Friday, June 17, 2011

CFTC Delays Dodd Frank Derivatives Ruling

Certain parts of the USA's Dodd Frank law on derivatives and accounting compliance measures for banks were supposed to take place automatically on July 16, 2011. No more.

The CFTC, the regulatory body responsible for trading in US futures and options, has postponed a final ruling until the end of this year (December 31st, 2011). Score another victory for the banks. Banking and financial industry lobbyists had insisted that the definitions of "swaps" and "swap dealers" remained too vague. Particularly, regulators have not even defined which non-bank - insurance companies, broker dealers, and hedge funds are considered systemically risky.


The Bottom Line: Legal rulemaking by US agencies has always taken a long time given the nature of lobbying. Squeezing the equivalent of several years of regulation into a short time period resulted in an extension for more time.
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