On Tuesday, June 14th, the Commodity Future Trading Commission (CFTC) announced that it would delay rules on certain derivatives rules for up to six months as they work to implement the Dodd-Frank financial reform law.
When it became law last July, Dodd-Frank imposed a one year timeline for the CFTC to write new regulations to cover dozens of reforms for the $600 trillion global swaps markets. However, since the bill became law, the CFTC has missed several deadlines imposed for developing and advancing these rules. With the final deadline for implementing the rules approaching, the CFTC unanimously voted 5-0 to delay the reforms until as late as December 31, or until the agency has finalized corresponding rules. The CFTC could impose further relief delays on certain swaps rules beyond December 31, but CFTC Chaiman Gary Gensler said he doesn't expect that to occur.
Also complicating matters for the CFTC is that the budget bill currently being considered would cut $30 million in funding for the Commission for Fiscal Year 2012. The decision to delay the rule was hailed by Republicans in the House of Representatives who have pushed legislation that would have delayed the derivatives rules for over a year, and cited the CFTC's move as proof the original deadlines laid out in the law were too aggressive. "Today’s action should provide additional certainty to the market," said Rep. Frank Lucas (R-Okla.), the chairman of the House Agriculture Committee. "I’m encouraged to see Chairman Gensler acknowledge that the statutory deadline isn’t realistic or reasonable, and that delaying regulations to ensure we get them right is critical to protecting the U.S. economy."