CFTC to delay vote again on swap dealer definition

WASHINGTON Tue Feb 21, 2012 6:01pm EST

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WASHINGTON (Reuters) - The U.S. futures regulator on Tuesday again delayed a vote on a long-awaited rule that would impose tougher rules on the swaps market by defining who will be a designated swap dealer, making it clearer which energy companies, banks and other firms will have to set aside more funds to cover their deals.

The U.S. Commodity Futures Trading Commission had been scheduled to vote on Thursday on regulations that would define a "swap dealer" and "major swap participant," subjecting them to costly and onerous regulations.

It is the latest in a series of delays on these controversial definitions that the CFTC is jointly working on with the Securities and Exchange Commission.

"The SEC pulled it for a variety of reasons. I think there is still some questions among the commissioners," said a CFTC official.

"It wasn't a dispute between us and them so it's a 'them' issue. They let us know this weekend."

The new regulations could be a shock to commodity firms that will now have to set aside capital and margin requirements on some of their transactions as swap dealer and major swap participants.

Commodity companies such as Shell, BP and Vitol contend that while they may trade billions of dollars a year in swaps, their trades are done to shield themselves from market risk such as changes in commodity prices or fluctuations in currency. As a result, they should not be subjected to the new regulations.

The rules are part of the new regulatory framework being put in place to boost oversight for the previously opaque $700 trillion over-the-counter derivatives market required under the 2010 Dodd-Frank law. The CFTC is months behind in implementing many of the rules, and has so finalized about 25 regulations.

(Reporting By Christopher Doering; Editing by Alden Bentley and Bob Burgdorfer)

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