Statement of Commissioner Dawn D. Stump for CFTC Open Meeting

Proposed Rule: Capital Requirements for Swap Dealers and Major Swap Participants – Reopening the Comment Period and Requesting Additional Comment

December 10, 2019

I would like to thank the staff of DSIO, OGC, and OCE for their efforts on further refining the capital rules that would apply to those swap dealers who are not otherwise prudentially regulated.  I realize that everyone at the Commission is juggling multiple concurrent priorities and I am grateful for the considerable amount of time you all devoted to our questions and the modifications in the document that were accepted based on our recommendations.

I believe that adequate regulatory capital for swap dealers is an important component of the post-crisis reforms, and I am pleased that the CFTC is advancing this effort.  Swap Dealers and other market participants that rely on their services need regulatory certainty and a logical implementation schedule.  I hope that we will ultimately be able to provide both.

When it comes to regulatory certainty, capital remains the last substantive Dodd-Frank Act rulemaking yet to be finalized by the CFTC.  The Commission has mandated the provisional registration of Swap Dealers for years and imposed all of the associated regulatory obligations.  Today we seek to advance the regulatory certainty as to capital requirements under our authority, which will enable Swap Dealers to more comprehensively ascertain the cost of continuing to provide such services.

Equally important is a transparent and reasonable schedule for the implementation of capital requirements.  Businesses need accurate and timely information to make sound decisions and plan for the allocation of resources.  I think the Commission would be well-served from commenters speaking to the effective date and implementation timeframe for the CFTC’s rule, especially as it relates to cooperation with other regulators and the impact of substituted compliance determinations.

Even while acknowledging that this piece of our swaps regulatory assignment has taken a bit longer compared to the other changes mandated by the Dodd-Frank Act, I am supportive of the Commission again engaging with the public to receive more timely feedback from affected parties.  Much has changed since the 2011 and 2016 proposals concerning capital. We need to solicit a more contemporary snapshot of the issues.  The matter before us today provides us with an opportunity to rethink our approach to capital and allows us to be more consistent with what other regulators have accomplished.  I agree with the need to re-open the comment period and also ask additional questions, but I do that with an open mind and am not presupposing the outcome.  I encourage commenters to not limit their potential answers to the examples provided but instead view the request for comment as a non-exhaustive list of options.  Bottom line, it is time to get this right. To help us do that, this release has explicitly requested data driven responses that illustrate examples of the impact of various capital choices. Any such information commenters can share will help formulate the highest quality rulemaking possible.  I look forward to seeing the comments and getting this rule across the finish line.