Dodd-Frank controvesy: What is a ‘swaps dealer’?
April 18, 2012
From Reuters: “Major Wall Street firms that trade in derivatives, like Goldman Sachs or Morgan Stanley, have been widely expected to fall into the swap dealer category. But large energy companies and traders such as Royal Dutch Shell, BP and Vitol contend that while they may trade billions of dollars a year in swaps, their trades are done to shield themselves from market risk such as changes in commodity prices or fluctuations in currency. As a result, they say they should not be subjected to the new regulations. Disagreements between the SEC and the CFTC on the final rules have led to numerous delays and kept companies waiting with great anticipation 16 months after the rules were first proposed.”
CFTC Commissioner Scott O’Malia has published his letter of dissent to the proposed rules here. My favorite sentence: “the Commission advanced a definition focusing on activities, rather than the entities conducting these activities”. But I’ll offer an Imperial pint (568 mL vs. the American 473 mL) to anyone who can distill the rest of the letter for me. Specifically, I’m not sure I grasp what he means by ‘Unnecessary Statutory Contortions’.