CMC Meets with Senior Staff at CFTC

CMC recently met with senior staff at the CFTC to discuss various issues under the position limits rulemaking, including aggregation and reporting. CFTC staff advised us that they were working on the petitions that had been filed by the Energy Working Group on these topics, and acknowledged CMC’s letters of support for those petitions.

On the subject of monthly reporting of daily positions, the CFTC believes that the new form that they have asked market participants to use as a template (Form 404) will be a little more burdensome to comply with than the current Form 204, but not prohibitively so. The CFTC is instituting an online process to file Form 404. Clearly, the CFTC’s opinion is that significant benefits (in excess of the costs imposed on industry) will accrue to the Commission from a surveillance perspective by seeing the daily positions data on a monthly basis.

CMC Voices Opinion on CFTC’s Dodd-Frank Rulemaking Process at Regulatory Improvement Council (RIC) Event

Earlier this week, CMC was invited to participate in an event organized by RIC, where we spoke about our concerns with the CFTC ‘s onerous and burdensome regulations, which result in part from their deviation away from their erstwhile principles-based regulatory approach.

AT RIC’s request, CMC is taking the lead in forming a working group within RIC to focus on derivatives and other Dodd-Frank topics. To that end, CMC and RIC plan to work together to organize a symposium on these subjects, where other trade associations, companies and Capitol Hill staff will be invited to attend and participate on panels.

At the RIC meeting this week, CMC also circulated a preliminary draft of a letter we plan to send to the Office of Management and Budget (OMB) next week, in which we write about our support for Commissioner O’Malia’s letter sent a few weeks ago to OMB, wherein he discusses the inadequate and perfunctory cost-benefit analyses being conducted by the CFTC in its rulemaking process. We solicited support on our letter from other trade associations and companies, and are awaiting their responses.

CMC met with White House staff to discuss inadequate cost-benefit analysis in CFTC rules

Last week, CMC staff met with White House staff at the OMB’s (Office of Management & Budget) OIRA (Office of Information and Regulatory Affairs) division. Representing OIRA were Jeff Weis, Associate Administrator (the second ranking political appointee at the division) and Kevin Neyland, Deputy Administrator (the top career civil servant at the division).

CMC brought up a letter that CFTC Commissioner O’Malia had recently sent to OMB Director Zients, complaining that the CFTC does an inadequate job of its cost-benefit analyses, despite statements from President Obama that all agencies in his administration are required to do so. OIRA’s response to us was that they noted our concerns and will discuss them with the CFTC. However, they said, they do not have the ability to directly order the CFTC because the CFTC is a statutorily independent agency.

CMC believes nonetheless that this legal limitation notwithstanding, the White House can use its bully pulpit with the CFTC if it so chooses. In order to prod OIRA into action, CMC plans to send to OIRA a follow-up letter to Comm. O’Malia’s letter within the next several days. CMC will actively explore the possibility of other trade associations representing commercial end users to sign on to such a letter.

CMC Meets with CFTC Commissioner Wetjen

CMC, jointly with the Energy Working Group, took the opportunity to sit down with CFTC Commissioner Mark Wetjen earlier this week. We discussed the upcoming Swap Dealer definition. All meeting participants were encouraged by what they heard from the Commissioner and his senior staff. A couple of highlights: The de minimis level is going to be raised to $3 billion of gross notional swaps value at the upcoming public meeting on February 23, Thursday. Footnote # 18 in the proposed swap dealer definition will be removed – in other words, it will not be mandatory for every swaps transaction to necessarily involve at least one swap dealer counterparty.

CMC Meets with Rep. Bachus

CMC recently sat down with House Financial Services Committee Chairman, Rep. Spencer Bachus (R – Alabama). He opined that the CFTC has gone too far in over-regulating the derivatives and commodities markets. Several industry lobbyists, including those from commercial firms, spoke up about how the CFTC’s rulemakings (such as the Swap Dealer definition) had the potential to adversely impact them.

CMC Meets with Sen. Roberts’ Staff

Earlier this week, CMC met with Sen. Pat Roberts’ staff (R – Kansas) for a wide-ranging discussion. Sen. Roberts in the Ranking Member of the Senate Ag Committee and hence a very influential person in CMC’s world. Sen. Roberts is focusing his efforts on the Farm Bill, although it is unclear at this time whether this congress will actually pass a Farm Bill. He expects the commodities title to be a contentious one, and he will work to retain crop insurance. He is supporting of a narrow swap dealer definition – he does not want see a grain elevator treated the same as a hedge fund. On the MF Global issue, he is not optimistic that customers will get all their monies back.

CMC Attends Lunch Featuring USDA Chief of Staff Krysta Harden

In a lunch attended by CMC, Krysta Harden, who currently serves as Chief of Staff to USDA Secretary Vilsack, talked frankly about her busy schedule and how USDA continues to build relations with China.