U.S. CFTC Commissioner Chilton, October 5, 2012 –
These are busy times in our industry. In fact, we’ve never had more on our plates. Implementation of the Congressional mandates of Dodd-Frank is a massive effort. I’m pleased we are, finally, seeing the end in sight. That said, it’s time to consider some options while we move forward on final implementation phases of these critically important—and necessary—financial market regulatory reforms.
We’ve approved 39 final rules, and given this mammoth undertaking it’s not unexpected that these new regulations would raise questions and concerns regarding compliance and implementation. Right now, we’ve got a couple hundred requests for clarification and/or regulatory relief in some fashion on approximately three dozen discrete issues. These requests—each one of them—deserve our careful, deliberate, thoughtful consideration and resolution. Every single request deserves a response.
To that end, I have a couple ideas as to how we can help this process move forward quickly, responsibly and effectively in implementing financial market reform. I’m offering them because the confluence of effective dates and the nature and timing of requests for clarification or relief has put us in a unique situation. I’m concerned that without some palliative measures at this point, there could be potential harm to markets and ultimately to consumers.
It’s time to calm the waters a bit regarding immediately pressing deadline dates. First of all, it’s my hope and expectation that responses to requests for clarification or relief on numerous of the existing requests will go out the next few days, and that should go a long way toward addressing concerns. Once that clarity is provided on reasonable requests, then—of course—compliance with all final rules is required. Just to be clear, my opinion is that, if you haven’t sent us some kind of request, then you are ready to be fully compliant with all pending deadlines—providing clarity as to existing requests does equate with some kind of “blanket pass” on compliance.
As we proceed, I recognize there will always be the ability to debate miniscule issues. That’s not what I’m talking about. I am focusing on the issues raised by those who have come to us already in good faith on substantial topics. They deserve clarity. Accordingly, on significant issues that are not addressed in the next few days, we need to figure out a reasonable, responsible way forward.
To be clear, I’m not at all talking about an overall delay of regulatory reform requirements. It’s not about suggesting that we’ve done poor rules: we have not. It’s about making sure we move forward on the right track for markets and consumers, and ensuring our rules aren’t derailed down the line. So let’s, as I recently said, “pause and take a breath.” I’ve got two points to offer that I believe may be helpful to consider as we work toward a December 31st completion of our rules:
- First, compliance with Dodd-Frank rules should be required by those that have requested guidance or relief when individual, reasonable requests for clarification or other relief have been addressed sufficiently, which could happen in the next few days, or it could take longer depending upon the issue; and
- Second, only in this (limited) meantime, it would not be appropriate, reasonable, or responsible for the Commission to proceed against entities for non-compliance with a Dodd-Frank rule unless and until they have received a response from the Agency to an existing request. In any event, I cannot envision the Commission moving forward with such an action.
Lastly, I’m not about throwing punches at anyone as to how we got here—the fact is, these are the circumstances, and we play the ball where it lies. My ideas on how to do that will make sure we move the ball down the fairway. Bottom line: we need to respond appropriately and as quickly as possible to each request so that legitimate market activity is not disrupted or impeded, and ensure that American consumers do not ultimately bear any added costs due to the inability of businesses to effectively and efficiently manage risks.