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Waters Asks For Derivatives Rule Delay

January 4, 2013
In The News

Rep. Maxine Waters, who will take over as top Democrat on the House Financial Services Committee next year, is urging the Commodity Futures Trading Commission to delay implementation of certain derivatives rules set to go into effect Jan. 1.

The CFTC was mandated under Title 7 of the Dodd-Frank reform law to help overhaul the derivatives market following the financial crisis. But concern is growing over how and when some of the provisions are being implemented, including across national borders.

In a letter sent earlier this week to CFTC Chairman Gary Gensler, Waters asks "for phased-in compliance and for 6 months of interim relief" from rules set to go into effect next month, arguing that the delay "will hopefully give time to the European Union to finalize a comparable regulatory regime, and help us avoid unnecessary market distress."

The request follows a hearing last week held by the House Agriculture Committee on reforms to the derivatives markets, and is in line with testimony given by CFTC Commissioner Bart Chilton.

In her Dec. 18 letter, Waters also points to similar concerns that were raised this past fall when other derivatives rules went into effect, causing some market disruption.

"As I'm sure you are aware, many market participants are concerned about repeating the disruptions that occurred before the previous October 12, 2012 compliance deadline. Because of a lack of certainty over how CFTC's finalized rules would apply on that date, certain U.S. financial institutions expressed that several foreign counterparties stopped signing swaps contracts with them in advance of October 12th," said the California Democrat. "In the interest of avoiding a repeat of this confusion, and because many stakeholders believe that harmonized, global swaps market reform can occur in the near-term, I request that you provide for phased-in compliance and appropriate short-term relief from the relevant Title VII provisions."