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Guy Dempsey and Gary DeWaal Comment on Recent US Treasury Regulatory Proposals

Firm News | October 13, 2017

Financial Services attorneys, Guy Dempsey, of counsel, and Gary DeWaal, special counsel, spoke with Futures & Options World (FOW) on the US Treasury's report release October 6, recommending regulations for the Securities Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). Guy stated, "Some recommendations are very concrete but some are so fuzzy as to not be particularly helpful. For example, the suggestion to remove footnote 88 in the swap execution facility rules is very specific, but the recommendation to "work with their international counterparts" so that the margin framework "is more appropriately tailored to the relevant risks" is a nice sentiment, but does not really do anything."

Gary noted the correlation between the proposals and widely expressed industry concerns. "The recommendations from the Treasury, at least for the CFTC, echo a lot of the KISS (Keep It Simple, Stupid) project proposals from the industry. Most of these ideas reflect that, with Dodd-Frank, a lot of controls were put into place that perhaps were incorrect interpretations of law or not focused enough and warrant change." He indicated that the involvement of Congress is crucial for clearing and other proposed regulations to happen. Gary stated, "[CFTC] Chairman Giancarlo has said he wants to do the big rule changes with a full commission, but it is very likely that the commission will remain with three members for a while. So one can wonder how many of these changes can be achieved. … Another potential concern is the sheer size of the proposed reforms. The CFTC has to accomplish a lot with a relatively small staff: identifying rules, soliciting and evaluating public input and generating final rules. These are things that take a lot of manpower." ("US Treasury Recommendations Reflect Industry Concerns – Experts," October 13, 2017)