Knight Investments LLC remark on US Commodity Futures Trading Commission (CFTC) Law Restructuring
Recent US Commodity Futures Trading Commission regulations are tightening up once stream line US processes, and Knight Investments LLC Officials commented on how this would affect compliance.
- (1888PressRelease) March 15, 2011 - In the month of February the Commodity Futures Trading Commission (CFTC) embarked on a radical restructuring of the over-the-counter (OTC) derivatives market, at a pace that hardly allows consumers to consider the impact of their new rules. Knight Investments LLC (KI) Compliance Officials stated that this year marked a new precedent in government regulation here in the United States. KI Officials stated that it was important for the private sector to note that things that were "okay" in 2010 - have drastically changed in the year of 2011.
"Our principal business is compliance. What that means is we are not into great fund raising strategies, solicitation, or advise on account structuring. Recent legislation has moved our company on the exclusive focus of legislation compliance. That means you come to us to talk about how your project is compliant with US legislation. Obvious benefits will derive from that, but we are exclusively a compliance hub." said the Director of Compliance for KI.
KI spokesmen went on to state that the recent change in the derivative market by US CFTC would create a whole new approach on how project principals could legally define what was actually an "asset".
The US CFTC's tight schedule, dictated by the 2010 Dodd-Frank Act, does not allow market participants enough time to fully evaluate the impact of the new rules and submit meaningful comments. Since just August of last year, the CFTC has published over 40 rule proposals, totaling around 975 Federal Register pages, and plans to release the entirety of its Dodd-Frank rule proposals by March. Based on a 30- to 60-day comment period for each proposed rule, the comment periods run consecutively would take over 2,514 days, or just under seven years. However, the commission is faced with the unrealistic statutory deadline of completing the rule-making process within 360 days from the date President Obama signed the law on July 21, 2010. (SOURCE US CFTC)
The President's recent Executive Order, "Improving Regulation and Regulatory Review," admonishes all project principals to take into account the "costs of cumulative regulations". This is being done by undertaking rigorous cost-benefit analyses in drafting rule proposals. Although the Executive Order does not apply to independent agencies like the CFTC, this should not be an excuse for failing to develop cost-effective regulations.
Compliance Officials of KI have noted that congress mandated a similar requirement under the Commodity Exchange Act. The first step in complying with this directive is for the commission to improve its capability to estimate the true costs of each rule proposed under the Dodd-Frank Act.
Officials from KI stated that this would greatly effect how private clientele would be able to approach the market, and stated that projects seeking collateral based compliance solutions would need to have "great counseling in an ever changing market".
On a final note KI Officials noted that the US CFTC must be mindful of international efforts to respond to the financial crisis and make similar changes to foreign regulatory regimes.
It is the compliance opinion of KI that U.S. and E.U. regulations (and reforms in Asia) are implemented on the same timetable to minimize regulatory arbitrage. The G-20 Pittsburgh Communiqué requires OTC derivatives market reforms to take place no later than the end of 2012, which is more than a year and a half after our self-imposed deadline. (SOURCE US CFTC)
It is not in America's interest for regulators to create an uneven playing field, and KI stated that US CFTC should have no desire to hinder the ability of American companies to compete with their Asian and European counterparts - as too much regulation will only weaken the American Economy. KI Officials stated that there had to be a careful balance of "equilibrium" with "private sector legislation".
Knight Investments LLC works as a private compliance firm to invest company assets on the behalf of promoting a vibrant community, low income housing, humanitarian causes, renewable energies, real estate developments, and project compliance solutions.
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