Opening Statement, Public Meeting on Proposed Rules Under Dodd-Frank Act

Commissioner Michael V. Dunn

April 27, 2011

Thank you all for joining us today for this important meeting regarding the implementation of the Dodd-Frank Act.

Today, as we near the end of our meetings regarding proposed rules, we will finally consider our Product Definitions rule – a joint rule with the SEC – which in a perfect world would have been one of the first rules proposed, because meaningful input from those who will be under the new regulatory regime depends upon knowing precisely what constitutes a swap and what does not.

We also will discuss our Conforming Rules, whose purpose is in part to ensure that what is required for swaps is required for futures and vice versa. In a perfect world, conforming rules would be the last proposed and finalized because to do them correctly depends on having a view of all the other rules.

This is not a perfect world and the Commission is doing what it can, when it can, with the resources we have.

In considering the proposed rule for Capital Requirements for Swap Dealers and Major Swap Participants, I will be particularly interested in hearing staff’s thoughts and the public comments on how much this rule will cost not only the industry but the CFTC. I believe this rule is a necessity, but I am interested to hear if or how these proposed capital requirements will affect the cost of transacting swaps. At the very least, these proposed capital rules will increase the burden on current Commission staff and will require the hiring of additional staff.

I am also very interested in hearing the public comments regarding the proposed rule on the Protection of Cleared Swaps Customer Contracts and Collateral. While staff makes a specific recommendation today regarding the approach that the Commission should take, the proposed rule also lays out a number of alternatives that staff has considered. I look forward to reading the comments on this rule so that the Commission can determine the best approach.

As we move from the process of proposing rules to the process of final rules, I will rely heavily upon the comments that we receive from the public in forming my opinions on the final rules. While I will have specific questions regarding each final rule, there are two broad themes of questions that I will have for each of the final rule teams. First, how can the rule be made more principles based, and less prescriptive or restrictive? Second, how much will the rule cost the Commission to implement, maintain, and enforce, particularly in terms of staffing. I have provided a series of questions regarding these themes to the rule teams, and I will look forward to answers to these questions as we move to final rules.

I would like to once again thank the staff at the CFTC for all their hard work on these very important proposed rules, and I look forward to their presentations.

Questions for Final Rule Teams

• Is the proposed final rule in line with a principles based regulatory regime, or is it prescriptive?
• If the rule is prescriptive, how can it be made more principles based?
• If the rule cannot be made more principles based, why is this rule better suited to a prescriptive approach rather than a principles based one?
• What is the expected cost of implementing, maintaining and enforcing this final rule?
• What are the expected staffing requirements for implementing, maintaining and enforcing this final rule?
• Will new staff need to be hired in order to implement, maintain and enforce this final rule?
• Does current staff have the expertise and experience necessary to implement, maintain and enforce this final rule?
• If the Commission’s budget does not allow additional hiring, how will current staff be allocated to implement, maintain and enforce this final rule?
• If the Commission’s budget does not allow additional hiring, how will current staff’s new responsibilities regarding this final rule impact their pre-Dodd-Frank responsibilities (ie, what is being done by staff now that won’t get done once the final rule is implemented)?

Last Updated: April 27, 2011