WASHINGTON Dec 17 The top U.S. derivatives regulator on Monday adopted a rule for markets to keep records of trades, but told some dealers they did not need to tape conversations after grain traders opposed it.
The Commodity Futures Trading Commission is implementing important parts of the 2010 Dodd-Frank overhaul of Wall Street regulations, writing the first-ever rules for the unregulated $650 trillion swaps industry.
One of the rules would have required members of two types of derivative trading platforms to record all oral communications that lead to a trade in a cash commodity.
But grain traders in the National Grain and Feed Association (NGFA) complained that the rule would force them to record every conversation with farmers.
"In consideration of comments, the Commission adopted modifications that preserve the rule's purpose without adversely affecting the agricultural community," CFTC Chairman Gary Gensler said in a written statement.
A host of grain giants - including Cargill, ADM, Bunge, Louis Dreyfus, Scoular Co, Growmark, Newedge, Macquarie and others - took part in a meeting organized by the CFTC on Aug. 29 to emphasize their objections.
In the final rule, there is no a requirement to tape conversations about cash transactions, unlike those that lead to trades in derivatives such as futures, options and swaps or retail foreign exchange deals, the CFTC said.
Moreover, certain categories of traders do not have to tape any verbally agreed deals.
"The final rule will impact a lesser number of market participants than was proposed," the CFTC said.
The rule was agreed on unanimously by the CFTC's five commissioners and was voted on in a written procedure, not in a public hearing, as sometimes occurs.
Taped records of conversations - which must be kept for one year - will preserve "critical evidence" in enforcement investigations, the CFTC said.
The agency is a lead investigator in the global probe of the rigging of the Libor interest rate benchmark.