Swaps Regulators Face Push for Delays

CFTC is being bombarded with requests to delay the Oct. 12 start date for Dodd-Frank derivatives regs.

The U.S. Commodity Futures Trading Commission, facing an Oct. 12 start date for a slate of derivatives rules, is being bombarded with requests from lobbying groups to ease or delay the Dodd-Frank Act measures.

Trade associations representing agribusiness firms Bunge Ltd. and Archer Daniels Midland Co. want to delay swap-dealer rules for non-banks. Banks and asset managers want regulators to finally say whether foreign exchange derivatives will be subject to the rules. And representatives of Ford Motor Credit Co. and Barclays Plc have met with CFTC staff to clarify that financial entities used for asset-backed securities are exempt.

Risk Management

Regulations that were set to take effect Oct. 1 about risk management standards between brokers and their clients have already been delayed after a request from the Futures Industry Association. A separate rule governing how quickly trades must be accepted or rejected for clearing prompted requests for relief from companies including LCH.Clearnet Group Ltd., the world’s largest interest rate swap clearinghouse.

‘One Contract’

“Under the current rules, just one contract could exceed the de minimis threshold for special entities and cause the counterparty to become a ‘swap dealer,’” the association wrote in an Aug. 14 letter. That designation will discourage trades with utilities for companies that do not want to become dealers, the group said in its letter.

‘Unintended Consequence’

“Failure to do so will have substantial and unintended consequence,” the groups said in a Sept. 28 letter. “If the Treasury Secretary will be unable to do so, we request that he issue an interim determination that FX products should be exempt from the swap definition.”

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