulations. In February, when the agency completed rules requiring funds to register by the end of the year, it said it could not determine if the requirements had to be met by so-called family offices that manage investments sometimes tied to commodities. The agency said Feb. 24 that it needed to develop a “comprehensive view” of family offices before granting an exemption.

On Nov. 29, the CFTC released a four-page letter exempting the family offices after dozens of letters from law firms including Skadden, Arps, Slate, Meagher & Flom LLP and the Private Investor Coalition Inc., a lobbying group of family offices. The coalition urged the exemption on behalf of 65 such offices. Instead of a new analysis of the offices, the CFTC relied on conclusions drawn by the SEC, which issued an exemption.

“Placing both agencies on equal footing with respect to the application of investor protections relevant to this issue will facilitate compliance with both regulatory regimes,” Gary Barnett, the CFTC’s director of the division of swap dealer and intermediary oversight, said in the no-action letter.

Guidance Lawsuit

The agency’s reliance on guidance documents was also at the center of a lawsuit filed and later withdrawn by CME against the CFTC. The CME alleged Nov. 8 that rules on data-reporting for cleared swaps would harm the company. The lawsuit cited a CFTC document answering frequently asked questions that was released subsequent to final rules.

Last week, the CFTC withdrew the section of the document that was referenced by CME in the lawsuit. And the agency sought comment on CME’s proposed policy of having data on swaps at its clearinghouse routed to its own swap-data repository.

Gensler told reporters Nov. 30 that the release on data- questions was a “staff document and not a commission document.”

The Depository Trust & Clearing Corp. faulted the agency Nov. 29 for amending its policies after spending more than a year writing rules for data reporting.

“The commission’s action late yesterday was an unexplained and an abrupt reversal of course,” New York-based DTCC, which operates a swap-database, said in a Nov. 29 statement asking the CFTC to change its decision. “This action is inconsistent with the commission’s previous actions, and will cause market participants to question the finality of any commission rule or interpretation.”

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