RPT-Bumpy final stretch in U.S. watchdog swaps overhaul

Thu Dec 20, 2012 6:59am EST
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By Douwe Miedema

WASHINGTON Dec 20 (Reuters) - On Monday, Oct. 15, top U.S. derivatives regulator Gary Gensler watched a mock ceremony to mark the start of a broad overhaul of the swaps industry that started that day.

In a conference room at the Commodity Futures Trading Commission (CFTC), two senior staff members cut a white ribbon hanging over a copy of the 2010 Dodd-Frank act.

Yet the preceding Friday, the agency had slipped through a batch of letters to grant exceptions to the rules it was now celebrating.

The last-minute changes, critics say, were a telling sign of the overly aggressive way in which Gensler - himself a former Goldman Sachs banker - is tackling the post-crisis clean-up of Wall Street.

The agency's staff has sent out more than 50 letters granting temporary reprieve from the rules after industry complaints this year.

So far the CFTC has completed two-thirds of the rules Congress told it to write to revamp a swaps markets blamed for exacerbating the 2008 financial crisis. The clampdown may make the business far less lucrative for the large investment banks that dominate it.

What remains to be done - rules that govern swap trading platforms, safety buffers for uncleared swaps, and guidance on how the agency's rules apply abroad - are the final building blocks that need to be put in place in coming months.   Continued...