(Fixes formatting in first graph, adds dropped word "separate"
in 2nd graph.)
* US grain industry opposed rule calling it unwieldy
* Final recording rule will be released separately
By Christine Stebbins
CHICAGO, Oct 16 Commodities regulators on
Tuesday postponed a decision on a record keeping rule for the
U.S. grain industry that has met opposition from merchants and
traders who say its requirements to tape conversations will
prove cumbersome and costly.
"Regarding recording of oral communications and the scope of
written communications and related amendments the Commission
has determined to address those changes in a final rule in a
separate release," the Commodity Futures Trading Commission said
in a statement. The comment was included in the Commission's
final rule that amended specific current regulations as part of
the landmark Dodd-Frank market reform law.
The proposed recording rule, first outlined in the Federal
Register on June 7, 2011, sought a number of "conforming
changes" for the commodities industry to align daily
transactions with Dodd-Frank including a rule change that would
require members of futures exchanges "to record all oral
communications that lead to the execution of transactions in a
commodity interest or cash commodity."
The recordings, which must be stored for five years in
addition to full electronic records of transactions, must be
"identifiable by counterparty and transaction," the proposed
CFTC received more than 50 comment letters from grain
players, mostly appealing against the original language, since
last summer. Grain merchants complained the rule, geared toward
market transparency and accountability, would force them to
record every conversation with farmers and thousands of grain
buyers and sellers. Futures groups say the rule would be costly
to implement and penalize exchange memberships.
"They are punting on the issue for the time being and that
makes a lot of sense to me given all that CFTC has been busy
with over the past few days with the flurry of announcements - I
don't think the CFTC had enough time to address this issue,"
said Sanjeev Joshipura, president of the Commodity Markets
Council, a trade group representing grain traders, exchanges and
futures market participants.
CFTC released a slew of rule announcements since last
Wednesday as it pushed to meet an Oct. 12 deadline to finalize
rules mandated by the 2010 Dodd-Frank financial reform.
"The question remains as to when they will get to this. Is
it going to be before November or after?" he added.
(Reporting by Christine Stebbins; editing by Andrew Hay)