Reuters: Regulatory News: CFTC to hold roundtable on tricky 85 pct rule

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CFTC to hold roundtable on tricky 85 pct rule May 25th 2012, 18:55 Fri May 25, 2012 2:55pm EDT * Most of contract's trading must be on centralized market * Critics say rule will force contract delisting, boost cost * CFTC to make rule final this summer * Roundtable to take place on June 5 By Alexandra Alper WASHINGTON, May 25 (Reuters) - The Commodity Futures Trading Commission will hold a roundtable on June 5 to discuss a controversial rule aimed at protecting price discovery in the swaps and futures markets, the agency announced on Friday. Dubbed "the 85 percent" rule, the measure as proposed would require 85 percent of a contract's trading to occur on an exchange's centralized market. Critics have said the rule would force exchanges to delist hundreds of contracts because of low volume, hitting traders with higher costs and in many cases force them to unwind the contracts. The CFTC was tasked by Dodd-Frank with boosting transparency and limiting risk in the $708 trillion over-the-counter swaps market, by requiring standardized swaps to be traded on transparent exchanges or swap execution facilities (SEFs). "The roundtable will help the commission by providing additional public input for the final rulemaking to implement [the rule]," the agency said in a statement. Widespread ignorance of swaps exposure at failed investment firm Lehman Brothers and insurer American International Group aggravated the financial crisis, which led to billions of dollars in taxpayer bailouts. The 85 percent rule, proposed in December 2010, was part of a framework of rules aimed at beefing up oversight of derivatives exchanges. Those rules were finalized earlier this month, but regulators punted on the 85 percent rule. CFTC Chairman Gary Gensler said a vote on the provision would be delayed until the commission could finalize rules on SEFs this summer. Link this Share this Digg this Email Reprints

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