Scott OMalia, a commissioner of the Commodity Futures Trading Commission, said Tuesday that the commissions cost/benefit analysis of OTC derivatives reforms is wanting, and that we havent done a good job on the timetable of implementing the reforms.
In a speech at the ISDA North America Conference in New York, OMalia conceded that the CFTC still has a lot of work to do to implement all the reforms it is charged with carrying out under Dodd-Frank. The commission is in charge of implementing new swaps rules, while the Securities and Exchange Commission, Federal Reserve and other regulators must implement other reforms under the act.
OMalias comments follow the announcement last week by CFTC Chairman Gary Gensler that some rules for derivatives would not be finalized until next year far past the deadline set by Dodd-Frank. OMalia said some rules may be determined as late as the third quarter of 2012. The commission has set four rules and is still working on another 30, he said.
At the conference, ISDA Chairman Stephen OConnor said regulators are spending too much time making rules that don’t do anything to reduce risk.
Conrad Volstad, CEO of ISDA, said the association would analyze the cost versus the benefit of derivatives reforms in the coming weeks. The commissions own cost/benefit analysis, OMalia conceded, didnt include a single dollar amount.
The commissioner, however, said that while the CFTC has a lot of work left to do, it has made significant headway in developing the new derivatives rule set. In particular, it has worked with Asian and European regulators to ensure it is not overreaching on the reforms and so their rules match with ours. EMIR and MiFID, for instance, look similar to our rules, but the devil is in the details.
A key concern for domestic and international market participants has been the potential extraterritorial nature of Dodd-Frank one CFTC proposal, for example, would have European banks register with US regulators as swap dealers just because they have American clients.
(CG)