ENERGY END-USERS SEEK TO ENSURE EXEMPTION FROM MANDATORY CLEARING REQUIREMENT UNDER DODD-FRANK ACT AS IMPLEMENTED; PRIMARY CONCERN IS COST BURDEN

摘要

An ad hoc coalition of energy end-users submitted comments in response to an Advanced Notice of Proposed Rulemaking (NOPR) issued 12/2/10 by the Commodity Futures Trading Commission (CFTC). The agency is in the process of implementing the financial reform provisions of the Dodd-Frank Act. The subject in this case is Protection of Cleared Swaps Customers Before and After Commodity Broker Bankruptcies. The Advanced NOPR requested comments on different regulatory options or models to protect margin collateral posted by customers who are clearing swaps transactions. The members of the Coalition make extensive use of swaps and futures to manage commercial risk, and the mechanics used by futures clearing merchants (FCMs) and derivatives clearing organizations (DCOs) to manage collateral can have a significant impact on their costs of hedging. Adoption of the wrong collateral segregation model would significantly increase such costs, they said.