O'Malia Expresses Concern Over CFTC Progress

In his first public address since the CFTC offered guidance on SEF rule implementation, CFTC Commissioner Scott O’Malia said he has concerns regarding the Commission’s rule making process and schedule, as well as the overall impact of these rules on the end user.

As the keynote speaker at the Edison Electric Institute CFTC Compliance Forum, Commissioner O’Malia addressed three main concerns moving forward: the implementation of the rules, the regulatory impact on end-users, and the Commission’s preparedness to oversee the implementation of the Dodd-Frank regulatory regime:

Market participants are confused regarding the application of our rules, and how or when they must be applied. Further, since the Commission doesn't vote on staff no-action letters, they don't appear in the Federal Register. And you won't find the exemptive letters in our rulebook either. This lack of transparency and consistency will drive a compliance officer crazy. 

O’Malia also noted he was disappointed with the Commission’s oversight of SEF reporting, saying that, despite an October 2nd deadline for SEFs to start up, he is not aware of any plan to automate a process that now relies on self-regulatory organizations to send over data in an Excel spreadsheet.

Is the Commission sufficiently familiar with the readiness of the market to adapt to our rules? The answer to this question is also "no." As I discussed earlier, evidence of this failure can be found in the Commission’s extensive use of no-action relief tied to arbitrary deadlines. 

To read O’Malia’s complete address, please click here.