* US regulators moving too quickly, risk disrupting market
* CFTC, SEC should give industry more time to comply
By Christopher Doering
WASHINGTON, Dec 8 U.S. regulators are
implementing new rules to increase oversight of financial
markets at such a rapid pace that it places an unfair burden on
market participants and could reduce liquidity and increase
risk, financial trade associations said in a letter.
Eleven groups representing banks, swaps dealers, mutual
funds and others told the U.S. Commodity Futures Trading
Commission and the Securities and Exchange Commission they are
concerned market participants are being asked to do too much in
a short amount of time.
The members, which included the American Bankers
Association, Futures Industry Association, and the Investment
Company Institute, said the quick pace risks placing a burden
on market participants and dealers who will be unable to comply
requirements, including those for clearing and execution.
"To implement a complex new regulatory structure without
adequate time to adapt, prepare, and test systems also could
lead to an ineffective or poorly designed reporting, clearing,
and exchange infrastructure, which also would impair liquidity,
and lead to higher costs, increased risk, and other adverse
consequences," the members said in a four-page letter.
U.S. regulators are scrambling to propose dozens of new
rules in order to comply with the recently enacted Dodd-Frank
bill that increased oversight of the $600 trillion
over-the-counter derivatives market. Most of the rules must be
in place by mid-July of next year.
The letter cited an example where the agencies are moving
too fast. For example, on Nov. 10 the CFTC proposed rules that
would affect swap dealers and major swap participants. It
wasn't until early December that the CFTC and SEC defined "swap
dealer" and "major swap participant."
"Without guidance as to the scope of these definitions,
some firms -- in particular, smaller firms -- were (and are)
uncertain whether they should comment on the rules that apply
to swap dealers and MSPs, because they did not know whether
these rules would apply to them," the groups said in a letter.
The trade groups urged regulators to consider in some cases
giving the industry more time to comply with the new laws.
"We urge regulators to take into account the practical
realities facing market participants and to phase-in the
application of new regulatory requirements over a reasonable
period of time," they said.
(Editing by Lisa Shumaker)