The Commodity Futures Trading Commission is close to granting a delay on a rule set to take effect tomorrow affecting energy swaps clearing, potentially helping CME Group Inc. avoid customer defections, according to three people with knowledge of the matter.
The regulation concerns how crude oil, natural gas and other energy swaps cleared at CME Group and Intercontinental Exchange Inc. are tallied toward a new $8 billion threshold that the CFTC has set to determine whether a market participant should face dealer oversight. Both companies are trying to shift that activity to futures trades to avoid the threshold. While Intercontinental is ready, CME Group isn’t, said the people, who asked not to be identified because the discussions are private.
Under the Dodd-Frank Act, passed in 2010 to overhaul the financial services industry following the credit crisis, companies that are determined to be swaps dealers will face higher capital, collateral and trading standards, which could erode profits. The CFTC is deciding whether to grant an exemption for 60 days or until Dec. 31, one of the people said.
The CFTC is considering the delay as a temporary measure to ease the transition between swaps and futures, according to another person.
CFTC spokesman Steven Adamske and Intercontinental’s Brookly McLaughlin declined to comment. CME Group spokesman Damon Leavell didn’t immediately return a call seeking comment.
A group backed by commercial firms including BP Plc and Cargill Inc. has petitioned the CFTC to delay implementing the rules for non-bank dealers, according to a letter submitted to the agency Sept. 18 by the Washington-based Commodity Markets Council.