Speaking before the House Agriculture Subcommittee on Risk Management, FIA President John Damgard called for a “measured” implementation of the derivatives reforms contained in the Dodd-Frank Act and described a number of problems with the rules proposed by the Commodity Futures Trading Commission.
Damgard highlighted four major concerns with the Dodd-Frank rulemaking process:
First, some of the proposed rules have gone well beyond the intent of Congress. Given the intense pressure that we all face in bringing down the level of government spending, it would make more sense to focus on the regulatory requirements that are mandated by Congress, and set aside other regulatory initiatives for a future date.
Second, the rules have been published for comment in an order and at a pace that makes meaningful analysis and comment difficult, if not impossible. We encourage both Congress and the Commodity Futures Trading Commission to take the time necessary to fully analyze all the costs and benefits of the proposed rules and allow sufficient time for implementation.
Third, the costs of complying with Dodd-Frank will discourage participation in the markets and force certain firms out of the business. You have already heard similar concerns from many groups that represent the end-users of derivatives; I would only add that the potential costs could lead to a loss of competition among clearing firms and liquidity providers.
Fourth, I encourage Congress to consider the international dimensions of the rulemaking process. In particular, FIA believes that the Commission should use its exemptive authority to avoid duplicative and perhaps conflicting regulatory requirements for activities that take place outside the United States.
Damgard's full oral remarks and his written testimony are available under Resources on the right.
