(Dec 30) "Dismantling" Dodd-Frank could make implementing Title VII of the law, which requires the
Commodity Futures Trading Commission
to regulate most swaps, unlikely. The chairman of the House Financial Services Committee, which would lead the effort to overhaul financial regulations, is satisfied with the several Title VII changes Congress made over the last two years and won't make further revisions any time soon.
One such change, tucked into the December 2015 Omnibus spending bill, rolled back a little-known Dodd-Frank provision that might have restricted the volume of trading in derivatives, and allowed banks to trade them in entities holding deposits guaranteed by the Federal Deposit Insurance Corp. and subject to borrowing at the Federal Reserve's discount window.
If no further legislative revisions are made, any Dodd-Frank related action would be made by the CFTC, which may focus on ensuring that end-users (non-financial commercial users of derivatives) are spared from certain regulations imposed on larger market participants, such as Wall Street banks. This could lead to refining rules on margin and recordkeeping requirements and finalizing an $8 billion "de minimis" threshold - up from $3 billion - for swaps market participants to be defined as dealers.
Swaps trading rules also are expected to be in for reworking, including the structure of swap execution facilities and how certain swaps are mandated for trading.