Update on Swaps Regulation

On Tuesday, June 14, 2011 Representative Scott DesJarlais (R-Tenn.) sent a letter to U.S. Commodity Futures Trading Commission Chairman Gary Gensler seeking clarification on the Commission's swap dealer definition. The distinction is important: The legislators intended to remove risk from the financial markets, but if definitions do not walk the right line, grain buyers and even farmers could find themselves on the wrong side of that line, putting risk management tools at risk and/or raising the costs. The CFTC today proposed a deadline extension to Dec. 31 for instituting all rulemakings that involve definitions or are based on terms that require definitions. According to Gensler, "Six months will provide the Commission with the opportunity to re-examine the status of final rulemaking in light of the changed regulatory landscape at the time. It would allow us, if appropriate at the time, to tailor relief from certain provisions of the Dodd-Frank Act at the end of the year." The proposed order CFTC announced today will be open for public comment for 14 days after it is published in the Federal Register and will be finalized before the July 16, 2011, deadline.