WASHINGTON (Reuters) - The U.S. futures regulator could propose its two key remaining regulations in late April but will not finalize most of its rules by a July deadline, a commissioner at the agency said on Wednesday.
The U.S. Commodity Futures Trading Commission has proposed the first drafts of most of its rules, but two key regulations remain -- a detailed definition of swaps to be covered by its new rules, and the capital and margin needed for swaps dealers and major swaps participants.
Scott O‘Malia, a Republican and one of five commissioners at the CFTC, said he expected those rules to be introduced toward the end of next month.
“That could be optimistic,” he told Reuters in an interview.
Officials at the CFTC and the Securities and Exchange Commission, among the agencies engaged in the arduous task of writing hundreds of rules to implement the 2010 Dodd-Frank Wall Street reforms, have said they will miss deadlines from Congress to get many of the new regulations put in place.
CFTC Chairman Gary Gensler said this month the agency hopes to finalize rules in three clusters and may consider phasing in the effective dates of regulations by asset class.
“I think most of them we’re going to miss,” O‘Malia said. “It’s not because we’re not trying. Getting it right is more important than getting it done early.”
The financial reform legislation enacted last July boosted oversight on the $600 trillion over-the-counter derivatives market, including credit default swaps such as those that undermined bailed-out insurer American International Group.
Lawmakers have criticized the fast pace of Dodd-Frank and questioned the sequence regulators, such as the CFTC, have used to introduce the rules. They have vowed to study the costs of implementation and whether these justify the benefits.
“We’re going to have to scrutinize the Dodd-Frank rule-making process and the adequacy and accuracy of the cost-benefit analysis of these rules,” House Financial Services Committee Chairman Spencer Bachus said at a hearing.
“How could you possibly do a credible job in the little time you’ve got?” he said.
The Congressional Budget Office has estimated the Dodd-Frank law will cut the deficit by $3.2 billion between 2010-2020. Some Republican Congress members and other officials are concerned that those savings will not materialize.
Jeffrey Lacker, president of the Richmond Federal Reserve Bank, said Dodd-Frank has “a lot of moving parts.”
“I am very worried about the distortions to economic activity that could result from the implementation of Dodd-Frank,” said Lacker.
Jill Sommers, a Republican commissioner with the CFTC, told the subcommittee she would like her agency to begin providing a thorough cost-benefit analysis that estimates the cost to comply with the rule, especially as the measures become more complex and tied together.
“In many of the rules that we have proposed under Dodd-Frank it is incumbent upon us to provide that kind of information to the public,” said Sommers. “To me, that is good government.”
Editing by Dale Hudson and David Gregorio