SIFMA AMG - Comment Letter to the CFTC on the Proposed Clearing Determination under Section 2(h) of the CEA (with Lofchie Comment)

SIFMA's Asset Management Group submitted this comment letter to the CFTC expressing concerns regarding the clearing mandate of certain interest rate swaps and credit default swaps, suggesting that the clearing mandate is premature. SIFMA notes that, despite the intensive efforts of market participants, "the volume of legal documentation required for compliance with the customer clearing rules makes it unlikely that the industry will be ready in time for the compliance dates triggered by this first clearing determination."

Cross-Reference(s): Commodity Exchange Act Section 2(h) (Jurisdiction of Commission; liability of principal for act of agent; Commodity Futures Trading Commission; transaction in interstate commerce - Clearing Requirement for Swaps).

Lofchie Comment: The implementation problems are piling up. The changes mandated by Dodd-Frank are simply too great for our market infrastructure to absorb in the time allowed between rulemaking and effectiveness. Beyond the timing issues, a more significant question is whether the changes will be to the benefit of customers. See also the item in today's news as to margin requirements.