Energy trade groups push CFTC to delay rule implementation

Lopa Parikh

Several U.S. energy trade groups have asked the Commodity Futures Trading Commission to allow energy market participants more time to comply with pending Dodd-Frank regulations.

The American Gas Association, the Edison Electric Institute and the Electric Power Supply Association said that extra time for compliance is necessary because the CFTC is still awaiting comment on some of the rule-makings.

“Careful and deliberate implementation is…necessary so that uncertainty as to rules and regulations does not inadvertently disrupt the liquidity of the derivatives markets and the delivery of wholesale, non-financial commodities related to electric gas operations, both of which could result in higher prices for consumers and commodity market participants,” the groups said.

The request on behalf of the energy trade groups is just one of many calls to delay “confusing” regulations. Last week, the Commodity Markets Council, which represents non-banks with large swaps desks, asked the CFTC to postpone the effective date of a rule governing swaps dealers, Reuters reports.

Under the 2010 Dodd-Frank Act, the CFTC has significantly restructured regulation of the derivatives industry in order to increase transparency and reduce risk in the $648 trillion over-the-counter global swaps market.

The groups also said in the letter that market participants may avoid certain trading and hedging transactions that may increase risk management costs, adding that the CFTC should defer compliance for a minimum of one year.

“The rules are so interrelated that we are asking for a period of a year after the final rule is issued so that we can have a comprehensive look at all the rules and regulations that apply to us, so that we can develop a comprehensive compliance program,” Lopa Parikh, the director of federal regulatory affairs at EEI, said, according to The Huffington Post.

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