Uncertainty abides amidst a flurry of CFTC activity

It’s a busy – not to mention dramatic and uncertain – time for U.S. derivatives regulation. Consider the milestone of final SEF rules and yesterday’s “Category 2” clearing deadline. Consider, too, the on-going uncertainty as to the pending expiration of the exemptive relief on Dodd-Frank’s cross border rules (also known as ‘extra-territoriality, or ‘ET’). CFTC Chairman Gensler remains a strong advocate for ET, despite the fact that three of the five commissioners wish to extend the deferral. Oh, and there’s Rule 1.73, the bunched order component that was delayed at the 11th hour and extended now to September 1, 2013.

And let’s not forget the legal challenges that have been brought against the CFTC in respect of some of the Dodd-Frank rules. The DTCC filed a lawsuit last month and, while Bloomberg’s lawsuit has just been thrown out, they have said they’ll challenge the ruling.

Call these lawsuits unintended consequences of Dodd-Frank, or call them evidence of growing pains as the industry adjusts to the challenges of a changing financial environment. Call the looming uncertainty over ET and the Rule 1.73 deferral examples of regulatory equivocation, or evidence of the disconnect between regulatory policy and the real world of (global) financial markets.

Whatever you call them, there is no denying the rate of change and the continuing uncertainty in the post Dodd-Frank derivatives landscape.

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