CFTC Releases Fifth Status Report on CFTC Regulations to OMB
Commentary by Bob Zwirb
Jonathan L. Marcus, the general counsel for the CFTC, submitted a letter to the OMB on the Commission's fifth status update on "Phase One" of the CFTC's Plan for Retrospective Review of Agency Regulations. The update provides a summary of all the CFTC's final rules issued since the last status update in January 2013. These final rules establish a comprehensive regulatory framework for the registration and operation of SEFs and DCMs, requiring joint identity theft prevention programs and detailing the process that adjudications will take. The following final rules were addressed:
- Final Rule Regarding Core Principles and other Requirements for Swap Execution Facilities (78 FR 33476)
- Final Rule Regarding Procedures to Establish Appropriate Minimum Block Sizes for Large Off-Facility Swaps and Block Trades (78 FR 32866)
- Final Rule and Guidelines Regarding Identity Theft Red Flags (78 FR 23638)
- Final Rule Regarding the Delegation of Authority to Disclose Confidential Information to a Contract Market, Registered Futures Association or Self-Regulatory Organization (78 FR 21522)
- Final Rule Regarding Clearing Exemption for Swaps between Certain Affiliated Entities (78 FR 21750)
- Final Rules Regarding Dual and Multiple Associations of Persons Associated with Swap Dealers, Major Swap Participants and other Commission Registrants (78 FR 20788)
- Final Rule Regarding Proceedings before the CFTC (78 FR 12933)
See: CFTC Status Report.
Related News: Core Principles and Other Requirements for Swap Execution Facilities (Final Rule; Fed. Reg. Version) (June 4, 2013); Procedures To Establish Appropriate Minimum Block Sizes for Large Notional Off-Facility Swaps and Block Trades; Final Rule (CFTC - Fed. Reg. Version) (May 31, 2013); Identity Theft Red Flags Rules (Joint Final Rules; Fed. Reg. Version) (with Lofchie Comments) (April 19, 2013); Delegation of Authority to Disclose Confidential Information to a Contract Market, Registered Futures Association or SRO (CFTC Final Rule; Fed. Reg. Version) (April 11, 2013); Clearing Exemption under Part 50 for Swaps between Certain Affiliated Entities (CFTC Final Rule; Fed. Reg. Version) (April 11, 2013); Dual and Multiple Associations of Persons Associated with SDs, MSPs and Other Commission Registrants (Fed. Reg. Version; Final Rule) (April 8, 2013); Proceedings before the Commodity Futures Trading Commission; Final Rule (CFTC - Fed. Reg. Version) (with Zwirb Comment) (February 26, 2013).
Commentary
The General Counsel's status report to OMB's Office of Information and Regulatory Affairs is intended to fulfill an obligation voluntarily undertaken by the CFTC "to review its existing regulations to evaluate their continued effectiveness in achieving the objectives for which they were adopted." Reducing Regulatory Burden: Retrospective Review under E.O. 13563, 76 Fed. Reg. 38328 (June 30, 2011) (encouraging independent regulatory agencies to consider undertaking voluntarily retrospective analysis of existing rules). As part of this review, which is called for by President Obama's Executive Order 13563, agencies are required to "consider how best to promote retrospective analysis of rules that may be outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned" and to perform this analysis with supporting data.
The General Counsel's letter, however, does none of this. Instead of engaging in a retrospective review and analysis of its regulatory programs, it simply categorizes and summarizes a number of final rules that the CFTC has recently promulgated to implement the Dodd-Frank Act. If anything, it looks forward rather than backwards, but without the benefit of ex ante cost benefit analysis.
Given the recent enactment of these Dodd-Frank rules, no one would expect the CFTC at this point in time to have knowledge of their economic impact. But the Executive Order requires the CFTC to submit a "preliminary plan" to periodically review its regulations to determine whether they should be "modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving the regulatory objectives." That is exactly what is missing here. Nowhere in this letter to OMB is there any indication of a plan to determine what effects the CFTC's rules will have on the financial markets.