CFTC to complete majority of Dodd-Frank rules by summer

By Sarah Gonzalez

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, Feb. 29, 2012- Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler told the House Agriculture Committee that he expects Dodd-Frank rule-writing to be completed by this summer; however, he noted it's possible that a handful won't be finished until later this year.

The House Agriculture Committee held a public hearing today to review the 2012 agenda of the CFTC as the agency continues to investigate the collapse of MF Global and finalize rules of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

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The CFTC has finalized 28 rules, but the agency still needs to complete at least 20 more rules related to the Dodd-Frank Act. Some of these will include providing definitions to "swap dealer" or "major swap participant."

Chairman Frank Lucas (R-Okla.) emphasized that Congress never intended hedging to be considered swap dealing, but Gensler continued to assure the Committee members that CFTC's swap dealer definition will not result in unnecessary registration of end-users. 

Rep. Randy Hultgren (R-Ill.) echoed the concerns of several committee members when he said the delays in the rulemaking process are creating uncertainty for market participants. Certain definitions and rules were expected to be completed last year. 

Lucas is outspoken about the fears he has that the thousands of pages of rules in the Dodd-Frank Act could place a heavy burden on the economy, specifically on non-swap dealing end-users in the agriculture markets. 

“New rules required by Dodd-Frank should not unnecessarily burden businesses or the economy with overly broad or cumbersome requirements,” said Chairman Frank Lucas. “Making policy without regard for the economic consequences is a luxury we cannot afford even in the strongest economy."

In 2010, Congress expanded the CFTC's mission to also oversee the previously unregulated swaps marketplace. Gensler said at approximately $300 trillion, the domestic swaps market is nearly eight times the size of the futures market.

The need to monitor swap dealers and excessive speculation makes it essential for CFTC to be fully staffed and funded, Gensler said. Representatives Rosa DeLauro (D-Conn.), Peter Welch (D-Vt.) and Leonard Boswell (D-Iowa) introduced H.R.3665 , Wall Street Accountability through Sustainable Funding Act, to address this issue. The legislation would allow CFTC renewed funding so it can regulate the risky financial transactions that contributed to the 2008 financial crisis, the recent collapse of MF Global and the speculation-driven rise in energy prices.

“Futures and swaps markets touch nearly every aspect of our economy from the food we eat, to the price at the pump, to our mortgages and credit cards, and to our retirement savings,” he said. “Thus, it is essential that these markets are transparent and efficient and work for the benefit of the American public.”

Ranking Member Collin Peterson (D-Minn.) said the CFTC's track record shows that it will continue to listen to the concerns of the Committee, agricultural cooperatives and farm credit institutions. 

“Looking at the Dodd-Frank rules that have already been finalized by the CFTC, I believe it is safe to say that, so far, the CFTC has done a pretty good job,” Peterson said. “In my conversations with Chairman Gensler, it seems to me that they are on the right track.”

Members of the Committee also questioned Gensler about customer protections in light of the MF Global collapse. Thousands of customers have yet to receive nearly 30 percent of the funds that MF Global should have held in segregated accounts. The investigation is still underway, now focusing on large transactions made by the broker-dealer in its final hours.


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