Saturday, February 18, 2012

Bart Chilton Responds to The Doc Regarding CFTC Swap Definition Delays

The Doc has received a response from CFTC Commissioner Bart Chilton regarding the CFTC's delays in defining Swap contracts, and thus delaying the implementation of position limits in commodities, particularly in silver. 

Yesterday, The Doc wrote the following to Mr. Chilton:

Mr. Chilton, I appreciate your efforts at implementing position limits in the commodities markets, specifically pertaining to silver.
Many silver investors are extremely frustrated that it has now been months since the CFTC voted to impose position limits, and have yet to define the word swap.
I wondered if you could clarify when the CFTC will attempt to define a swap, giving a 60 day deadline to the start of the position limits. 
I would greatly appreciate your response. 
Thank you for your time.

Mr. Chilton today replied to The Doc's inquiry regarding the timeframe for the CFTC to define a Swap contract, and begin the implementation of position limits in commodities:

Hey Doc

This has been very frustrating. Had I known this would take so long, I wouldn't have supported the position limit rule.

As you know, we want limits on swaps in addition to currently regulated exchanges. So, of course, we need to define what a swap is. But the rule has the exchange limits going into effect a year before the swaps limits, so it was probably a mistake to tie to two together.

The delay in the swaps definition is due in large part to the fact that the definition is part of an overall joint product definition rule (many products). When I say joint, it is so because the SEC also must approve the rule.

We were supposed to get a draft of the rule in December, then Jan and then this month. Still nothing. The estimate is for early April now, with no guarantee that the date won't slip again. This is unacceptable to me and so I am working to find another way to get the exchange limits in place sooner than that (taking a vote in April and then the 60 days).

I hope to be able to discuss the details next week in a public meeting -- assuming nothing changes.

Anyway, I'm working on it.