CFTC passes swap rules despite 'flaws'
Thursday 12 January 2012 - by Karina Whalley
The Commodity Futures Trading Commission voted 4-1 on Wednesday approving the revised regulations on business behaviour that aim to curb market abuse by banks selling derivatives. But commissioner Jill Sommers, who voted against the ruling, says the measure contains "serious flaws".
However, market participants are still concerned that the rules have not been adequately revised.
Commenting, the Securities Industry and Financial Markets Association said: "It is our hope that after a more thorough review that the commission has indeed made sufficient changes to the original proposal so as not to unnecessarily impede the ability of pension funds, states and municipalities to manage their risks."
Commissioner Sommers had warned that the finalised rules contain "serious flaws", arguing the regulation has not been sufficiently modified to take into account complaints by special entities.
"Shortly after our proposed rules were published, special entities began to tell us that the protections we proposed were not protections at all. We heard over and over again, right up until last week, that our rules would not provide additional protections, but would actually harm them by making it more difficult for them to enter into arms-length transactions with swap dealers," she explained.
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