The head of the Commodity Futures Trading Commission (CFTC) Tuesday confirmed that the final rule on restricting excessive speculation in the derivatives market will be on the agenda at next week’s meeting.
“Our next public meeting is scheduled…on Oct. 18. Next in the queue of staff recommendations are final rules related to clearinghouse core principles and position limits,” CFTC Chairman Gary Gensler told the Futures Industry Association in Chicago.
Gensler and Commissioner Bart Chilton clearly are on board to vote out the contentious final rule on position limits, but they will need the support of one of commissioners Jill Sommers, Scott O’Malia or Michael Dunn to pass the final rule.
The Commission’s proposed rule on hard position limits, which was approved in January, would limit the positions in futures and options contracts and economically equivalent swaps, other than bona fide hedge positions, that may be held by any entity in one of the 28 covered commodities, including crude oil, natural gas, heating oil and gasoline (see Daily GPI, Jan. 14). The CFTC reportedly has made some changes to the proposed rule since then.
In addition to voting on position limits, “we may consider staff recommendations providing further exemptive relief — consistent with the CFTC’s July 14th exemptive order — from certain provisions of Dodd-Frank’s Title VII requirements,” Gensler said. The July order provided a six-month extension of certain provisions of Title VII that were due to kick in in mid-July (see Daily GPI, July 15).
“Staff also is working very closely with Securities and Exchange Commission staff on three important joint rulemakings: those related to further defining entities and products as well as those related to reporting for investment advisors. This work is furthest along regarding entity definitions, including swap dealer, major swap participant and eligible contract participants…When the Commission considers the entity definition rule, we hope to also consider swap dealer registration rules,” Gensler said. Industry has been eagerly anticipating the entity definition rules.
Gensler said he doesn’t expect clearinghouses to submit swaps to the CFTC for mandatory clearing until either fall or winter. Under that time line, he said mandatory clearing would likely take effect toward the beginning of the second quarter of 2012. “Under recently proposed rules on implementation phasing, market participants would have an additional three, six or nine months to come into compliance with the clearing mandate, depending on a swap’s counterparties,” he said.
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