US watchdog gives more time on swaps used to hedge

WASHINGTON, April 9 Tue Apr 9, 2013 11:56pm BST

Related Topics

Quotes

   

WASHINGTON, April 9 (Reuters) - The top U.S. derivatives regulator granted manufacturers and other firms more time to start reporting swaps they do not use for speculative purposes, the latest in a raft of last-minute exemptions to new rules to make the swaps market less risky.

As of Wednesday, companies that aren't large banks or investors such as hedge funds - known as 'end-users' in regulatory parlance - would have needed to start reporting their swaps positions to data warehouses.

Most of these companies now have until July 1 to comply with the CFTC's rules for interest rate and credit default swaps, and until August 19 for equity, foreign exchange and commodity swaps, the CFTC said.

Groups such as the Coalition for Derivatives End-Users had lobbied for the delay, saying their computer systems weren't ready for the costly measures.

The Commodity Futures Trading Commission (CFTC) is implementing a raft of new rules to shed light on the $650 trillion swaps market, as regulators crack down on Wall Street after the 2007-09 credit meltdown.

Swaps will need to be traded through clearing houses, which stand between buyers and sellers to absorb risk and make trading safer. Positions need to be reported to data warehouses to give regulators more insight into the market.

Companies outside banking, who use swaps as a hedge against losses on all sorts of financial assets - and not to speculate on financial gains - had complained they faced the threat of a regulatory deluge.

The CFTC has often granted relief from its rules for a certian period of time or certain groups of users as it rushes to finish dozens of new rules mandated under the 2010 Dodd-Frank law, part of a global overhaul of finance,

Last week, it allowed swaps between units of the same company to be traded without the intervention of a clearing house, another issue companies had lobbied for.

The CFTC has itself admitted to problems with the data, when Commissioner Scott O'Malia said it could not upload the vast files it already gets without crashing its computers

The data are collected by three Swap Data Repositories, run by the CME Group Inc, the world's largest futures exchange, the IntercontinentalExchange and the Depository Trust and Clearing Corp (DTCC).

FILED UNDER: