Weekly roundup of the relief for Dodd-Frank rulemaking, the new commodities data repository and a template for execution agreements
This week the Commodity Futures Trading Commission (CFTC) voted to delay implementation of some self-executing elements of the derivative rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) – a move that wasn’t surprising, but triggered a sigh of relief in the industry.
This move, however, does not mean that the regulators and the industry at large are slowing down industry reform and related initiatives.
On Thursday, the CFTC and US Securities and Exchange Commission (SEC) held another roundtable to discuss the proposed definitions under Title VII of the Dodd-Frank Act including the definition of ‘dealer’ and ‘major participant’.
The regulators have published a statement (via oral speech) to clarify the proposed order for exemptive relief. In short, some of the rules will still come into play come in July though these are minor compared to those rules that now have the December 31st 2011 deadline.
Some legislators previously revealed their lack of confidence in the July 16th 2011 deadline by advancing a Bill (H.R. 1573) to extend the deadline by 18 months to December 31st 2012. However, this move was generally construed by most to indicate that the regulators are eager to get the rules right rather than rush the rulemaking process.
The regulators have six months to continue the rulemaking process but the market participants still must figure out what lies ahead for them in terms of the implementation of new rules. Also, questions of regulatory harmonisation (or regulatory arbitrage) as well as the extraterritoriality of the Dodd-Frank Act remain unanswered.
Derivsource has a podcast “Dodd-Frank Deadline – A Look Ahead” where three leading industry experts discuss the specific topic this week of Dodd-Frank implementation and give some valuable insight into these issues. Listen here.
Meanwhile, the industry associations continue to progress on planned initiatives to support regulatory reform and the improvement of the transparency and safety of the derivatives markets post crisis with two major announcements this week.
Firstly, the International Swaps and Derivatives Association (ISDA) announced it has selected the Depository Trust & Clearing Corporation (DTCC) Deriv/SERV and EFETnet to work on the development of the Commodity Derivatives Trade Repository. Later in the week ISDA and the Futures Industry Association (FIA) jointly announced the publication of a cleared derivatives execution agreement, which can be used as a template for negotiating execution related agreements within counterparties in the cleared swaps markets.
These two announcements and the continuing push from regulators to proceed with the rulemaking process clearly show that the Dodd-Frank Act deadline extension does not mean the industry is taking its foot off the gas pedal. If anything, it is just allowing for more time for the journey.
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