CFTC’s O’Malia warns on swaps costs
February 10, 2011
Businesses that use over-the-counter derivatives to hedge their risks still face the specter of higher costs if swaps dealers are forced to put up capital for the deals, a Republican commissioner at the U.S. futures regulator warned on Thursday.
CFTC Commissioner Scott O'Malia stated: "We need to be very sensitive if we're going to assess a capital charge on swap dealers for all their uncleared trades, that's going to have an impact on end users."
O'Malia said he was "very pleased" that Gary Gensler, the chairman of the CFTC, took pains at a Capitol Hill hearing on Thursday to emphasize businesses exempt from clearing won't have to post margin for their swaps.
"It's great news on the margin. I'm very concerned about the capital," O'Malia said.
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)