CFTC’s Gensler seeks to calm lawmaker swap fears
February 10, 2011
CFTC Chairman Gensler sought to ease the fears of lawmakers and businesses about the costs and scope of regulations for the over-the-counter swaps market, while admitting the agency was falling behind in rolling out the new rules. The overflowing hearing was civil, but lawmakers put Gensler on notice they would scrutinize the outcome of the CFTC's work.
Highlights of the hearing:
"Some of these rules will be put in place after July," Gensler said, noting the agency would take a "pause period" in February and March to consider public comments.
End User Margin: "I believe we have the authority not to impose (margin on end users), and that's what my recommendation is to the staff and commission moving forward," Gensler said. "We are very sensitive to end users," he said.
But Rep. Frank Lucas, the Agriculture Committee chairman, said businesses could be indirectly hurt by the added costs that banks will face from the CFTC's regulations.
"Mr. Gensler did not address whether the costs of end-user transactions may still increase substantially through margin requirements that may be imposed on their financial counterparties and passed on to them," Lucas told Reuters.
Cross References
Dodd-Frank Act, Title VII, Secs. 723(a)(7) 731; new CEA Secs. 2(h)(7) 4s(e)(3)(A)
CWT C&F Memo: Regulation of End Users of Swaps Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (July 2010)