* CFTC to discuss self-executing rules among other reforms
* Considering effective dates of derivatives reforms
* Senators seek clarity on derivatives robo-rules
By Christopher Doering
WASHINGTON, June 7 The U.S. futures regulator will meet next week to discuss how it will handle derivatives market changes scheduled to automatically kick in July 16, as part of a larger meeting on the effective dates of Dodd-Frank financial reforms.
The meeting by the Commodity Futures Trading Commission could provide some clarity for industry players worried about the so-called self-executing provisions. Some former CFTC officials and industry watchers said the agency threatens to throw into question billions of dollars in derivatives into legal limbo if U.S. regulators don't create a short-term fix to the market chaos. [ID:nN19279043]
The problems have arisen, in part, because the CFTC and Securities and Exchange Commission are missing deadlines in rewriting regulations for the $600-trillion global over-the-counter derivatives market.
The CFTC is expected to use the meeting on June 14 to discuss how it will deal with the self-executing rules, and could also provide a loose set of guidelines for the order it expects to implement Dodd-Frank rules.
The agency has issued draft proposals for dozens of measures and must vote to finalize them before they go into effect.
"We are working on a document and a proposal right now that creates certain safe harbors for self-executing rules, to delay them until the new rules are in place," Scott O'Malia, one of the CFTC's five commissioners who approve new rules, told Reuters in an interview earlier on Tuesday. [ID:nLDE7561E5]
If the CFTC does not act, many derivatives contracts may lose the legal protection afforded them by a clause in the Commodity Futures Modernization Act of 2000 that created a framework that stated they were not illegal off-exchange futures.
Lawmakers are expected to ask the CFTC about the steps it has taken to provide certainty to those that will be affected at a Senate Agriculture Committee hearing expected next week.
"As July 16 approaches it becomes increasingly important for the public and market participants to know what the law will be after this date," Republican Senators Pat Roberts, Richard Lugar and Saxby Chambliss said in a letter to the five CFTC commissioners.
In a letter dated May 27, they asked the CFTC to provide by Friday a list of what provisions will become effective on July 16, what the law will be for governing swaps during the interim period and before the new regulations are completed, and what action the regulator plans to take to provide legal certainty for swap transactions during this interim time.
(additional reporting by Huw Jones in London;editing by Sofina Mirza-Reid)
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