Swap Dealers Rule OK’d – Joan Quigley (The Bond Buyer)
January 12, 2012

“The Commodity Futures Trading Commission on Wednesday voted 4 to 1 to approve a final rule on business conduct standards for swap dealers designed to protect states and local governments, as well as taxpayers, from fraud in the swaps marketplace. …The CFTC will not release its final rule for several days, according to an agency spokesperson. But based on a fact sheet and a question-and-answer document posted on the commission’s web site Wednesday, market participants expressed a range of concerns about the rule. …’This is an issue where the devil is definitely in the details and I don’t know how bad it will be until I look at the final rule proposal,’ said Barbara Roper, director of investor protection for the Consumer Federation of America. But, she added: ‘It’s significantly weaker than it was.’ …Last month, consumer groups warned that industry groups had lobbied to weaken both agencies’ proposed business-conduct standards. Without them, they said, the market would see more cases like Jefferson County, Ala., which filed for bankruptcy protection last year after terminating more than $3 billion in interest rate swaps. The consumer groups also said that under the SEC’s proposal, a state or local government with an independent advisor could sign a waiver saying the swap dealer is acting as a counterparty in an arm’s-length transaction and that the best-interests standard does not apply because the government has an independent advisor. In an interview Wednesday, Roper said the CFTC’s final rule appears to be more closely patterned after the SEC’s proposal. Specifically, she said, the CFTC created a safe harbor that did not exist in its original proposal. …Another consumer group shared Roper’s concerns. ‘These rules, unlike the initial proposal, are simply not sufficient to fully implement the Dodd-Frank protections,’ Americans for Financial Reform said in a release.” Click here for more.