New rules designed to carry out the Dodd-Frank Wall Street Reform Act are expected to generate more than 200 registered swaps dealers and 20-30 new entities registered as swaps execution facilities or designated contract markets, while derivatives clearing organizations increase from 14 to about 20, Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC) said Thursday.
Outlining the CFTC’s multiple swat teams working on new regulations, Gensler pointed out that as of Sept. 16 there were 303 days left of the 365 allotted by Congress to complete implementation of the wide-ranging regulatory reform. The CFTC chairman spoke at a meeting of the International Swaps and Derivatives Association, noting that it was the first time a CFTC chairman had addressed the group on the subject of swaps regulation, since it was the first time the Commission’s jurisdiction included over-the-counter swaps.
The CFTC will be holding weekly public meetings through the fall to publish proposed rules with comment periods limited to 30 days, and “due to the tight statutory deadlines to complete the rules, it is not likely that we will extend public comment periods.”
Six CFTC teams are working on regulating swaps dealers. Those expected to register as dealers are global and regional banks currently known to offer swaps in the United States; affiliates created by the banks to comply with new regulations about divorcing their trading activities, numerous nonbank swap dealers currently offering commodity and other swaps and potential new market makers getting into the swaps business.
Five CFTC teams are working on regulating major swap participants. In addition to the 16 current futures exchanges, the Commission estimates approximately 20-30 new entities will register as swap execution facilities to handle all the transactions that will be driven to exchanges by the transparency requirements of the new law. Gensler noted that Congress was “very specific” that real-time reporting of transactions must be achieved as soon as technologically practicable.
Another six teams are focused on clearing operations and central clearing facilities. This will include determining which contracts will be subject to the mandatory clearing requirement.
Besides conferring with other U.S. regulators, the CFTC has been working with international regulators on conforming swaps oversight. Gensler commended the European Commission for a detailed proposal for regulation of the swaps market released Wednesday. “Each of our rule-writing teams will be referring to these new proposals as we seek consistency in our regulatory approaches.”
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