* Rule mandated by Dodd Frank to boost analyst independence
* Industry says rule will hurt business, create legal
* CFTC delays rule by 60 days
By Alexandra Alper
WASHINGTON, June 4 The U.S. futures regulator on
Friday delayed by 60 days the compliance date for a rule that
seeks to boost the independence of research analysts at futures
brokers, heeding a last-ditch plea for relief from the industry.
The rule, finalized by the Commodity Futures Trading
Commission in February, seeks to establish a firewall between
the research, trading and clearing sides of big futures brokers.
Mandated by the 2010 Dodd Frank Reform law, it was scheduled
to go into effect on Monday.
Industry groups have argued the rule will disrupt brokerage
research and damage customer communications. They have pleaded
for more time to comply.
In a letter to the Futures Industry Association (FIA) dated
Friday, the CFTC's division on swap dealer oversight granted the
futures brokers "no action relief," or a promise not to enforce
the rules until Aug. 3
"You have identified operational constraints that will
prevent certain affected persons from becoming fully compliant"
with the rules by June 4, Gary Barnett, chief of the Division
wrote. "The Division will not recommend that the Commission take
an enforcement action," against futures brokers for failing to
comply with the new rules for two months, he said.
The letter was a response to two petitions received on May
25 and May 31 by the FIA and the National Introducing Brokers
The relief will also apply to introducing brokers, which
take futures orders from clients but don't actually execute the
The rule restricts how researchers interact with traders and
clearing personnel inside their own firms. It also requires
brokers to ensure disclosure to customers of any conflicts of
interest that might affect their trading and clearing decisions.
Futures brokers say the rule will create a nightmare of
legal liabilities, stifle communication and disrupt markets.
The rules are part of a broader set of business conduct
regulations for swap dealers and futures brokers, and was
approved by a 3-2 commission vote earlier this year, with both
Republicans voting against it.