The Financial Services Committee of the US House of Representatives has voted to give regulators more time to deliver the rules that will govern derivatives trading.
The committee approved a bill, HR 1573, introduced on 13 April by representatives Spencer Bachus, Frank Lucas, Michael Conaway and Scott Garrett, which extends the deadline for implementing Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act to 30 September 2012, with the exception of regulatory reporting rules and the definition of certain terms, including swap, security-based swap, and security-based swap agreement. A version of the bill which delayed compliance with new derivatives rules to the end of December 2012 had previously been approved by the House Agricultural Committee on 4 May.
The Financial Services Committee also voted to maintain the original Dodd-Frank effective date for regulators to finalise clearing rules by 21 July, 2011.
Concerns over the speed at which regulation is being implemented were raised following an investigation into the cost-benefit analysis of specific rule proposals by the inspector general of the Commodity Futures Trading Commission (CFTC), the US derivatives trading regulator, in April.
HR 1573 is intended to give both the CFTC and the Securities and Exchange Commission (SEC), the US's securities trading watchdog, more time to meet the objectives of the derivatives title and to address concerns that proposed rules could disadvantage US firms operating in the derivatives market. Additionally, the bill aligns the US with the Group of 20 political leaders' agreement to implement financial markets reform by December 2012.
“Dodd-Frank created a whole new regulatory structure for derivatives markets and it is vitally important to our economy that regulators get this new structure and the underlying rules right,” said Ken Bentsen, executive vice president, public policy and advocacy at SIFMA. “While we remain committed to fully implementing the derivatives provisions in the Act, we believe that the current July 21, 2011 deadline does not provide adequate time for regulators to consider the critical issues related to this new regulatory system for over the counter derivatives markets. This legislation would provide additional time for regulators to draft rules, conduct additional cost-benefit analysis and consider the cumulative impacts of these rules on the market and how they would affect businesses and consumers.”
The bill was approved by 30 votes to 24, all of the latter being Democratic representatives.
Once a bill is revised by the committees under whose jurisdiction it falls, it must be debated on the floor of Congress, which consists of both the House of Representatives and the Senate, for approval.
While the House is dominated by the Republican party with 240 members over the Democrat's 193, the Senate is currently dominated by members of the Democrat party with 53 senators, including two aligned independents over the Republican Party's 47 members.