FIA, IIB and SIFMA Request That CFTC Delay the Effective Date of Numerous Swaps Rules (with Lofchie Comment)

The Futures Industry Association ("FIA"), the Institute of International Bankers ("IIB") and the Securities Industry and Financial Markets Association ("SIFMA") (collectively, the "Associations") submitted a joint letter requesting that the CFTC delay the effective date of numerous rules relating to swap regulation. Among the rule topics as to which delays were requested are the following:

• Reporting;
• External business conduct;
• Internal business conduct; and
• Confirmation, portfolio reconciliation, portfolio compression and swap trading relationship documentation.

The Associations also requested interpretative advice on a number of significant issues related to the above topics.

The Associations made numerous arguments as to which delay makes sense, including, for example, that the relevant technology is not ready, and that certain of the CFTC's rules conflict with the rules of non-U.S. regulators.

Cross-Reference(s): CEA Sec.2(h), 2(i), 4r [Reporting and Recordkeeping for Uncleared Swaps], 4s [Registration and Regulation of SD and MSP] and 21[Swap Data Repositories]; CFTC Rules Sec.3.10 [Registration], Parts23 [SD and MSP], 43 [Real-Time Public Reporting], 45 [Swap Data Recordkeeping and Reporting Requirements], 46 [Pre-Enactment and Transition Swaps] and 50 [Clearing Requirement and Related Rules].

Lofchie Comment: Yesterday, we reported a speech in which CFTC Commissioner O'Malia had, among other things, described the CFTC rulemaking process as a "train wreck" and urged the CFTC to issue all of required exemptions and delays in its rulemaking as quickly as possible, rather than waiting until the near-eve of December 31st. One may guess that the Commissioner's remarks were in anticipation of the request formally submitted today by the industry.



As I have previously noted, the fact that the swaps dealer registration deadline is set for the last day of the year seems a real mistake to me. I would emphasize that the date was not set as a result of any considered process; it just happened to be the date that resulted from any number of missed deadlines and delays. Imposing a regulatory burden on the last day of the year would seem to have all kinds of unintended effects, not the least of which is destroying families' vacations, but also including more practical considerations such as the fact (as noted in the letter) that most firms stop instituting major IT changes by mid-December.

View letter in full here (links externally to PDF).