Most energy firms have spent nothing to comply with Dodd-Frank: survey
Washington (Platts)--12Nov2012/131 pm EST/1831 GMT
More than half of commodity trading companies, particularly oil and
natural gas producers and electric and gas utilities, have budgeted no money
to comply with new derivatives reform regulations, according to a survey
According to the survey of nearly 50 companies, more than half said they
have budgeted nothing to comply with new reporting and record keeping rules
the Commodity Futures Trading Commission plans to have in place early next
year. Many of the firms with no budget are producers and utilities that
believe they will be classified as end users under the CFTC's derivatives
regulatory regime and not subject to the costly rules swap dealers and major
swap participants are expected to face, the survey said. However, even end
users will be subject to some reporting and recordkeeping rules, the survey
"In reviewing the data, there appears to be a general lack of urgency on
the part of many market participants -- low or no budgets, few resources
assigned to compliance efforts, and little engagement with third parties that
could provide expert opinion or technology solutions that could facilitate
compliance," the survey said.
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The survey was written by Patrick Reames, managing director of
CommodityPoint, a Texas-based research and analysis firm, and Ed Bell, a
founding member of the University of Houston's Global Energy Management
Reames said that both he and Bell "were a bit surprised to discover a
significant lack of urgency on the part of many energy market participants."
Reames said many companies may have been waiting for the conclusion of
this month's presidential election before moving forward with compliance
efforts. Republican nominee Mitt Romney had pledged to repeal the Dodd-Frank
Wall Street Reform and Consumer Protection Act and while many market
participants believed that a repeal was unlikely they expected that the rules
would be weakened or eliminated under with a Republican in the White House.
President Barack Obama's reelection likely ensures that many of these rules
will be imposed as planned.
In their survey, Reames and Bell wrote that if firms are late to comply
with these new rules they "will likely remain under CFTC scrutiny for a very
"As with all regulations, companies exposed to Dodd-Frank rules will be
considered guilty until they prove themselves innocent ... continuously and
consistently," they wrote.
--Brian Scheid, email@example.com
--Edited by Jeff Barber, firstname.lastname@example.org