Hitting the ground running just hours after President Obama signed the Wall Street reform bill into law (see related story), the Commodity Futures Trading Commission (CFTC) on Wednesday released a list of 30 areas where it plans to implement new regulations.
The CFTC said some of the areas within the Wall Street Reform and Consumer Protection Act will require only one rule, while others may require more. The Commission is required to complete these rules generally within a year (360 days), though some are required to be completed within three, six or nine months.
"The CFTC, working along with the SEC [Securities and Exchange Commission] and other regulators, will have a full and busy rule-writing agenda over the coming year," CFTC Chairman Gary Gensler said. "The financial reform bill presents new responsibilities and authorities for the agency. The Commission looks forward to taking on these new responsibilities to lower risk, promote transparency and protect the American public."
The rule-writing areas have been divided into eight groups: Comprehensive Regulation of Swap Dealers & Major Swap Participants; Clearing; Trading; Data; Particular Products; Enforcement; Position Limits; and Other Titles.
At the bill's signing, Obama said the new law "will finally bring transparency to the kinds of complex, risky transactions that helped trigger the financial crisis," such as derivatives. The law will bring the over-the-counter (OTC) derivatives market under the oversight of the federal government. OTC transactions will now be traded on regulated exchanges much like stock, and be cleared in clearinghouses in order to limit excessive speculation in markets.
However, it grants a narrowly crafted clearing exemption for large commercial traders that use derivatives to hedge the risk associated with trading of physical products or end-users that use derivatives to legitimately hedge their commercial risk rather than for speculative purposes. The exemption would apply to a broad array of commodities, including oil, natural gas, electricity and coal.
"We have begun preparing for the task of writing rules for the swaps marketplace by identifying 30 topic areas where we have determined rule-writing to be necessary," Gensler added. "Teams of staff within the agency have been assigned to each rule-writing area and will see the process through, from analyzing the statute's requirements, to broad consultation, to recommending proposed rulemakings to publishing final rules."
In the first category, Comprehensive Regulation of Swap Dealers & Major Swap Participants, CFTC plans rules for:
In the Clearing category, rulemakings are planned for:
The Trading category rulemakings are to include:
For Data, rulemakings are being considered for:
Particular Products rulemakings would include:
Enforcement rulemakings is to be reviewed for:
Under Position Limits, rulemakings will be considered for:
Other Titles rulemakings are to include:
The Commission said it is requesting input from the public on each of the rule-writing areas. Instructions for submitting views will be available on the individual rule-writing pages on the CFTC's website.
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