The U.S. Commodity Futures Trading Commission should refrainfrom sanctioning so-called end-users of swaps for six months whilethe agency seeks to clarify its Dodd-Frank Act rules, CommissionerBart Chilton said today.

Commercial and energy companies deserve a more transparentrulemaking process that provides greater certainty, Chilton said incomments prepared for a telephone news conference to propose whathe called an End-User Bill of Rights.

“Dodd-Frank needs to be implemented and needs to be implementedquickly, but that does not mean it should be done so harshly,”Chilton said in a statement prepared for the news conference.“End-users and other market participants should have little doubtas to the status of their activities.”

Chilton, one of three Democrats on the five-member CFTC, said hewon't vote until Oct. 31 to approve enforcement action against anyend-user making an effort to comply with the rules being imposedunder Dodd-Frank, the 2010 regulatory overhaul.

Derivatives provisions of Dodd-Frank were enacted to giveregulators more oversight of the $639 trillion global swaps marketafter largely unregulated trades helped fuel the 2008 creditcrisis. The CFTC and Securities and Exchange Commission wereauthorized to write rules requiring that trade information bereported to so-called swap data repositories that function ascentral record-keepers.

The rules are failing to give regulators a full picture of theswaps market and wouldn't help them detect a loss similar toJPMorgan Chase & Co.'s London Whale trades, Scott O'Malia, aRepublican CFTC commissioner, said March 19. The information isn'tusable in its current form and has overwhelmed the CFTC's computersystems, O'Malia said. The CFTC has approved three databasesoperated by the Depository Trust and Clearing Corp., CME Group Inc.and Intercontinental Exchange Inc.

The CFTC has set an April 10 deadline for reporting ofinformation about trades involving end-users. Chilton called on theagency to give the firms a six-month delay for reporting historicalinformation.

Energy and commodity traders have pressed the CFTC to grant adelay in the reporting requirement, arguing that the rules areburdensome and the databases are still implementing theirprocedures.

“Even today, certain questions remain unanswered regardingtransactions that might qualify as swaps,” the Commercial EnergyWorking Group said through lawyers at Sutherland Asbill &Brennan LLP in a March 1 letter to the agency seeking a six-monthdelay.

Lobby groups representing Barclays Plc, JPMorgan Chase & Co.and Goldman Sachs Group Inc. have also urged that the CFTC delaythe reporting rules for their clients. In a March 28 letter to theCFTC, the International Swaps and Derivatives Association Inc. andFinancial Services Roundtable said bank clients need a delaybecause they lack the resources necessary to comply with theagency's rules.

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