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CFTC’s O’Malia criticizes rushed rule finalizations

Scott O'Malia

Commodity Futures Trading Commissioner Scott O’Malia recently criticized the committee’s rushed pace in finalizing the remaining Dodd-Frank rules, comparing the approach to the high-frequency trading that led to disruptions in the finance market in 2010.

At an OTC markets event on Tursday, O’Malia said that, in addition to thorough cost-benefit analyses, coming to agreement with industry parties on basic definitions is important, particularly in the area of swaps, according to CFTC Law.

O’Malia took aim at the CFTC’s swap dealer definition, saying that the rule was far too complex and unclear in specifying which parties would be included in the definition of “swap dealer.”

Additionally, O’Malia criticized high-frequency regulation and suggested smarter reforms based on establishing dialogue and facts, as well as conducting cost-benefit analyses, to promote regulatory consistency and focus on violations versus enforcement, CFTC Law reports.

O’Malia has been critical of the CFTC’s cost-benefit analyses, which normally accompany guidance issued by the commission, and argues that the analyses do not properly or entirely quantify costs or offer alternatives to the policies under consideration.

Industry lobbyists have cited the poor quality of cost-benefit analyses as argument for efforts to curtail and challenge rules mandated under the 2010 Dodd-Frank Act.