The comment period expired this week for the CFTC's proposed end-user exception to mandatory clearing of swaps, with over 70 comments posted. A comment letter from the Coalition for Derivatives End-Users (from the web site of whose study agent a brace of advisor-academics recently decamped) urges a host of changes, and argues that Dodd-Frank implementing rules issued by the CFTC are subject to a cost-benefit analysis requirement, which the agency has not followed:
"Section 15(a) of the Commodity Exchange Act ('CEA') requires the Commission to evaluate the costs and benefits of any new rule promulgated under the CEA. . . . In this and previous notices of proposed rulemaking implementing the Dodd-Frank Act, the Commission has taken the position that Section 15(a) 'does not require the Commission to quantify the costs and benefits of a new regulation.' Instead, the Commission’s cost-benefit analysis consists of a recitation of the new rule’s requirements—in this case, the notification requirement—and an announcement that the cost of compliance will be 'minimal.' But the Commission has made no attempt to estimate or objectively value the costs imposed by this and other rulemakings under the Dodd-Frank Act. We believe that the Commission's current approach does not satisfy the requirements of Section 15(a). . . . Courts have not hesitated to vacate or remand agency rules founded on irrational or incomplete cost-benefit analyses." (notes omitted)
