Remarks of Acting Chairman Mark P. Wetjen
Before the Derivatives, Securitization and Project Finance Committee of the DC Bar’s Corporation, Finance and Securities Law Section
Continuing the Work of Dodd-Frank Implementation
Despite the Commission having only two commissioners for most of this year, it has been a busy and productive time at the Commission as it continues to oversee implementation of Dodd-Frank.
In a little less than five months, the Commission and its staff have taken nearly 100 actions. Many of these are enforcement related, and some are related to budgetary or administrative issues, but the majority of the remaining actions are related to Dodd-Frank implementation in some way.
The focus of these actions has been largely on implementing the Commission’s trading mandate, addressing market structure issues related to risk controls and FCM risk management, coordinating with domestic and international regulators on cross-border policies and information sharing, and making adjustments to rules that especially impacted end-users.
The list of recent actions, which includes interim final rules, rule proposals, a concept release on automated trading, among others, have been issued in a deliberative and methodical way, and intentionally without haste or lack of notice to those whom they affect.
This activity, of course, comes on the heels of implementing over 65 final rules, orders and guidance documents to shape the rules of the road for the derivatives industry as Congress directed. I have been involved in shaping, and supported, over 55 of these rules, working collaboratively with my fellow commissioners—both Democrats and Republicans—in the process.
As a result of these past efforts, and a few efforts to come, I am confident that we will have workable rules to govern an industry that operates with greater risk controls, transparency, and oversight.
My commitment has been to approach implementation in a way that best achieves the objectives Congress laid out, and to ensure an orderly transition to the new market structure. I will now turn to a few specifics.
Perhaps the most significant implementation effort this year was overseeing compliance with the Commission’s swap-trading mandate. Presumably, this audience is aware of the process by which swaps become subject to that mandate.
The mandate itself presented a few novel and complex legal, policy, and infrastructure challenges when applied to swaps executed as part of a package transaction, as frequently occurs in markets today. Accordingly, the agency took steps to ensure these transactions are treated appropriately as the marketplace moves toward greater SEF trading.
As of May 16, participants executing package transactions involving swaps subject to the trading mandate must do so on a SEF or DCM, and some preliminary data suggests that these efforts may actually be accelerating the move to both regulated and electronic trading.
This trend is encouraging and expected to continue. In fact, pursuant to the staff letter issued at the end of April, compliance for certain types of package transactions will be phased in over the summer and early fall.
The staff action builds on what I believe is the best approach to implementation: remain true to congressional intent to maximize transparency where appropriate, but work to ensure an orderly transition to what remains a historic market-structure shift for swaps.