CFTC Commissioner O’Malia Calls CFTC Rule Making Process a “Train Wreck”

In a speech at the “AICPA/SIFMA FMS Conference On The Securities Industry,” CFTC Commissioner Scott O’Malia discussed the post-Dodd-Frank derivatives landscape within the context of the (i) transaction rules, (ii) capital and margin rules, and (iii) Congress’s legislative review role for the coming year. 

With the year coming to an end, Commissioner O’Malia framed his discussion and criticisms of the CFTC rule making process through the issuance of the following holiday wish list:


  • Any relief that the Commission is planning to provide from the December 31 implementation date should be issued by December 14, to give certainty to the market as soon as possible.


  • The CFTC should produce:
    • a flexible SEF rule;
    • transaction rules that set fair rules of the road and step aside to allow the industry to decide which products and on what venues to trade; and
    • capital and margin rules that are sufficiently mindful of the costs imposed on market participants, particularly commercial end users.


  • Congress needs to review and provide feedback on a few areas of the Commission’s work that need further clarity and guidance.

Commissioner O’Malia goes on to suggest that the CFTC’s regulatory process has been a “train wreck,” stating that “there are many unintended, overreaching and technologically infeasible provisions in our rules… [so] we have in effect been forced to set up a parallel exemptive process to provide relief from these rules.”  


Lofchie Comment:  Keeping with the theme of Commissioner O’Malia’s speech, I have to imagine that meetings of the CFTC Commissioners must resemble closely holiday dinners with the relatives.  (“Sorry if I spilled that gravy in your lap.”)


Click here to view speech in full (links externally to CFTC website).