The Commodity Futures Trading Commission and the Securities and Exchange Commission said they will hold a two-day roundtable at the start of May to help set dates for implementing final rules governing the establishment of new markets for trading credit default and other types of swaps of financial risks.
The joint session will be open to the public and is designed to help "set effective dates and a schedule for compliance with rules implementing Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The roundtable will help decide how to phase in implementation of requirements based on factors such as: the type of swap or security-based swap, including by asset class; the type of market participants that engage in such trades; the speed with which market infrastructures can meet the new requirements; and whether registered market infrastructures or participants might be required to have policies and procedures in place ahead of compliance with such policies and procedures by non-registrants.
The announcement of the roundtable comes on the same day that the CFTC proposed rules that set out recordkeeping and reporting requirements for data on swaps made before the creation of the new markets being established for the swapping of risks.
The Dodd-Frank act calls for swap contracts that can be standardized to be traded on exchanges or "swap exchange facilities" where central counterparts clear the financial arrangements and risks involved.
The CFTC said a Notice of Proposed Rulemaking, Swap Data Recordkeeping and Reporting Requirements: Pre-Enactment and Transition Swaps, has been submitted to the Federal Register and will be published shortly.
The proposed rule provides clarity concerning what records must be kept and what data must be reported to swap data repositories with respect to these historical swaps. The rule proposes limited recordkeeping requirements for counterparties to historical swaps. For swaps in existence on or after the date of publication of the proposed rule, counterparties would be required to keep records of specified, minimum primary economic terms for the swaps.
The commission also considered proposed rulemaking under the Dodd-Frank Act regarding margin requirements for uncleared swaps for swap dealers and major swap participants. The proposed rules would address margin requirements for uncleared swaps entered into by nonbank swap dealers or major swap participants.
Commissioner Scott O'Malia said the margin requirements could fall unduly on "non-systemically relevant commercial firms," increasing their costs of operating.
These firms "will now be faced with the decision of hedging risk or investing in their business,'' he said.
"I am also struck by the fact that the prudential regulators are hiding behind the “safety and soundness” language in the Act to draft rules that prohibit bank swap dealers from posting margin to their counterparts,'' he said. "To be clear, this is a one-way posting of margin. Banks will not post margin to end-users – financial or commercial."
The Commodity Futures Trading Commission on Tuesday voted to propose a rule that would not require commercial end users – such as corporations -- to post margin on some swaps deals.
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