In a letter to CFTC Chairman Gary Gensler on Thursday, Sen. Mike Crapo (R-Idaho) and Senate Banking Committee Ranking Member Richard Shelby (R-Ala.) warned that Dodd-Frank derivatives rules create uncertainty.
“Because the CFTC did not release the key definitions for the rules until recently and has failed to provide sufficient regulatory guidance, there is a great deal of uncertainty about how market participants should comply with these rules. This regulatory uncertainty risks disrupting our OTC [over-the-counter] derivatives and foreign exchange markets and could adversely impact the overall economy,” the senators wrote.
A series of CFTC rules issued pursuant to Title VII of the Dodd-Frank Act are scheduled to go into effect on October 12, but the senators question the timing of the rules’ implementation.
“Given the serious difficulty market participants have had in attempting to comply with these rules in the original time frame, why did the CFTC not extend the October 12 deadline,” the letter asks.
The senators also raised the question of uncertainty brought about by a lack of information from the Department of Treasury that would exempt foreign exchange products from the swap definition.
“What steps has the CFTC taken to minimize market disruptions until Treasury determines whether to provide a foreign exchange exemption,” the senators’ letter asks.