In the latest issue of The Risk Desk, CFTC Commissioners Dan Berkovitz and Rostin Behnam shared their perspectives on a number of recent proposals, including amending the rules governing swap execution facilities ("SEFs") and the registration threshold for swap dealers.
Mr. Berkovitz, who was sworn in as a Commissioner last month, and who had served as the agency's General Counsel in the previous administration, stated that the Commission should more closely examine SEFs. Conceding that the "trading mandate has not worked totally as the vision," Mr. Berkovitz questioned whether the lack of trading on SEFs is a market condition or "is it that structurally there simply isn't the regulatory framework to make it happen?" He noted the anticipated proposal by the Chairman, saying "[t]his isn't 2012. . . . We're not concerned about the best way to implement this. We're operational now. We're trying to make it better." He also described the positive atmosphere at the Commission: "what we have at the agency right now, is pretty unusual, if not unique, in terms of collegiality."
Mr. Behnam stated that he expects "some headwinds" on SEF, but suggested that people are not interested in a complete 180-degree turn right now. He said he is hearing, "Let's take it easy." Separately, Mr. Behnam expressed "grave[] concerns" regarding the CFTC's approach to the swap dealer de minimis threshold. Mr. Behnam charged that the Commission was "moving far beyond the task before it - setting the aggregate gross notional amount threshold for the de minimis exception - to redefine swap dealing activity absent meaningful collaboration with the [SEC]." He expressed concern that "various ancillary components" that have been proposed may "not only detract from [the proposal's] core purpose, but may signify the [C]ommission's willingness to exploit the de minimis exception to undermine the swap dealer definition and circumvent congressional intent."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
