WASHINGTON Market participants not used to strict regulatory oversight may be given more time to comply with new swaps rules, but those with ties to big banks could be hit sooner, under rough guidelines the Commodity Futures Trading Commission is considering.
The futures regulator on Friday outlined a 13 factors, or concepts, it is considering as it determines when those affected by sweeping new financial reform rules must comply. The agency said implementation will be phased-in in a way that lowers risk and minimizes cost.
"The concepts reflect the idea that ...the implementation of Dodd-Frank rules would not be all at once. No sort of big-bang approach," a CFTC official said during a background briefing for reporters.
The CFTC said compliance dates for swap dealers, major swap participants and others could depend on a complex set of guidelines, including the asset class, the availability of data; and costs and time to make necessary technological upgrades.
The CFTC said it is considering giving entities that have not been previously subjected to regulatory oversight more time. Swap dealers that may have previously been part of a bank holding company, and were already regulated, may have an easier time complying.
Compliance dates for certain rules may also be dependent on whether it links with other rules. Another option could include having different phase-in dates for various stages of a transaction -- such as clearing and trading requirements, data reporting, and compliance with position limits.
The release of the document comes ahead of an industry roundtable the CFTC is hosting next week with the Securities and Exchange Commission. Regulators are considering how to implement new rules they are drafting to comply with the Dodd-Frank law that gave them oversight of the $600 trillion over-the-counter derivatives market.
Throughout the rule-making process, there have been concerns regulators are not doing enough to tell the industry how the rules will be implemented so they can prepare.
During the rule-making process, the futures agency has not only been hounded by the industry, but also lawmakers and some of its own commissioners for its fast pace, and what a few have called an "irrational" sequence of rules.
In a four-page release, the CFTC asked those attending the meeting on Monday and Tuesday to consider how useful the guidelines would be in determining the effective dates of the rules, and what timing suggested by the guidelines might be appropriate. Those attending also were asked to consider what compliance issues might come up in each of the 13 ideas.
(Editing by Lisa Shumaker and David Gregorio)