The negotiations surrounding the Dodd-Frank reforms will likely continue up to and past the deadline for implementation. According to Reuters, one of the largest questions, the definition of swaps under the new rules, should be answered this week.
The Securities and Exchange Commission and the Commodity Futures Trading Commission have both announced that they will vote on a proposed definition of swaps this Wednesday. The definition must be approved by both agencies.
Many industry representatives have complained that the new rules cannot be realistically discussed without a clear understanding of the contracts being regulated. The more traditional derivatives swaps have a reasonably clear understanding of where they stand, but commodity options, floating rate loans and simple insurance all lie in a more nebulous area.
The CFTC’s chairman, Gary Gensler, suggested last month that cash forward contracts might be excluded, but very little else has been made public. Former CFTC senior official Michael Greenberger told Reuters he thinks the new definition will likely include credit derivatives, currency derivatives, commodity index swaps, energy swaps, and agriculture swaps.
The new rules are scheduled to go into effect in July, but recent reports from within the CFTC have raised concerns that the new regulations have not been examined thoroughly enough. Depending on the regulatory bodies and Congress, implementation of some or all new rules could be delayed.
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