–Current Funding Not Enough For Expanded Role Under Dodd-Frank Act

NEW YORK (MNI) – The head of the Commodity Futures Trading
Commission Thursday said that two months from now, the agency aims to
have completed the mammoth task of writing new rules for the swaps and
derivatives markets.

CFTC Chairman Gary Gensler noted, however, that only with
sufficient resources can the regulator meet the significant new
responsibilities placed upon it by the Dodd-Frank Act — with its
current funding far below the required level.

In remarks prepared for an Institute of International Bankers
luncheon, Gensler noted that the Commission will meet next week to draft
rulemakings in six areas — including alternatives to credit ratings and
the process for reviewing swaps for clearing.

“Our plan is to finish our proposed rule-writing agenda by
mid-December,” Gensler said, adding a cautionary note that, being human,
“it is always possible that some of our rules will slip.”

The rules will then be open for comment for either 30 or 60 days,
ending mid-February. Gensler said this will give the agency “the needed
time” to review, summarize and, where appropriate, incorporate comments
from the public before publishing final rules by the July 15 statutory
deadline.

“Finishing rules within the statutory deadline will best bring
regulatory certainty to the marketplace,” he said.

The collecting and maintaining of swaps data is one key rule the
CFTC expects to draft, Gensler said, saying swap dealers, major swap
participants, swap execution facilities (SEFs) and exchanges will be
required to collect the information and make it available directly and
electronically to both domestic as well as foreign regulators.

“This requirement will allow regulators around the globe to see a
transparent picture of the transactions and positions in this
marketplace,” he said.

Gensler went on to speak about the challenges faced by the CFTC in
this new regulatory environment, noting the swaps market that the CFTC
is tasked with regulating under Dodd-Frank Act is a $217 trillion
industry in notional amount.

Such a challenge, while significant, is manageable so long as the
CFTC has sufficient resources, he said, but “given the new
responsibilities for the CFTC to regulate the swaps market, our current
funding is far less than what is required to properly fulfill our
significantly expanded role.”

Prior to the passage of the Dodd-Frank Act, President Obama’s
budget requested $261 million for the CFTC for fiscal year 2011 —
including $45 million in funding to provide half of the staff estimated
at that time to implement Dodd-Frank.

And while the Senate Appropriations Subcommittee with jurisdiction
over the CFTC boosted that amount to $286 million, “recognizing the
heightened demands of the final bill,” the CFTC will need more staff to
implement and enforce the new regulations Gensler said.

He said in order to fully implement the Dodd-Frank reforms, the
Commission will require approximately 400 additional staff over that
needed to fulfill the agency’s pre-Dodd-Frank mission.

“We hope our funding levels for the current fiscal year will be
finalized when Congress returns after the election,” the CFTC chairman
concluded.

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