CFTC Commissioner Scott O’Malia released a statement dissenting from the Commission’s approval of the rule establishing Process for a Designated Contract Market or Swap Execution Facility to Make a Swap Available to Trade under Section 2(h)(8) of the Commodity Exchange Act (CEA). If a swap is “available to trade,” that means that, with very limited exceptions, all trading in that swap must take place on a regulated CFTC market.
According to Commissioner O’Malia, problems with the CFTC’s rulemaking include: (i) that the CFTC has not allowed itself any clear method to assess whether an “available to trade” determination has been made by a market, (ii) the criteria that a market must use to make a determination are quite vague, (iii) the CFTC’s rules are not supported by any data, and (iv) the CFTC has not provided a process to revoke an available to trade determination.
Lofchie Comment: Leaving aside whether one agrees with the substantive requirements of the “available to trade rule,” such as the request to request at least three quotes, the criticisms that Commissioner O’Malia makes of the procedural requirements of the rule seem serious. It is surprising that the CFTC majority elected not to address these comments in its final rule.
See: Dissenting Statement of Commissioner Scott D. O’Malia
See also: CFTC Adopts Rules Regarding SEFs
See also: Remarks of the CFTC Commissioners with Regard to SEF Trade Execution Rules and Anti-Disruptive Trading Practices