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CFTC timetable reveals major Dodd-Frank rules to be delayed until fourth quarter

Scott O’Malia

A timetable released by Commodity Futures Trading Commissioner Scott O’Malia reveals that critical Dodd-Frank rule-makings may be delayed until the fourth quarter.

The timetable was issued by the agency on the same day that the CFTC also proposed an extension for the swaps regulation start date until December 31, a five month delay of a rule that was already extended and supposed to take effect on July 16, Risk.net reports.

O’Malia, however, expressed doubt over the realistic nature of the timetable, adding that financial institutions have been unable to properly prepare for the rules to take effect.

“I believe the market continues to seek guidance regarding the timing of the [CFTC]’s remaining rules,” O’Malia said, according to Risk.net. “I frequently hear from [the] industry that the [CFTC]’s rules are not sequenced in a manner that provides them with the certainty they need to make budgeting, investment and hiring decisions. For that reason, I have included, along with my concurrence, a list of the remaining commission rules, orders and guidance, as well as a timetable of when I understand the [CFTC] expects to vote on those rules, orders and guidance.”

The timetable reveals that key Dodd-Frank rules, including final rules on product definitions, proposed mandatory clearing determinations and an end-user exemption, will be voted on in June.

A rule on the core principles for swap execution — or Sefs — will be finalized in July, according to the timetable. Other rules, however, including the controversial Volcker Rule, will not be finished until the fourth quarter at the earliest, Risk.net reports.

Bill Hedermen, an enterprise risk director at Deloitte & Touche, said that the newly issued timetable will bring some certainty to the rule-making process, though it will be challenging for the CFTC to finalize all rules by the end of the year.

“Any timeline targeting the end of the year would be pretty ambitious,” Hedermen said, according to Risk.net. “That said, the new timeline has a sufficient level of detail and direction that could help make it possible to finalize most of the major rules by election day—allowing for some continuity in policy direction after the election, no matter how it turns out.”

Other industry experts, however, argue that the agency may meet its proposed deadlines.

“It will be a race to finish the Dodd-Frank rules by the end of the year, but I think CFTC Chairman Gary Gensler is seriously trying to deliver on that,” Michael Philipp, a partner at the Chicago-based investment firm Morgan, Lewis & Bockius, said, Risk.net reports. “He thinks he is going to get the job done by the end of the year, and I think he is going to get it done. Will there be loose ends and issues that need further interpretation? Absolutely, but absent something we can’t conceive of, I think he is going to deliver.”

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