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CFTC Delays Vote On Swap Platforms

Posted in CFTC Compliance

In another example of regulators struggling with the general mandates of the Dodd-Frank Act, the CFTC was forced to delay a vote on establishing trading platforms for swaps.  The new trading platforms were called for by Congress to bring transparency and competition into the over-the-counter markets.  The law requires that swaps, which are currently traded over-the-counter, be traded on exchanges or on alternative platforms known as swap execution facilities or SEFs. 

The CFTC pushed its Tuesday meeting to March 1st because Commissioner Mark Wetjen, a Democrat, stated that he was concerned that the platform regulations would “push the markets precipitously in a way that ends up being counterproductive.”  Many consider Commissioner Wetjen to be a swing vote with the respect to the proposed regulations. 

The CFTC continues to debate the mechanics of the trading platforms.  Firms that are creating the SEFs have put pressure on the CFTC to finalize the rules so that they can compete with exchanges.  Unfortunately, the firms will have to wait at least several more weeks before the CFTC meets to consider the final regulations.