* CFTC to finalize third set of Dodd-Frank rules
* CFTC still must finish nearly 40 more rules
* Regulator to publish meeting dates for rest of 2011
By Christopher Doering
WASHINGTON, Aug 4 The U.S. futures regulator,
is expected to finalize on Thursday new measures outlining
requirements for swap data collectors and guidelines for
whistle-blowers as it races to meet its obligations required
under last year's financial market overhaul law.
The Commodity Futures Trading Commission is far behind
schedule in a frenzy to complete nearly 50 rules. The three
rules presented Thursday, if passed, will complete about 20
percent of the regulations required under last year's
Dodd-Frank financial reform law that gave it oversight of the
$600 trillion global swaps market.
The law requires most types of over-the-counter derivatives
to trade on exchanges or in new swap execution facilities. The
trades also have to pass through clearinghouses, and be
recorded and collected in new swap data repositories.
A CFTC final rule outlined on Thursday detailed the
requirements for those swap data repositories. SDRs, including
those outside the United States, must register with regulators
and share their collected data. The CFTC has 180 days to review
an application of an entity that wants to register as an SDR.
"Recognizing the importance of SDRs to the regulatory
infrastructure of the Dodd-Frank Act, this final rule making
establishes a robust - yet flexible - approach toward SDR
registration," said Scott O'Malia, a CFTC commissioner.
The final rule included a series of changes from its
The CFTC clarified that as a condition of accepting data,
the SDR could not require the submitter to allow it to be used
commercially. The repositories also must confirm the data is
accurate, but the CFTC now said in some cases they may not be
required to with both counterparties in a swap deal.
In addition, foreign regulators with oversight
responsibility and proper authority over an SDR would be
allowed to access the repository's data directly without going
through the CFTC.
The SDRs would not have to comply with all the new
requirements until a series of corresponding rules are
completed, including the definition of a swap, how data is
reported to the SDR and real-time reporting requirements.
"Until those rules are finalized ... the commission can't
mandate the registration," a CFTC official said.
BLOWING THE WHISTLE
In a more controversial final rule, whistle-blowers could
collect millions of dollars in rewards for reporting financial
wrongdoing, mirroring a plan approved in May by the U.S.
Securities and Exchange Commission, that regulators hope will
boost the number of tips they receive.
The CFTC and SEC's plans, which would pay tipsters between
10 and 30 percent of sanctions over $1 million for original and
useful information, has grown into one of the more contentious
requirements of the Dodd-Frank law. The CFTC said it averages
between 16 and 24 sanctions over $1 million each year.
Companies from Google (GOOG.O) to JPMorgan Chase (JPM.N)
have expressed fears the whistle-blower rule will undermine
internal compliance programs at public companies by encouraging
employees to go directly to the regulator.
"We're not requiring mandatory internal reporting," a CFTC
official told reporters on a call in advance of the meeting.
"We are going to state in the rule that the commission will
consider a whistle-blowers decision to report internally as a
factor that can potentially increase the amount of the award."
The CFTC also plans to finalize a rule that would treat
agricultural swaps like other over-the-counter derivatives, a
move that lifts restrictions and makes it easier for more
market participants to use the financial instruments.
Swaps are used by buyers and sellers of farm goods to
protect against the risk of price movements.
The futures regulator, which first proposed the rule in
January, removed a section on commodity options, which it will
issue as a separate rule. A CFTC official said it must first
complete various product definitions before it can move forward
on commodity options.
Regulators missed a July 16 deadline for implementing most
of the rules in Dodd-Frank. As a result, the CFTC and SEC each
granted temporary relief to the industry from complying with
some swaps rules that had been set to go into effect at that
The CFTC is expected on Thursday to announce its
rule-making meeting dates for the remainder of the year. The
agency must still finalize the most controversial rules,
including proposals to limit excessive speculation, define an
end user and capital and margin requirements.
(Editing by Alden Bentley)