CFTC Commissioner Scott D. O’Malia’s Remarks on the Problems of “High-Frequency Regulation” and How the CFTC Failed the “Good Government” Test in its Swaps Rulemakings and Cross-Border Guidance

In his speech at the University of Notre Dame Business Law Forum, Commissioner O’Malia provided examples of where the CFTC has failed the “Good Government” test in its rulemakings and “must make immediate corrections”.   In discussing where the CFTC’s rule making process had failed, he focused on the following:

  1. Swap Data Reporting Rules;
  2. The Proposed Cross Border Guidance;
  3. Swap Rules Driving Shift to Regulatory Security of Futures Markets.

Lofchie Comment:  According to Commissioner O’Malia, the CFTC’s rulemaking process has led, or will lead, to “regulatory inconsistencies, blatant mistakes, uncertainty and unexpected outcomes.”  When one of the leaders of a major financial regulatory agency so bluntly bashes (even if using polite words) the regulations produced by the agency he serves, one would think that this would eventually catch the attention of the press.  Add to Commissioner O’Malia’s remarks the hostility to the CFTC’s proposed regulations and cross-border assertions of jurisdiction voiced by non-U.S. regulators, even to the point of threatening a trade war.  At some point, it should become apparent that there is more going on here than just partisan grumbling: something is seriously amiss.

View speech here (links externally to CFTC website).