CFTC May Delay Some Overseas Swap Rules

Change is part of a wave of last-minute postponements and exemptions by the agency.

The U.S. Commodity Futures Trading Commission may delay some Dodd-Frank Act overseas swaps rules for about six months, part of a wave of last-minute exemptions and postponements to ease transition to new regulations.

The derivatives regulator may put off compliance for overseas-based operations of banks including JPMorgan Chase & Co. and Goldman Sachs Group Inc. for some risk-management rules that begin to take effect at the end of the month, according to two people who asked not to be identified because the delay hasn’t been made public. The agency has already released more than 40 no-action letters postponing other Dodd-Frank rules, and officials have signaled that more are coming.

‘Teeth Out’

“Maybe four years from now someone will ask why they issued all these no-action letters taking all the teeth out of the law,” Jeffrey Harris, a Syracuse University finance professor and former CFTC chief economist, said in a Dec. 4 telephone interview. “There needs to be some method and mechanism to go back and revisit these once final rules are in place.”

Unanswered Questions

Between Oct. 26 and Nov. 29, the CFTC gave 10 banks, including JPMorgan, Goldman Sachs and Barclays Plc., delays in how quickly they must decide to accept or reject trades for clearing. The letters weren’t immediately posted on the CFTC’s website when they were released to banks. The rule was originally supposed to take effect Oct. 1; the banks now have until Jan. 1. Meanwhile, LCH received a delay on a related rule and won’t need to meet CFTC requirements until March 31.

Section Withdrawn

Last week, the CFTC withdrew the section of the document that was referenced by CME in the lawsuit. And the agency sought comment on CME’s proposed policy of having data on swaps at its clearinghouse routed to its own swap-data repository.

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