Monday, June 20, 2011

House Passes Appropriations Bill Requiring CFTC to Finalize Swap Data Reporting Rules before Block Trade and Real-Time Reporting Rules

The House passed the Fiscal Year 2012 Agriculture Appropriations Bill (HR 2112) with an amendment requiring that commodity swap data reporting rules be finalized and in effect for 12 months before the CFTC can lock in final trade blocks or real-time reporting rules. The amendment, introduced by House Capital Markets Subcommittee Chair Scott Garrett (R-NJ), is designed to allow industry time to comply with any new rules. The amendment passed on a vote of 231-189.

Thus, the CFTC would be required to finalize important data reporting rules prior to finalizing block trade and real-time reporting rules. According to Chairman Garrett, the amendment would give the CFTC the ability to collect transaction data it needs to determine reasonable standards for block trade levels and real-time reporting without disrupting the marketplace. Without rulemaking informed by data, said the Chairman, liquidity and pricing in the swaps market could be severely impacted. He reasoned that finalizing any numerical determination of block trade sizes or setting real-time reporting time frames prior to having the necessary data is arbitrary, encourages litigation, and will likely have unintended consequences on the ability of pension funds to protect their