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A Review Of Cost-Benefit Analyses Performed by the Commodity Futures Trading Commission in Connection with Rulemakings Undertaken Pursuant to the Dodd-Frank Act

July 26, 2011 Comments off

A Review Of Cost-Benefit Analyses Performed by the Commodity Futures Trading Commission in Connection with Rulemakings Undertaken Pursuant to the Dodd-Frank Act (PDF)
Source: Commodity Futures Trading Commission, Office of Inspector General

Since enactment of the Dodd-Frank Act, CFTC has published more than 50 proposed rules, notices, or other requests related to the new law.81 In accordance with section 15(a) of the Act, CFTC has published cost-benefit analyses with each proposed rule. We examined the cost- benefit analyses for four proposed rules dealing with the treatment of segregated funds of swaps customers, derivatives clearing organization risk management requirements, swaps relationship documentation requirements, and core principles for swap execution facilities. Three of the proposed rules were issued prior to March of this year. The proposed rule addressing the treatment of segregated funds of swaps customers was issued by the Commission on April 27, 2011.

While the methodology initially adopted by the Office of General Counsel and the Office of Chief Economist would permit a detailed and thorough approach to the task, in the three earlier rules we examined it appears the Commission generally adopted a ―one size fits all‖ approach to section 15(a) compliance without giving significant regard to the deliberations addressing idiosyncratic cost and benefit issues that were shaping each rule, and often addressed in the preamble. We made the same comments in our earlier report addressing four other proposed rules that were also issued early in the process. Our comments and recommendations made in the earlier report fully apply to these three rules, and we have no additional recommendations.

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