CFTC Releases Proposal on New Regulatory Framework

Washington -- The Commodity Futures Trading Commission (CFTC) today proposed broad revisions to its regulatory scheme. The proposal would replace the current "one-size-fits-all" regulation for futures markets with broad, flexible "Core Principles," and establish three regulatory tiers for markets: recognized futures exchanges, derivatives transactions facilities and exempt multilateral transactions facilities (MTEF). The three tiers match the degree regulation to the varying nature of the products and the sophistication of the customers trading in the market.

The Commission also is proposing a regulatory framework for clearing organizations designed to reduce systemic risk. The proposed rules would permit clearing organizations overseen by the CFTC, U.S. banking regulators or the Securities and Exchange Commission to clear transactions executed on exempt MTEFs and to clear bilateral transactions.

In order to provide greater legal certainty to the OTC derivatives markets, the Commission proposes to expand and clarify the operation of its Part 35 Exemption for Swap Agreements. The proposed amendments would permit transactions executed pursuant to Part 35 to be fungible, standardized and cleared.

The proposed new rules and rule amendments are being published for a 45-day comment period. The CFTC also will hold two days of public hearings to receive statements from interested members of the public concerning the proposals. The hearings will be held on Tuesday, June 27, 2000, and Wednesday, June 28, 2000, in Washington, D.C.

Chairman Rainer stated, "Today's release of these proposed revisions is an important step in revamping the CFTC's approach to regulation. We look forward to a robust discussion of the significant changes contemplated by this new, flexible regulatory framework over the next 45-days and at our two public hearings."

Copies of these documents can be obtained by contacting the Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, DC 20581, (202) 418-5100 or by accessing the CFTC website at http://www.cftc.gov/opa/oparegulatory.htm. Any one interested in appearing before the CFTC should submit a request to appear as outlined in the CFTC�s Notice of Public Meetings to be published in the Federal Register.