The Commodity Futures Trading Commission (CFTC) is working "very closely" with international regulators to ensure that financial reforms that are implemented in the United States are consistent with those in foreign markets, said Chairman Gary Gensler.
"We have shared term sheets and memos on potential proposed rules with regulators in Europe and Asia and asked them to comment in particular on our clearing and reporting requirements. We also are looking into how to best incorporate the newest draft...standards for central counterparties into our rules," he said in a speech to the Institute of International Bankers in New York last Thursday.
The Dodd-Frank Wall Street Reform Act, which President Obama signed into law in July, gives U.S. regulators until July 15, 2011 to write the new regulations, and it provides for a minimum transition period of 60 days for entities to comply with the new rules (see Daily GPI, July 21). "For example, in many cases your banks will need [the] transition period to register as swap dealers for the first time. Further entities will need time to come into compliance with business conduct standards and real-time reporting requirements, just to name two examples," Gensler said.
So the earliest that real-time reporting requirements, and other new regulations, would come into effect would be in September 2011, according to Gensler.
The CFTC currently has jurisdiction over trading in the futures marketplace, which has a notional value of $33 trillion. Dodd-Frank requires the CFTC to regulate the physical commodity swaps market, which has a much larger notional value. The Office of the Comptroller of the Currency estimates that, as of the first quarter of 2010, swaps entered into by U.S. commercial banks had a notional value of $217 trillion. But others estimate that the market could be as large as $300 trillion in the United States alone, or roughly nine times the size of the futures markets.
Gensler said his agency will need additional staff to oversee both markets. Earlier this year the president requested $261 million for the CFTC for fiscal year (FY) 2011. This included $216 million and 745 full-time employees for pre-Dodd-Frank authorities and $45 million in funding to provide half of the staff needed to implement Dodd-Frank.
The House Appropriations Subcommittee, which has jurisdiction over the CFTC, matched the president's request. And the Senate Appropriations Subcommittee, which has jurisdiction over the CFTC, boosted the amount to $286 million for FY 2011, recognizing the heightened demands of the final bill, Gensler said.
"We hope our funding levels for the current fiscal year will be finalized when Congress returns after the election" for a lame-duck session, he said.
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