UNITED STATES OF AMERICA

 COMMODITY FUTURES TRADING COMMISSION

 OPEN MEETING TO CONSIDER EFFECTIVE DATES

 OF PROVISIONS IN THE DODD-FRANK ACT

 Washington, D.C.

 Tuesday, June 14, 2011
 2

 1 PARTICIPANTS:

 2 Commission Members:

 3 CHAIRMAN GARY GENSLER

 4 COMMISSIONER MICHAEL DUNN

 5 COMMISSIONER JILL E. SOMMERS

 6 COMMISSIONER BART CHILTON

 7 COMMISSIONER SCOTT D. O'MALIA

 8 Speakers:

 9 TERRY ARBIT

 Office of General Counsel

 10

 HAROLD HARDMAN

 11 Office of General Counsel

 12 CARLENE KIM

 Office of General Counsel

 13

 DAN BERKOVITZ

 14 Office of General Counsel

 15 ANANDA RADHAKRISHNAN

 Division of Clearing and Intermediary

 16 Oversight

 17 Other Participants:

 18 DAVID STAWICK

 Office of the Secretariat

 19

 DAVID VAN WAGNER

 20

 21 * * * * *

 22
 3

 1 P R O C E E D I N G S

 2 (9:35 a.m.)

 3 CHAIRMAN GENSLER: Good morning. This

 4 meeting will come to order. This is a public

 5 meeting of the Commodity Futures Trading

 6 Commission to consider issuance of a proposed

 7 order granting exemptive relief for certain

 8 requirements of the Commodity Exchange Act as

 9 amended by the Dodd-Frank Act that becomes

 10 effective on July 16, 2011.

 11 In addition, the Commission will vote to

 12 schedule future Commission meetings in July,

 13 August, and September to consider the issuance of

 14 final rulemakings under the Dodd-Frank Act.

 15 Before we hear from staff, I'd like to thank

 16 Commissioners Mike Dunn, Jill Sommers, Bart

 17 Chilton, Scott O'Malia for all of their thoughtful

 18 work to implement the Dodd-Frank Act.

 19 Commissioner Chilton could not be with

 20 us today because he's speaking at the European

 21 Commission Bureau of European Policy Advisors. We

 22 do have his cell phone if we need to call him and
 4

 1 link him in. And I do want to say, I'm going to

 2 keep doing this, Mike, but since I know that three

 3 days, are we? No, we're five days. You keep

 4 reminding me.

 5 COMMISSIONER DUNN: The 19th.

 6 CHAIRMAN GENSLER: The 19th. We're five

 7 days away from Commissioner's Dunn official term

 8 of office, but as we all know, he's been gracious

 9 enough to say he'll be here on the 20th, and the

 10 21st, and he'll keep coming in I hope and continue

 11 to serve this nation and this Commission. And so

 12 we'll have ample time because the Senate has to do

 13 something before you're out of here, Mike. So

 14 we'll keep thanking you.

 15 I also want to thank the hard-working

 16 staff at the CFTC, everyone really, on the many

 17 things we're doing, but particularly Dan

 18 Berkovitz, Terry Arbit, Harold Hardman, and

 19 Carlene Kim. I see Ananda is also going to be

 20 with us chatting about some things for preparing

 21 the recommendations that we'll hear today.

 22 This is a complex area and I think that
 5

 1 they've drafted a proposal that appropriately

 2 addresses the issues. But with all that else is

 3 going on here, I know that it's short notice, and

 4 I thank my fellow Commissioners to -- somewhat

 5 putting up with that because it is -- certainly we

 6 probably all prefer to have had this six or eight

 7 weeks ago, but I think they've found the right

 8 balance here.

 9 I welcome members of the public, market

 10 participants, members of the media to today's

 11 meeting, as well as welcoming those listening to

 12 the meeting on the phone and watching live

 13 webcast. The proposed order, as well as fact

 14 sheets and Q&A documents will be posted on our

 15 website shortly.

 16 Now I intend to support the proposed

 17 order regarding the effective dates of certain

 18 Dodd-Frank provisions. The Dodd-Frank Act has a

 19 deadline of 360 days after enactment for

 20 completion of the bulk of the rulemakings.

 21 There's some that were other dates, importantly,

 22 position limit rules. But the bulk are July 16,
 6

 1 2011.

 2 But both the Dodd-Frank Act and the

 3 Commodity Exchange Act give the CFTC flexibility

 4 and authority to address issues related to

 5 effective dates of Title VII and we've coordinated

 6 closely on the SEC on these issues.

 7 More specifically, there's a section of

 8 the Act, Section 754, that says that the

 9 provisions related to swaps in Subtitle A provide

 10 for those regulations to take effect 360 days

 11 after the date of enactment or to the extent the

 12 provision requires a rulemaking, not less than 60

 13 days after publication of the final rule and

 14 implementation in line with that.

 15 Thus, those provisions that require

 16 rulemaking will not go into effect until the CFTC

 17 finalizes the respective rules. And that's the

 18 substantial portion, maybe even the majority of

 19 provisions require rulemaking. And they'll only

 20 go into effect based upon the phased

 21 implementation that this Commission is still

 22 considering in terms of final rulemaking.
 7

 1 But there are provisions of the Act that

 2 do not require rulemaking that may go into effect

 3 on July 16th. And the proposed order that we're

 4 considering today would provide relief until

 5 December 31, 2011, on when the definitional

 6 rulemakings become effective, whichever is sooner.

 7 So there's a set of definitional rules, swap, and

 8 swap dealer, and so forth. Until those are

 9 finalized, other parts of the Act have some

 10 ambiguity of course.

 11 The proposed order also addresses relief

 12 through December 31st of this year from certain

 13 Commodity Exchange Act requirements that come from

 14 the repeal of provisions. And the staff will go

 15 through those repealed provisions and how we're

 16 granting relief from that.

 17 There have been suggestions to delay

 18 implementation of the derivatives reforms included

 19 in the Dodd-Frank Act. That's really not what

 20 today's proposed order is about. Instead it

 21 provides the time necessary for the Commission to

 22 complete its rulemaking and to continue to work
 8

 1 with the public and their other regulators.

 2 Now some might ask why six months. Six

 3 months will provide the Commission with the

 4 opportunity to reexamine the status of final

 5 rulemaking in light of the changed regulatory

 6 landscape at the time.

 7 It would be my hope that we can complete

 8 many of the rules within this six months, maybe

 9 even most of the rules in this six months. But

 10 there will be a changed regulatory landscape and

 11 we can reassess it at the time. And if

 12 appropriate at that time, but only if appropriate,

 13 we can tailor relief to the provisions that still

 14 were outstanding that we need to consider.

 15 It's important to note, however, that

 16 until the CFTC completes its rulemaking process

 17 and implements and enforces the rules, the public

 18 remains unprotected. The proposed order will open

 19 -- will be open for public comment as well.

 20 So if there's something that you think

 21 that we've missed, please let us know. It's going

 22 to be a short window of 14 days of public comment
 9

 1 from the time it's in the Federal Register, which

 2 I suspect will take a few days, and that it's our

 3 hope, and I believe that we will be able to

 4 finalize an order before the July 16th date. So

 5 before we hear from staff, I'd like to turn it

 6 over to Commissioner Dunn.

 7 COMMISSIONER DUNN: Thank you, Mr.

 8 Chairman, and thank you all for joining us today

 9 for another meeting of the Dodd-Frank Act. To

 10 date the Commission has issued over 50 advanced

 11 notices of the proposed rulemaking, 2 interim

 12 final rules, 1 final rule, 1 proposed interpretive

 13 rule.

 14 This has been the most transparent

 15 rulemaking process that I've been involved with in

 16 over 20 years of rule writing. The sheer amount

 17 of information that staff has reviewed, the

 18 meetings they have had, the questions they have

 19 answered regarding Dodd-Frank could only be

 20 described as monumental. Yet staff has completed

 21 all of this work while simultaneously continuing

 22 their pre Dodd- Frank duties.
 10

 1 The qualities of the rules have been so

 2 far in the facts that the market are regulated,

 3 have continued to operate efficiently and

 4 effectively as a testament to the quality of the

 5 staff we have at the CFTC and I thank them all for

 6 the work they've done and are continuing to do.

 7 Many have said that our agency is moving

 8 too fast to implement Dodd-Frank. They claim we

 9 have not given them enough time to comment and

 10 that we have not given ourselves enough time to

 11 fully appreciate the effects of the rules we are

 12 writing will have on the market, soon to be under

 13 our jurisdiction.

 14 An equal number of individuals are

 15 claiming that we are moving much too slow with the

 16 rulemaking process. They claim that anything less

 17 than strict adherences to the congressionally

 18 imposed deadlines with Dodd-Frank is a failure.

 19 Given our level of staffing, I believe

 20 we are moving at a pace that ensures that the

 21 rules are written following the intent of

 22 Congress, are responsive to the comments of the
 11

 1 American public, and based upon sound and

 2 fundamental market principles.

 3 If we were to move slower, I fear that

 4 unnecessary delay may leave the country vulnerable

 5 to another financial crisis. If we were to move

 6 faster, I doubt the quality of written rules would

 7 continue to remain as high level as I have become

 8 accustomed to receiving from our staff.

 9 Regarding today's meeting, once again, I

 10 think it's a testament to Chairman Gensler and the

 11 transparent nature of the process he has overseen.

 12 The staff, together with market participants and

 13 users, were unable -- were able to identify issues

 14 with the July 16th date and develop an effective

 15 way to ensure that. Until our rules are

 16 completed, market users will continue to have the

 17 ability to effectively use derivatives as risk

 18 mitigation instruments.

 19 The proposed exemptive reliefs have a

 20 sunset provision of December 31, 2011, that I

 21 strongly support. While others may argue that the

 22 market requires certainty, there is no way that we
 12

 1 will meet this date. I believe these fears are

 2 unfounded.

 3 The sunset provision sets an ambitious,

 4 but achievable, goal for completion of Dodd-Frank

 5 rulemaking. And I believe that the Commission and

 6 staff should be held accountable for providing

 7 needed certainty to the markets and the public by

 8 that date. Should we not finish by December 31st,

 9 it is nonetheless appropriate and prudent to

 10 periodically review the extent and scope of relief

 11 provided from the CEA and to then tailor that

 12 relief to the Dodd- Frank and implementation

 13 schedule.

 14 We will know more about the full mosaic

 15 of the rules by December and -- that we know now.

 16 And that knowledge will help us fashion additional

 17 exemptive relief if needed. A more personal

 18 reason is that it is likely I will no longer be a

 19 Commissioner by that date. I believe that my

 20 successor should have a voice in establishing the

 21 policy governing the CFTC at that time.

 22 Regardless, today's proposed order will
 13

 1 not affect the Commission's ability to provide

 2 further relief to prevent undue disruption or cost

 3 to market participants. Again, I would like to

 4 thank the staff of the CFTC for all of their hard

 5 work on these very important proposed rules and I

 6 look forward to their presentations.

 7 CHAIRMAN GENSLER: Thank you,

 8 Commissioner Dunn. Commissioner Sommers.

 9 COMMISSIONER SOMMERS: Thank you, Mr.

 10 Chairman. Good morning. Today we are dealing

 11 with an issue of great importance to me:

 12 Providing some certainty to swap market

 13 participants concerning the status of their swaps

 14 transactions on July 16th, the general effective

 15 date of Dodd-Frank.

 16 First let me say that I intend to vote

 17 for this relief because I believe the markets need

 18 guidance from the Commission as soon as possible,

 19 but I do so reluctantly. The legal provisions

 20 added by the CFMA in 2000 were critical to market

 21 participants. And I believe that by passing

 22 Dodd-Frank and repealing those provisions of the
 14

 1 CFMA, Congress in no way intended to decrease the

 2 confidence in the markets. Yet that is what has

 3 happened.

 4 For months I have been talking about the

 5 legal uncertainty that would arise on July 16th

 6 and I've said that the Commission needed to act

 7 sooner rather than later. Market participants

 8 have said the same thing. Instead of acting

 9 sooner, we are acting later even though we have

 10 all known for months that despite our best

 11 efforts, regulations implementing the new

 12 regulatory regime would not be finalized and

 13 effective by July 16th.

 14 As a result of waiting until the last

 15 minute, we have needlessly allowed uncertainty to

 16 mount among market participants. As an example,

 17 it has been reported to me that as a result of the

 18 uncertainty surrounding the applicability of

 19 business conduct standards for swap dealers, some

 20 swap dealers have already informed their pension

 21 fund swap counterparties that as of July 16th,

 22 they will no longer be able to act as
 15

 1 counterparties to pension funds.

 2 DCOs are wondering if they are required

 3 to have chief compliance officers in place. This

 4 kind of ambiguity is not acceptable. I recognize

 5 that because the Commission waited so long to

 6 issue this proposal, we have no time to spare. I

 7 am optimistic that the proposal we have before us

 8 today will answer all of the pending questions and

 9 concerns regarding how agreements will be treated

 10 after July 16th.

 11 The objective should be to craft relief

 12 that is not confusing or convoluted and that can

 13 clearly allow swap market participants to continue

 14 operating as they are today and have been since

 15 2000. If that is not what we have accomplished,

 16 then I fear we will be inundated with critical --

 17 excuse me, comment letters and the process of

 18 finalizing the exemptive relief will be very

 19 difficult for us to resolve in one month.

 20 In my view, we should utilize the

 21 grandfather relief as Congress intended by

 22 grandfathering 2(h) and 5d markets for one year
 16

 1 and fill the remaining gaps with clear and concise

 2 4c relief. Where 4c relief is not possible, my

 3 preference would be to issue some form of

 4 Commission action rather than no action relief

 5 from staff.

 6 The current approach, along with its

 7 expiration less than six months after July 16th,

 8 is not ideal. If we are intent on allowing this

 9 relief to expire on December 31st, we should -- if

 10 we are not intent on allowing this relief to

 11 expire, we should commit now to a Commission

 12 meeting on Tuesday, November 1st, to propose

 13 whatever continuing relief is necessary so that we

 14 do not again rush to provide market certainty at

 15 the very last minute.

 16 Before I conclude, I would like to

 17 address two additional issues. First, legal

 18 uncertainty among market participants has not been

 19 limited to the issues surrounding July 16th.

 20 Legal uncertainty is mounting in the area of how

 21 the Commission views the extra territorial

 22 application of its new authorities under
 17

 1 Dodd-Frank.

 2 Despite many requests to clarify our

 3 view, we have said woefully little on the topic.

 4 And the questions we ask in the registration

 5 proposal, in my mind, do not answer many of the

 6 important questions. My office has been working

 7 internally to promote conducting a round table on

 8 extra territoriality issues.

 9 Unfortunately, we have not set a date

 10 yet. But I'm hopeful that this will be another

 11 topic that interested parties will be willing to

 12 participate in to share views and offer us their

 13 suggestions. I believe we have an obligation to

 14 address these important issues before the

 15 Commission begins to finalize our proposals

 16 implementing Dodd-Frank.

 17 Second, as we vote today to set meeting

 18 dates over the next several months, I again ask

 19 that we establish a schedule for finalizing rules

 20 that make sense and allow staff and the Commission

 21 to fully consider input from commenters and input

 22 from each other and allows the Commission to fully
 18

 1 consider the provisions of each rule before we

 2 cast our votes.

 3 I believe it is irresponsible for us to

 4 calendar five to seven final rules per meeting.

 5 We need the opportunity to consider every single

 6 issue included in each rule and think about the

 7 implications very carefully.

 8 If we do not, I think we'll be doing a

 9 disservice to the critical markets, and market

 10 participants, and to the American public. I want

 11 to thank the team, and OGC, and all of the

 12 Commission staff for the hard work they've put in

 13 to this order today and I look forward to the

 14 discussion.

 15 CHAIRMAN GENSLER: Thank you,

 16 Commissioner Sommers. Commissioner O'Malia.

 17 COMMISSIONER O'MALIA: Thank you, Mr.

 18 Chairman. As the other Commissioners have

 19 discussed, we are here voting today to decide an

 20 issue that has been at the forefront of every

 21 market participants' mind, namely what happens to

 22 my business on July 16th. What makes the 16th so
 19

 1 important? That is the date certain provisions of

 2 Dodd- Frank take effect. These provisions include

 3 repeal of the CEA exemptions and exclusions for

 4 transactions and exempt and excluded commodities

 5 on which many market participants currently rely.

 6 But on that date, market participants

 7 have no practical way to comply with the

 8 Dodd-Frank provisions. Specifically, the

 9 Commission has yet to issue a final rulemaking on

 10 key definitions such as swap or swap dealer. The

 11 Commission has yet to complete the regulatory

 12 framework for swap execution, including the SEF

 13 definition.

 14 Given this situation, it is

 15 understandable that the market participants have

 16 requested, again and again, that the Commission

 17 provide clarity and certainty that their current

 18 practices would continue to be acceptable after

 19 July 16th. This need for certainty goes beyond

 20 regulatory certainty. Market participants need to

 21 know their business activities will not expose

 22 them to increased litigation and counterpart risk
 20

 1 as well.

 2 Today we are voting on a proposed order

 3 that is supposed to provide certainty and clarity.

 4 The proposed order intends to exempt market

 5 participants under CEA Section 4c from complying

 6 with any provision of the Dodd- Frank Act that

 7 references key definitions and from having to

 8 alter the current practices, in light of the

 9 repeal, the CEA exemptions and exclusions.

 10 I support the proposal because we are

 11 just one month away from the July 16th deadline.

 12 It is also important that the Commission show

 13 participants that the relief -- the relief that it

 14 is contemplating.

 15 I do believe that the relief offered

 16 isn't perfect for the simple reason that it ends

 17 at an arbitrary date of December 31, 2011, even if

 18 the Commission does not finalize key definitions

 19 or swap execution framework before that time.

 20 December 31st is an arbitrary endpoint.

 21 First, the Commission has not set forth

 22 the comprehensive sequencing for consideration of
 21

 1 the final rulemaking. I'm afraid that setting an

 2 arbitrary date and the proposed order will just

 3 leave markets with the same questions that they

 4 have today. And what will -- what will we have

 5 accomplished? We will be putting a form over

 6 substance for the sake of an arbitrary date. And

 7 how does this benefit the public?

 8 Second, I find that the reasons proposed

 9 -- in the proposed order for the arbitrary 31st

 10 date to be unconvincing. First, the proposal

 11 states it is, "appropriate to periodically

 12 reexamine the scope and the extent of any

 13 exemptive relief in order to ensure that the scope

 14 of the relief is appropriately tailored to the

 15 schedule of implementation."

 16 This statement seems to suggest that the

 17 Commission has two choices if the requisite

 18 rulemakings do not take effect by December 31st.

 19 One is to extend relief for a second time or, two,

 20 let the exemptive relief expire. I would suggest

 21 that the Commission only has one responsible

 22 choice: To extend the relief until the final
 22

 1 rules are implemented instead of focusing on an

 2 arbitrary date that creates market and legal

 3 uncertainty.

 4 Second, the proposal states that

 5 limiting exemptive relief is consistent with other

 6 provisions of Title VII. The proposal references

 7 the one year grandfathering provisions available

 8 for persons relying on Sections 2(h) and 5d of the

 9 CEA. I am baffled as to how a one year

 10 grandfathering provision supports limiting

 11 exemptive reliefs to less than one year, namely,

 12 six months based on an arbitrary date.

 13 Finally, because the Commission has not

 14 set forth comprehensive implementation schedule

 15 for the final rulemakings, I have a specific

 16 question as to whether, with respect to the

 17 proposed order -- the proposed order builds in

 18 part on existing Part 35 of the Commission's

 19 regulations. But on February 3, 2011, we

 20 published a proposal on the Federal Register that

 21 would revoke Part 35. This proposal is entitled

 22 Commodity Options and Agriculture Swaps.
 23

 1 So the proposed order tells the market

 2 participants to rely on Part 35, which we have

 3 already proposed revoking. If we were to give the

 4 market an implementation schedule, as I have

 5 suggested over and over again, things would make a

 6 little more sense.

 7 I have drafted an amendment that I will

 8 be offering to extend the relief of the proposed

 9 order until the Commission completes the relevant

 10 rulemaking and the final rulemakings become

 11 effective. This amendment would give market

 12 participants the clarity and certainty that they

 13 have requested. This amendment will also be in

 14 line with the relief contemplated by fellow market

 15 regulators, such as the SEC.

 16 I'm also reiterating my call for the

 17 Commission to set forth a comprehensive schedule

 18 for the public -- for a public comment on both,

 19 whether it plans to vote on a final rulemaking and

 20 the order for when the rulemakings will become

 21 effective. A schedule will help the Commission

 22 avoid potential contradictions, like our treatment
 24

 1 of Part 35.

 2 I hope the Commission will favorably

 3 consider my amendment and my renewed call for a

 4 rulemaking and implementation schedule with an

 5 open mind. As I have stated, even if the

 6 amendment fails, I will support the proposed

 7 order. As Teddy Roosevelt said, "You do what you

 8 can, with what you have, where you are."

 9 I welcome public comment on every aspect

 10 of the proposed order, especially with respect to

 11 when the Commission has provided legal certainty

 12 it needs or whether the arbitrary 31st end date

 13 promotes -- or undermines this certainty. Mr.

 14 Chairman, I appreciate you calling this hearing

 15 and moving this as expeditiously as we can. Thank

 16 you.

 17 CHAIRMAN GENSLER: Thank you to each of

 18 the Commissioners for your thoughts. And without

 19 further dispatch, Mr. Berkovitz, Mr. Hardman, Mr.

 20 Arbit, Ms. Kim, and -- Ananda, I didn't know you

 21 were going to be up here, but Mr. Radhakrishnan.

 22 MR. BERKOVITZ: Good morning,
 25

 1 Commissioners. First, I would like to thank all

 2 of the members of the OGC Team that have worked

 3 very hard on this order: Harold Hardman, Terry

 4 Arbit, Carlene Kim, Neil Kumar, Sue McDonagh, and

 5 Mark Higgins. I also would like to thank the

 6 divisions for their helpful comments and support

 7 on this project.

 8 The proposed order before you today

 9 clarifies how the Commodity Exchange Act will

 10 apply to swaps as of July 16, 2011, the general

 11 effective date of Title VII of the Dodd-Frank Act.

 12 As you noted, Section 754 of the Dodd- Frank Act

 13 provides that unless otherwise provided,

 14 provisions of the Act that require a rulemaking

 15 are effective no sooner than the earlier of 60

 16 days after the rulemaking is completed or 360 days

 17 after enactment, which is July 16th.

 18 Many provisions fall into this category.

 19 Although the Commission has issued proposed rules

 20 to implement these provisions, these rulemakings

 21 will not be completed by July 16th. Examples of

 22 such provisions include the registration of swap
 26

 1 dealers and major swap participants, margin and

 2 capital requirements for swap dealers and major

 3 swap participants, and external business conduct

 4 standards for the same.

 5 Because the provisions will not become

 6 effective until the rulemakings have been

 7 completed and implementing dates established, the

 8 proposed order does not include relief from these

 9 provisions. We have provided the Commission, and

 10 the Commission is publicly releasing on its

 11 website, a list of provisions that require a

 12 rulemaking.

 13 Provisions that do not require a

 14 rulemaking are effective on the general effective

 15 date. Thus, certain provisions of the Dodd-Frank

 16 Act will become effective immediately on July

 17 16th, while others will be phased in over a period

 18 of time. The proposed order before the Commission

 19 would provide clarity to market participants and

 20 the public regarding which provisions of the CEA,

 21 as amended by the Dodd-Frank Act, will apply

 22 during this transition and those which will not.
 27

 1 The draft proposed order proposes to

 2 grant exemptive relief in two parts. Part one of

 3 the draft order proposes to address provisions

 4 that will go into effect on July 16th, but that

 5 reference terms such as swap, swap dealer, major

 6 swap participant, or eligible contract

 7 participant, that the Dodd-Frank Act requires the

 8 Commission and the Securities Exchange Commission

 9 to jointly further define. These definitional

 10 rulemakings will not be in place by July 16th.

 11 Accordingly, the draft order proposes to

 12 temporarily exempt persons or entities from

 13 complying with these provisions until the earlier

 14 of the effective date of the definitional

 15 rulemaking for such terms or December 31st. The

 16 exemption would apply only to the extent the

 17 provisions specifically relates to entities or

 18 instruments such as swap, swap dealers, major swap

 19 participants, and eligible contract participants.

 20 Part two of the draft order proposes to

 21 address provisions of the Commodity Exchange Act

 22 that will or may apply to certain transactions and
 28

 1 exempt or excluded commodities, which are

 2 primarily financial commodities, energy, and metal

 3 commodities, as a result of the repeal of various

 4 CEA exemptions and exclusions as of July 16th,

 5 specifically, Commodity Exchange Act Sections

 6 2(d), 2(e), 2(g), 2(h), and 5d, as well as the so

 7 called line of business provision that was

 8 originally provided in the Swaps Policy Statement.

 9 Although Part 35 of the Commissions

 10 Regulations is still available to provide

 11 exemptive relief upon this date, Part 35 does not

 12 cover certain of these transactions. The proposed

 13 relief would cover these additional transactions,

 14 such as those entered into by eligible contract

 15 participants, standardized transactions, clear

 16 transactions, and transactions traded on trading

 17 facilities.

 18 The Commission is proposing to

 19 temporarily exempt such transactions until the

 20 repeal or replacement of certain of the

 21 Commission's regulations or December 31st,

 22 whichever is earlier.
 29

 1 The proposed exemptive order would be

 2 issued under Section 712(f) of the Dodd-Frank Act,

 3 which specifically authorizes the Commission to

 4 issue exemptive orders in preparation for the

 5 effective date of the Dodd- Frank Act and Section

 6 4c of the CEA, which provides the Commission with

 7 exemptive authority for many provisions of the

 8 CEA.

 9 As required by Section 4c, if approved

 10 by the Commission, the proposed order would be

 11 subject to a period of notice and comment. The

 12 proposed order provides for a 14-day public

 13 comment period. This would provide the Commission

 14 and staff time to analyze the public comments and

 15 issue a final order as appropriate prior to the

 16 July 16th effective date.

 17 The proposed order does not provide

 18 relief from all of the provisions of the CEA that

 19 will become effective on July 16th. The staff is

 20 also provided a list of those provisions for which

 21 relief is not being provided and this will also be

 22 on the Commission's website.
 30

 1 Examples of such provisions include the

 2 core principles for designated contract markets,

 3 the core principles for derivatives clearing

 4 organizations, and the prohibition on certain

 5 disruptive trading practices.

 6 There are a few provisions in the CEA

 7 that will apply as of the effective date and for

 8 which the Commission does not have authority to

 9 issue exemptive relief. The staff is considering

 10 whether to issue a no action relief from these

 11 provisions.

 12 Before concluding, I would also like to

 13 highlight several limitations on the scope of the

 14 proposed relief. First, the draft order does not

 15 provide relief from the Commission's anti-fraud

 16 and anti-manipulation authorities. Second, the

 17 draft order does not affect any Dodd-Frank Act

 18 implementing regulations that the Commission

 19 promulgates, including any implementation dates

 20 therein.

 21 Neither part of the proposed order would

 22 affect the Commissions with authority with respect
 31

 1 to futures, contracts, options on futures, or

 2 transactions by retail customers and foreign

 3 currency or other commodities. The proposed order

 4 would not apply to any provision of Title VII of

 5 the Dodd-Frank that has already become effective.

 6 Fifth, the draft order states that the

 7 proposed relief would not limit the Commission's

 8 authority under Section 712(f) to provide -- which

 9 provides the Commission with authority to engage

 10 in exemptions, rulemakings, and other actions

 11 necessary to prepare for the effective dates of

 12 the provisions of Title VII.

 13 In addition, the draft proposed order

 14 would not affect the Commission's ability to

 15 provide further exemptive relief as appropriate

 16 either prior to or after any future event. I'd be

 17 happy to answer any questions; thank you.

 18 CHAIRMAN GENSLER: Thank you, Mr.

 19 Berkovitz. Before I ask for a motion on that, I

 20 realize that I traditionally ask for a unanimous

 21 consent that all final votes for proposals be

 22 taken by voice vote -- recorded vote and published
 32

 1 in the Federal Register without objection. I

 2 would at this time then entertain a motion on the

 3 staff recommendation on the proposed orders.

 4 COMMISSIONER DUNN: So moved.

 5 COMMISSIONER SOMMERS: Second.

 6 CHAIRMAN GENSLER: With that, I have

 7 just a few questions. First, we'll publish today

 8 on our website what you'd call Category 1 -- or in

 9 the proposal, Category 1 of all of those things

 10 that require rulemaking. Is that correct?

 11 MR. BERKOVITZ: That's correct.

 12 CHAIRMAN GENSLER: And so the public

 13 would be able to comment on that if they think

 14 that there is ambiguity or any questions or doubts

 15 about what we've put there. Is that right?

 16 MR. BERKOVITZ: Yes, Mr. Chairman.

 17 CHAIRMAN GENSLER: Okay. And then is it

 18 correct that anything that's on that list only

 19 goes effective when the final rule happens and

 20 whatever implementation phasing that we put in

 21 there?

 22 MR. BERKOVITZ: That's correct. Those
 33

 1 rulemakings -- there would be a minimum of 60 days

 2 before those rules could be effective and further,

 3 the Commission would establish implementation --

 4 CHAIRMAN GENSLER: Right.

 5 MR. BERKOVITZ: -- dates for the

 6 requirements and those regulations.

 7 CHAIRMAN GENSLER: Right, and we've

 8 benefited to public roundtables with the SEC.

 9 We've had a comment file that was open for about

 10 60 days. The staff put out concepts; we're

 11 considering Commissioner O'Malia's suggestion that

 12 we do more to get more public feedback than we've

 13 already gotten on this.

 14 But my question then goes to then

 15 anything that's on that list that we put that's

 16 subject to let's say finalizing the clearing

 17 rules, or the SEF rules, or the business conduct

 18 rules, et cetera, necessarily has to wait until we

 19 finalize that rule. Is that right?

 20 MR. BERKOVITZ: That's correct. There's

 21 nothing in any of those proposals --

 22 CHAIRMAN GENSLER: So basically there's
 34

 1 no December 31st deadline on that necessarily.

 2 What we've put the December 31st on is this

 3 exemptive relief on things that might be

 4 self-executing or self-effective in this statute.

 5 MR. BERKOVITZ: That -- that's correct.

 6 CHAIRMAN GENSLER: Okay. My other

 7 question is, without speaking for the SEC, but can

 8 you just share with the public and us your

 9 coordination with the SEC on this?

 10 MR. BERKOVITZ: If -- we've had -- as

 11 we've had, and CFTC staff has on many of the

 12 Dodd-Frank rulemakings, consulted and coordinated

 13 with our colleagues on the staff of the SEC, we've

 14 been discussing this issue with them for quite

 15 some time and discussing our proposed approach

 16 with them and they've shared their proposed

 17 approach with ours at the staff level.

 18 I would also add, also consistent with

 19 the direction in the Dodd-Frank, that Congress

 20 provided for consultation and coordination with

 21 other prudential regulators, we have also reached

 22 out to the other prudential regulators and done
 35

 1 consultation coordination with them as well.

 2 CHAIRMAN GENSLER: And I understand you

 3 actually did a briefing for the FSOC deputies last

 4 week on this?

 5 MR. BERKOVITZ: That's correct, we

 6 briefed the Financial Stability Oversight Council

 7 deputies on this issue last week and the SEC,

 8 also, at that time.

 9 CHAIRMAN GENSLER: And then my last

 10 question is related to the no-action relief. As I

 11 understand it, though we have this exemptive

 12 relief in Dodd-Frank, Congress did put some

 13 limitations -- even if they're modest, but there

 14 are some limitations -- that we would be -- staff

 15 would be doing a no-action letter. Would that

 16 also be posted on our website so that people could

 17 have a look at that and so forth?

 18 MR. BERKOVITZ: We could do that. We

 19 could do that, Mr. Chairman.

 20 CHAIRMAN GENSLER: I think that would be

 21 good for transparency. I think that would be very

 22 helpful.
 36

 1 Commissioner Dunn.

 2 COMMISSIONER DUNN: Thank you, Mr.

 3 Chairman. The only question I have is the one

 4 that my colleague, Commissioner O'Malia brought

 5 up, is when we do repeal Part 35? And we're

 6 saying in here that there's going to be a

 7 continuation of the Part 35 when that final

 8 regulation comes up. Would that issue be

 9 addressed at that time in that final regulation?

 10 MR. BERKOVITZ: Presumably yes,

 11 Commissioner, that the proposed regulation, the

 12 Commission would have several options: Either not

 13 issue the final regulation because of the -- it

 14 would entail a repeal of Part 35 or,

 15 alternatively, the Commission could issue the

 16 final regulation, but not make effective the

 17 repeal of Part 35 for however long as the

 18 Commission determined that Part 35 should remain

 19 in effect. So the Commission retains full options

 20 to retain Part 35 however long is necessarily

 21 within that rule and even if that rule is

 22 effective.
 37

 1 COMMISSIONER DUNN: Mr. Chairman, I was

 2 remiss in my opening statement not to recognize

 3 Commissioner Sommers and her bringing to our

 4 attention the need to address this issue and I

 5 greatly appreciate it.

 6 She has brought it up two or three

 7 public meetings ago and her staff has -- and she

 8 have been the clarion call on getting this done.

 9 And I've been frustrated, as have other members of

 10 the Commission, on not having a list. If I know

 11 it, a number of our senior staff meetings, I --

 12 where is the list?

 13 I want to know which ones are being

 14 effective. That, to me, is symptomatic of not

 15 having enough staff for us to be able to do the

 16 regulations on a timely basis. And I'm reminded

 17 back when I was in the service, we had a saying

 18 when you're up to your backside in alligators,

 19 it's hard to remember that you're there to drain

 20 the swamp. I've cleaned that up a little bit, Mr.

 21 Chairman. But these are some of the alligators

 22 that are biting our backsides here and we have to
 38

 1 drain the swamps. We have to make sure that we

 2 correct our financial services industry so we

 3 don't have a meltdown that we've had before.

 4 I think we're going to run into these

 5 types of issues from time to time. That's why

 6 I've long advocated sunset provisions on

 7 regulations that we're proposing, at least giving

 8 everyone -- putting everyone on notice that we're

 9 going to review these to make sure that we don't

 10 have any unintended consequences.

 11 And Mr. Chairman, when I went to you

 12 earlier on and said please put in a sunset

 13 provision, that is exactly what I had in mind. I

 14 think we need to hold the Commission's feet to the

 15 fire to get these final regulations out there.

 16 I'm reminded of the no-action letters

 17 that were out there for 10, 20 years that staff

 18 was no longer even aware of. And it was one of

 19 the initiatives that you put in place when you

 20 became chairman of the "Clean Plate Agenda," I

 21 believe you called that, where you went in and

 22 took a look at those and said this doesn't make
 39

 1 any sense to us.

 2 There are no-action letters out there

 3 that should be revoked or at least addressed in a

 4 regulation and I appreciate that activity going

 5 on. I think it is imperative that we have a

 6 deadline over us to work as hard as we can to get

 7 these finalized. And that to me would be the

 8 ultimate legal certainty that the industry is

 9 looking for.

 10 CHAIRMAN GENSLER: I thank you,

 11 Commissioner Dunn, for your compliments. You

 12 better watch it, we might be calling this the Dunn

 13 Sunset. But it was Commissioner Dunn who first

 14 suggested it, so I thank you.

 15 Commissioner Sommers.

 16 COMMISSIONER SOMMERS: Thank you, Mr.

 17 Chairman. I think I'll follow up on that last

 18 subject matter that Commissioner Dunn was talking

 19 about with the sunset provision because we have

 20 not finalized key definitions, we're in this

 21 place.

 22 And so my understanding of a tentative
 40

 1 schedule for us finalizing rules, we may have

 2 entity definitions at the top of our list, but

 3 product definitions, because the comment period

 4 doesn't close until mid to late July, I think it's

 5 the 22nd, July 22nd. It is calendared for a later

 6 time in the fall.

 7 I think that it -- we could avoid having

 8 an issue with the sunset provision if there's a

 9 way for us to have both entity and product

 10 definitions finished at the top of the list. So I

 11 guess my question is, is that possible for us to

 12 do? Can we get with the SEC to finalize the

 13 definitions, both of entities and products, at the

 14 beginning of the list so that we don't run into

 15 having a final rule on the definition of swap

 16 that's not finished by December 31st and having to

 17 extend this relief.

 18 MR. BERKOVITZ: We have been closely

 19 coordinating with the SEC on -- not only on the

 20 substance of rulemakings, but the schedule of

 21 rulemakings. And we're working very closely with

 22 them to go to the final stage on these
 41

 1 definitional rulemakings because we -- and both at

 2 the staff level, we all recognize that these are

 3 critical -- in the critical path to getting the

 4 other regulations implemented. So we are working

 5 with them in trying to get a schedule for these.

 6 CHAIRMAN GENSLER: Commissioner Sommers,

 7 just -- I've spent a fair amount of time with

 8 Chairman Schapiro and I know that each of the

 9 Commissioners deal with the Commissioners at the

 10 SEC as well. I've made that same point. I think

 11 that entity definition is more likely.

 12 We do have a roundtable in two days, I

 13 think, a public roundtable on that, which I think

 14 a number of Commissioners, Commissioner O'Malia

 15 for sure, suggested that we have. But if we could

 16 move on the entity definition, and as you say,

 17 since products close July 22nd, we'll have to see

 18 how many hundreds of comments we have to try to

 19 move that early after -- I guess it would likely

 20 be early after Labor Day, because I share that

 21 view.

 22 But it's also the SEC has a lot of other
 42

 1 things they're working on, you know, rating

 2 agencies, and a lot of other topics so that, you

 3 know, is part of what the challenge for both of

 4 our Commissions are. But I think we're aligned

 5 and maybe we can get it over the line with the SEC

 6 and it's just a lot of staff work, obviously,

 7 depending upon how many comments we've got.

 8 COMMISSIONER SOMMERS: Well, obviously

 9 that's my preference and I think that it could

 10 help us avoid some of the issues with this sunset

 11 provision if that were doable. With regard to the

 12 order, we state up front in the order that we are

 13 issuing this notice of proposed order and request

 14 for comment to provide greater clarity regarding

 15 the applicability of various statutory and

 16 regulatory requirements. Will market participants

 17 be able to identify which provisions of the CEA

 18 are the subject of the relief being proposed

 19 today?

 20 MR. BERKOVITZ: I believe so. That is

 21 the intent. The market -- we've provided a list

 22 of, as the Chairman has described -- and we've
 43

 1 used Category 1 provisions, which are the

 2 provisions in Dodd-Frank that require rulemaking

 3 and, therefore, will not be effective until those

 4 rulemakings are complete.

 5 We have provided a list of provisions

 6 for which we are not granting relief. We are

 7 providing relief for provisions in the Act which

 8 specifically reference swaps and swap entities,

 9 and these definitional items so people can look

 10 and determine whether or not there's one of those

 11 terms and referenced and therefore whether there's

 12 relief.

 13 On the repeal of the CFMA provisions

 14 that were added, the scope of the relief that

 15 we're providing is essentially the same as the

 16 scope of the relief under current law and that's a

 17 general type of relief rather than a specific

 18 relief. So it is basically market participants

 19 who can understand what they are exempt from now

 20 will understand the scope of this proposed order

 21 exemption.

 22 COMMISSIONER SOMMERS: I hope that
 44

 1 that's right. I mean, I wanted to make it clear

 2 that our intent here today is to make sure that

 3 market participants have a very clear

 4 understanding of what this relief applies to. So

 5 the goal here is to make this extremely clear.

 6 MR. BERKOVITZ: That was certainly the

 7 intent in drafting this and in categorizing this

 8 way and people could figure out which category of

 9 regulation they're in and, therefore, whether

 10 relief would or would not apply. As was noted in

 11 the opening remarks, part of the purpose of ht

 12 comment period is to see whether we got it right.

 13 And so we're looking forward to comments.

 14 I know -- and we provided this to the

 15 divisions and many of the -- much of the material

 16 you'll hear -- you'll see in the order is a result

 17 of the process within the Agency of trying to get

 18 it right and trying to identify all of the

 19 relevant provisions and ensure that we did. So we

 20 welcome the comment period for that purpose.

 21 COMMISSIONER SOMMERS: I have a number

 22 of additional questions and my objective here is
 45

 1 to not confuse everyone in the audience or people

 2 listening, but to make some of these issues much

 3 -- or answer questions that maybe someone would

 4 have.

 5 I'm going to start with Footnote 16.

 6 And Footnote 16 refers to areas where the

 7 Commission does not have authority to use 4c

 8 exemptive authority and mentions that staff is

 9 issuing -- considering issuing no-action relief.

 10 And as I said in my opening statement, I actually

 11 have a preference for some other sort of relief

 12 besides relief issued by staff.

 13 So my question is, does the Commission

 14 have authority in these areas, other than 4c

 15 authority, such as issuing a policy statement or

 16 Commission guidance? And then what would, you

 17 know, what in your opinion would provide the most

 18 clarity to market participants?

 19 MR. BERKOVITZ: In addition to the staff

 20 no- action relief, the Commission itself could

 21 also indicate determination of whether or not it

 22 would take enforcement action against -- for
 46

 1 violation of these provisions. The no action

 2 relief does not necessarily have to be issued by

 3 the staff. The Commission retains the authority

 4 to do it itself.

 5 Traditionally, there are pros and cons

 6 of doing it -- staff no-action versus a Commission

 7 no-action -- which -- so there's pros and cons of

 8 doing it each way. In different circumstances one

 9 could do one or the other.

 10 COMMISSIONER SOMMERS: Okay. So we're

 11 not bound to issue staff no-action relief?

 12 MR. BERKOVITZ: No, the Commission could

 13 take similar action itself.

 14 COMMISSIONER SOMMERS: Okay. Within

 15 that same footnote --

 16 MR. BERKOVITZ: I would clarify that it

 17 wouldn't -- we would have to be careful not to

 18 wade into the area that it's exemptive relief

 19 because the statute says we can't give exemptive

 20 relief, so the Commission would have to be a

 21 little careful in how it would do that.

 22 COMMISSIONER SOMMERS: So would
 47

 1 Commission guidance be issuing exemptive relief?

 2 MR. BERKOVITZ: We could work on

 3 providing the options in that area --

 4 COMMISSIONER SOMMERS: Okay.

 5 MR. BERKOVITZ: -- to see how we could

 6 thread that needle.

 7 COMMISSIONER SOMMERS: Okay. On the

 8 same footnote, this is with regard to the

 9 anti-fraud and anti- manipulation provisions,

 10 including CEA Section 4b to cover swaps. And the

 11 footnote says that although these provisions,

 12 therefore, would, under the proposed relief, not

 13 apply to swaps under the Dodd-Frank Act because

 14 that term is subject to further definition,

 15 nevertheless they will apply to all transactions

 16 other than swaps, including but not limited to

 17 futures, contracts, options on futures contracts,

 18 transactions with retail customers and foreign

 19 currency, or other commodities pursuant to CEA

 20 Section 2(c)2.

 21 The last part of this refers to

 22 transactions subject to exemptive relief pursuant
 48

 1 to Part 2 of the proposed order. Can you explain

 2 what transactions subject to exemptive relief

 3 pursuant to Part 2 of the proposed order would

 4 cover?

 5 MR. BERKOVITZ: This would cover

 6 basically the type of agreements, contracts, and

 7 transactions that are covered in -- within Part

 8 35. So if an agreement or contract or transaction

 9 is -- would fall under the Part -- current Part 35

 10 or the scope of relief that we're providing, which

 11 does not have the same type of limitations as Part

 12 35. In other words they could be clear, they

 13 could be standardized. They'd be entered into by

 14 eligible contract participants, those agreements,

 15 contracts, or transactions. The ANTI-MANIPULATION

 16 AUTHORITY AND ANTI- FRAUD AUTHORITY would apply to

 17 those types of agreements, contracts, or

 18 transactions.

 19 COMMISSIONER SOMMERS: Okay. Moving on

 20 to our ability to issue grandfather relief, I

 21 think that Congress gave us the ability to provide

 22 grandfather relief to both 2(h) and 5d markets.
 49

 1 And I've talked about this before about whether or

 2 not grandfather relief provides any other relief

 3 that we are not providing today.

 4 And I just would like to hear your

 5 comments on whether the relief issued under this

 6 proposed order and the proposed grandfather relief

 7 for 2(h) and 2(d) would be the same or are there

 8 any differences there?

 9 MR. BERKOVITZ: We believe that for the

 10 time -- apart from the time period difference at

 11 -- in terms of the December 31st date or the

 12 length of the period that -- within the time

 13 period covered, that this order provides the same

 14 relief from applications of the Commodity Exchange

 15 Act that the grandfather relief would provide.

 16 COMMISSIONER SOMMERS: There's also a

 17 footnote that says that nothing in this proposed

 18 order is intended to impact the availability of

 19 grandfather relief. So I'm just wondering are we

 20 contemplating that after we issue this order, that

 21 at some point somebody could be granted

 22 grandfather relief?
 50

 1 MR. BERKOVITZ: This footnote was

 2 intended that if you have grandfather relief

 3 already, this does not place -- displace what you

 4 already have. So though -- to the extent that

 5 we've already granted grandfather relief for

 6 certain of the 2(h), three through five

 7 transactions, and the 5d transactions, that relief

 8 would continue in effect.

 9 COMMISSIONER SOMMERS: So I guess that's

 10 what I'm confused about. I didn't know that we

 11 had already granted grandfather relief.

 12 MR. BERKOVITZ: We had granted

 13 grandfather relief -- we've granted exemptive

 14 relief for two classes of transactions: Those of

 15 the exempt commercial markets and the exempt

 16 boards of trade back in the fall. The 2(h), three

 17 through five provisions, and the 5d provisions, we

 18 do have grandfather relief in place for those.

 19 At the same time, the Commission

 20 determined that it would -- at that time it would

 21 not issue grandfather relief for the 2(h)1 or two

 22 transactions, which are the ones that are not
 51

 1 taking place on exempt commercial markets.

 2 COMMISSIONER SOMMERS: So anyone that

 3 sent in a petition under our request for those

 4 petitions, they've been issued Grandfather Relief?

 5 I was under the impression that we had --

 6 MR. BERKOVITZ: Some --

 7 COMMISSIONER SOMMERS: -- received

 8 thousands.

 9 MR. BERKOVITZ: Some have and some

 10 haven't.

 11 COMMISSIONER SOMMERS: Oh.

 12 MR. BERKOVITZ: Certain -- we granted

 13 grandfather relief for certain of the petitioners,

 14 but not others. And to the extent that we granted

 15 relief, it wasn't limited to the actual people who

 16 petitioned.

 17 CHAIRMAN GENSLER: Carlene, why don't

 18 you just take them --

 19 MS. KIM: Okay. Let me just clarify the

 20 general counsel's statement on the nature of the

 21 grandfather relief that was issued back in

 22 September. The grandfather relief that we issued
 52

 1 in September extended to the facilities

 2 themselves. So that would be the ECMs and EBOTs

 3 and not necessarily the transactions or the market

 4 participants trading thereon.

 5 COMMISSIONER SOMMERS: I thought that

 6 the petition said that you had to have a pending

 7 DCM or SEF application in order to be granted

 8 relief?

 9 MS. KIM: The grandfather order that we

 10 issued back in September lists a number of

 11 conditions that must be continually met by the

 12 ECMs and EBOTs to be able to rely on the

 13 grandfather relief and the condition that you just

 14 cited is one of them.

 15 COMMISSIONER SOMMERS: So do people have

 16 SEF applications pending?

 17 MS. KIM: I think David could help --

 18 COMMISSIONER SOMMERS: Sorry.

 19 CHAIRMAN GENSLER: David, why don't you

 20 take -- David Van Wagner, who's the chief counsel

 21 for the Division of Market Oversight.

 22 MR. VAN WAGNER: Sorry Ananda. Yeah,
 53

 1 one of the conditions was that when the SEF rules

 2 or the DCM rules -- oh, thank you -- come into

 3 place, that within 60 days of the effective date

 4 of the SEF or the DCM rules, they'd have to have

 5 an application here and it would have to remain

 6 pending. So until such time as that condition is

 7 possible, I would say that they are -- they can't

 8 fail that condition of the relief, so.

 9 COMMISSIONER SOMMERS: As long as

 10 they're meeting all of the other conditions --

 11 MR. VAN WAGNER: Right.

 12 COMMISSIONER SOMMERS: -- then we

 13 granted them the relief?

 14 MR. VAN WAGNER: And at this point,

 15 really the only thing that they could have done

 16 for 2(h)3 markets is gotten their petition here in

 17 time, which was back in the fall and then actually

 18 EBOTs can continue to file a relief petition up

 19 until July 16th. That's just a quirk of Dodd-

 20 Frank.

 21 COMMISSIONER SOMMERS: Okay. So --

 22 MR. VAN WAGNER: So technically they
 54

 1 still can. So the ECMs that have relief are known

 2 at this point. The EBOTs who have relief will not

 3 be known until -- in totality until July 16th.

 4 COMMISSIONER SOMMERS: And there may be

 5 entities that have pending applications that are

 6 operating say under 5d that now have until July

 7 16th to get a petition in?

 8 MR. VAN WAGNER: Correct.

 9 COMMISSIONER SOMMERS: Okay.

 10 MR. VAN WAGNER: And just one other

 11 clarification just to throw in. When you refer to

 12 the thousands of petitions, most of them I would

 13 characterize that the vast majority were requests

 14 for relief from 2(h)1 and the Commission, as part

 15 of their orders back in the fall, indicated there

 16 are, you know, the view that they would -- that we

 17 would not be granting relief, however, at that

 18 time.

 19 However, we might, closer to the date of

 20 Dodd- Frank's implementation, i.e., July 16, 2011,

 21 take up this issue and I think that's what's being

 22 done here. And so again, if this is adopted, all
 55

 1 of those 2(h)1 parties will get swept up into the

 2 order that's pending before you now.

 3 COMMISSIONER SOMMERS: And do you

 4 believe that this is comparable to what they would

 5 have been given in grandfather relief? This

 6 order.

 7 MR. VAN WAGNER: Yes, I mean, the only

 8 real discrepancy is that if they had been granted

 9 relief they would have gotten it through July of

 10 2012, so the timing is not, you know, in synch.

 11 But obviously enough, December 30th comes around

 12 and we decide to extend, so.

 13 COMMISSIONER SOMMERS: Thank you.

 14 MR. VAN WAGNER: Sure.

 15 COMMISSIONER SOMMERS: I have a number

 16 of questions with regard to the different types of

 17 categories that we're extending this relief to

 18 that have pending rulemakings. So, for example,

 19 if the DCM core principles are effective before

 20 the rules and guidance are finalized, how is a DCM

 21 supposed to comply? If you look at Core Principle

 22 9, how can a DCM comply with Core Principle 9 as
 56

 1 of July 16th, given that the language was changed

 2 in Dodd- Frank? So that's one of the examples.

 3 MR. BERKOVITZ: On the DCM, the core

 4 principles could come into effect and, as the

 5 statute provides, the DCMs would have substantial

 6 discretion in determining how to comply with those

 7 core principles in the absence of, or in prior to,

 8 Commission providing further guidance or

 9 interpretation. So it would -- they would have

 10 substantial discretion to determine how to comply

 11 with those requirements.

 12 COMMISSIONER SOMMERS: And does that

 13 mean that they should plan to comply with

 14 pre-Dodd-Frank core principles until things like

 15 the chief compliance officer rules are finished?

 16 MR. BERKOVITZ: I believe the chief

 17 compliance officer is a specific -- there's no

 18 chief compliance --

 19 MR. RADHAKRISHNAN: There's a chief

 20 compliance officer requirement for DCOs. So if

 21 you look at the structure of the statue, the

 22 statute itself lays out certain responsibilities
 57

 1 for the chief compliance officer. And these don't

 2 require rulemaking.

 3 And then there's one provision which

 4 goes to the annual reports and there the

 5 Commission has proposed rulemaking as to the

 6 contents of the annual reports. So it's staff's

 7 view that if you look at the duties, they're

 8 fairly clear as to what the chief compliance

 9 officer has to do.

 10 So that's why this particular provision

 11 is in Category 4. If you look at the sheet that

 12 OGC's provided, which is that they come into

 13 effect because the staff's view that rulemaking

 14 was not required, nor was it dependent on any

 15 other proposal making in order for a DCO to make

 16 sure that somebody was serving as chief compliance

 17 officer.

 18 COMMISSIONER SOMMERS: How should a DCO

 19 comply with that provision then? A DCO should

 20 know that they have to have a chief compliance

 21 officer in place by July 16th even though we

 22 haven't laid out the duties yet?
 58

 1 MR. RADHAKRISHNAN: Actually, I would

 2 say that the duties are prescribed and so I would

 3 argue that the DCO should designate an individual

 4 as a chief compliance officer. The only thing

 5 that's not been finalized are the details of the

 6 annual report that the chief compliance officer

 7 has to provide. But as far as everything else --

 8 I'll just read you the duties.

 9 Report directly to the board or senior

 10 officer; review the compliance of the DCO with

 11 respect to corporate (inaudible) described in

 12 Subsection C2; be responsible for administering

 13 each policy procedure that's required to be

 14 established pursuant to the Sections. I would

 15 argue these don't require rulemaking.

 16 Now, of course, once the Commission

 17 finalizes its proposed rules for implementing the

 18 core principles, then the chief compliance officer

 19 will be responsible for making sure that the DCO

 20 complies with these core -- with the regulations.

 21 COMMISSIONER SOMMERS: Thank you. And

 22 one last question on private rights of action. Do
 59

 1 you believe that the proposed relief today

 2 provides protection from any private right of

 3 action claim based on the failure to comply with

 4 the CEA as amended by Dodd-Frank?

 5 MR. BERKOVITZ: Yes, we do. We believe

 6 it provides that protection.

 7 COMMISSIONER SOMMERS: Thank you.

 8 CHAIRMAN GENSLER: Thank you,

 9 Commissioner Sommers.

 10 Commissioner O'Malia.

 11 COMMISSIONER O'MALIA: Thank you. Kind

 12 of following around that line of questioning by

 13 Commissioner Sommers, General Counsel Berkovitz,

 14 what counsel would you give a DCM transacting

 15 swaps going forward? What set of rules are going

 16 to apply between now and December 31st? We've got

 17 the core principles that apply, but if they

 18 transact swaps, what should they -- what set of

 19 rules should they use?

 20 MR. BERKOVITZ: Actually, Commissioner

 21 O'Malia, that's a very good question. The DCM

 22 transacting swaps question is one we've actually
 60

 1 been discussing at the staff level as recently as

 2 very late last night.

 3 And I think that's one we're looking for

 4 some comment on during the comment period and

 5 further discussion here as to exactly what -- how

 6 we would -- whether we would grant full exemptive

 7 relief for a DCM that wants to do swaps. So we

 8 look forward for some input and further thought on

 9 that before we finalize the order.

 10 COMMISSIONER O'MALIA: Thank you. Let

 11 me ask you another question regarding the larger

 12 trader reporting and other reporting and record

 13 keeping requirements applied during the -- how

 14 will all of these requirements apply during the

 15 period of exemptive relief? The proposed order

 16 does not appear to set forth clear guidelines,

 17 whereas I understand the SEC may be considering

 18 this issue in far greater depth. Do you have a

 19 thought on this?

 20 MR. BERKOVITZ: Excuse me, on the

 21 specific reporting --

 22 COMMISSIONER O'MALIA: Large trader
 61

 1 reporting, for example.

 2 MR. BERKOVITZ: Right. Large trader

 3 reporting, should the Commission issue a final

 4 rule, we would anticipate under this approach in

 5 the proposed order that there would be further

 6 guidance in that particular rule. It's exactly

 7 what the implementation schedule would be for

 8 that.

 9 This approach contemplates that as the

 10 Commission issues regulations to implement

 11 Dodd-Frank, either through the definitions

 12 themselves, the definitional rulemakings, or the

 13 substantive requirements that implementation will

 14 be addressed in each of those instances. Whether

 15 one comes before the other, we don't know at this

 16 point.

 17 So -- but when we get to the point where

 18 we're issuing rules, we're going to either have a

 19 definitional rule first to be followed by

 20 implementation or an implementation rule followed

 21 by a definition.

 22 So the phase-in will have to be
 62

 1 addressed in either of those instances, whatever

 2 order we're going. And so the same is true with

 3 large trader reporting. We'll have to provide

 4 greater clarity in the rulemaking itself.

 5 COMMISSIONER O'MALIA: Thank you. Can

 6 you -- in reflecting on the proposal rulemaking

 7 here, the staff recommendation, should the market

 8 have any expectation that the Commission will

 9 renew this exemptive authority beyond December

 10 31st if the relevant rules are not in place?

 11 MR. BERKOVITZ: I can say as a -- the

 12 intention, as the CFTC staff, we have -- we

 13 believe that the Commission indicated this intent

 14 in the -- when it addressed the grandfather issues

 15 initially, as David was talking about, an initial

 16 order on the grandfather -- the Commission

 17 Statement of Intent to ensure a smooth transition.

 18 If the Commission issues this proposed order and

 19 final order, there would be similar statements of

 20 intent.

 21 The Commissioners have expressed that.

 22 I certainly take that intent very seriously and I
 63

 1 think the staff intends it as well. So I think

 2 the intent is pretty clear for the -- that the

 3 Commission is -- intends to provide this smooth

 4 transition and those statements of intent are also

 5 reflected in the roundtable, and the phasing, and

 6 of implementation.

 7 So I think this is a theme that is

 8 pretty consistent in a number of orders,

 9 roundtables, and forums that the Commission has

 10 issued. So I do think that there is that clear

 11 statement.

 12 COMMISSIONER O'MALIA: But it's not

 13 explicitly stated in the proposed rulemaking?

 14 Well, we're working on it. I mean they just have

 15 to -- based on our conversations, et cetera,

 16 they're just going to have to hope that we have an

 17 extension?

 18 MR. BERKOVITZ: Well, in terms of

 19 drafting the proposed order, it would -- we didn't

 20 think we could draft a proposal or that would bind

 21 a future Commission that might be in a future

 22 order at that time. Ultimately, the future
 64

 1 Commission would make the determination. So we

 2 couldn't give -- go further than we went.

 3 COMMISSIONER O'MALIA: Well, I

 4 appreciate that. And before I go to the

 5 amendment, I do want to mention or respond to

 6 Commissioner Dunn and we will now have forever

 7 know it as the "Dunn-set provision" and I will no

 8 longer refer to it as an arbitrary date. It will

 9 be the "Dunn-set Provision."

 10 And I appreciate the fact that as he

 11 stated, he wants to hold our feet to the fire.

 12 And one would argue that that's what the Statute

 13 intended us to do and despite our best efforts,

 14 and the staff absolutely working as hard as they

 15 possibly can, and the inventiveness of the

 16 Commission as well, and the hard-charging nature

 17 of the Chairman, we still were not able to meet

 18 the statutory deadlines.

 19 So -- and as the Chairman said, this is

 20 not about delay. And I think if we were going to

 21 hold our feet to the fire, the best way to do that

 22 would be to put forward an implementation plan
 65

 1 that we can march in order, by each rule, and have

 2 the public do that, understand where we are and

 3 what's coming up next. So I would again make that

 4 plea. But is it now appropriate that I move to

 5 amend the staff recommendation with the following

 6 amendment?

 7 CHAIRMAN GENSLER: Sure, Commissioner.

 8 COMMISSIONER O'MALIA: Well, I make that

 9 motion.

 10 COMMISSIONER SOMMERS: Second.

 11 CHAIRMAN GENSLER: The amendment as I

 12 understand it is to drop the sunset, or the

 13 Dunn-set, or --

 14 COMMISSIONER O'MALIA: The Dunn-set.

 15 CHAIRMAN GENSLER: And so then it is --

 16 I'm told it's debatable and then we can vote on --

 17 I'm not going to support the amendment as offered

 18 by Commissioner O'Malia, but I do appreciate all

 19 of the work that you put into all of what we're

 20 doing, but even this amendment. I think it is

 21 important as Commissioner Dunn said, that we move

 22 forward, we give the markets this relief, but that
 66

 1 we take up whatever further relief might be

 2 appropriate at the time knowing what we know then.

 3 As Commissioner Sommers said, that may

 4 well be a little bit more time than we have this

 5 time. She suggested, you know, seven or eight

 6 weeks before, eight weeks before rather than --

 7 and in this case it's about five weeks before.

 8 But I think that we'll know a lot more then and I

 9 do think that the American public is still very

 10 much vulnerable.

 11 The crisis in 2008 was very real. The

 12 regulatory system failed, Congress reacted, the

 13 President reacted, that this swaps marketplace be

 14 brought with transparency, openness,

 15 competitiveness, and we lower risk. And I think

 16 that our staff is doing an excellent job and will

 17 start to take up some final rules this summer and

 18 into the fall.

 19 I agree with Commissioner Sommers, these

 20 definition rules are very important. And then we

 21 can see where we are come, you know, probably

 22 early November. And it would be my hope that we
 67

 1 -- we've got most of these final rules done or

 2 maybe all of them and if not, we can then see and

 3 tailor to where we are. So I will not be

 4 supporting your amendment.

 5 COMMISSIONER O'MALIA: Mr. Chairman, I

 6 appreciate that and your willingness to entertain

 7 this and the Commission's willingness to entertain

 8 this amendment. You make mention of the fact that

 9 we will have our rules completed, but what matters

 10 is the transition when they -- completing the

 11 rules and implementing the rules, as you have

 12 noted on numerous occasions, is going to be a

 13 different date.

 14 And there's going to be phasing and I

 15 support that. And I -- obviously we need to

 16 understand getting them done and when they're

 17 going to implement is -- might be a bit of a delta

 18 and we need to understand how that transition will

 19 occur.

 20 CHAIRMAN GENSLER: And I think that's a

 21 very good point and I think that in fact the

 22 market will benefit that we phase. That will
 68

 1 lower risk to the American public and lower cost

 2 by phasing the implementation, or technically it's

 3 phasing the effective dates. I would note, again,

 4 this exemptive relief is only on those things that

 5 are self executing. If it's dependent upon a

 6 clearing rule, or a business conduct rule, or a

 7 SEF rule it's -- it doesn't go effective until the

 8 earliest of 60 days after the final rule. And in

 9 many instances we'll delay that 60 days.

 10 COMMISSIONER O'MALIA: Well, I advocate

 11 that we put all of those rules under the same

 12 condition. Let me ask you, do you have -- do you

 13 think there's any chance the Commission would not

 14 renew the exemptive relief prior to rule

 15 implementation?

 16 CHAIRMAN GENSLER: I think that it's

 17 best to take that up at that time and just see

 18 what the circumstances are. I agree with General

 19 Counsel Berkovitz that it's terms of the intent.

 20 It's the Chairman's intent, me, that this is a

 21 smooth transition.

 22 These are very significant changes that
 69

 1 -- in market structure, that swaps will be

 2 regulated after having been unregulated for 30

 3 years. And to get this smooth, to phase it, I've

 4 been a long advocate and public advocate for. But

 5 I think it's best to take it up, and as

 6 Commissioner Dunn says, you know, to keep us

 7 focused; that the American public's still

 8 vulnerable until we get this stuff done;

 9 Commissioner Dunn.

 10 COMMISSIONER DUNN: Thank you, Mr.

 11 Chairman. I would like to see this Dunn Amendment

 12 become a Dunn Deal. And again, I -- the two

 13 reasons that I've given here is to hold our feet

 14 to the fire. And I am concerned that it's taken

 15 us this long to recognize that this is a problem

 16 and we should have addressed it much earlier, as

 17 Commissioner Sommers has advocated.

 18 By having a sunset on there, it doesn't

 19 allow the Commission to say, oh, well, that's

 20 covered. It gives a certain amount of urgency to

 21 get these things completed. And Mr. Chairman, I

 22 tend to agree with Commissioner O'Malia.
 70

 1 Yes, we'd like to see what's coming up

 2 on the plate, what's next up. I think everyone

 3 would like to see that. But the fact that there

 4 is going to be a phase-in provision on these final

 5 rules, is also something that ought to be a

 6 certain amount of relief to the industry as a

 7 whole out there.

 8 Legal certainty, I can understand people

 9 wanting to know legal certainty. And for all of

 10 those folks that have questions of is this product

 11 in or out, am I as an entity in or out, it would

 12 be my hope, Mr. Chairman, that the Commission and

 13 the staff commit to responding to those types of

 14 inquiry within a reasonable amount of time so that

 15 people understand where they are in this.

 16 The second reason that I have given is

 17 that hopefully there will be a new Commissioner

 18 sitting here soon and I think it's incumbent upon

 19 me to allow that individual to have some say in

 20 the policy as we go forward on this. And for

 21 those reasons, I'm very adamant that we have the

 22 Sunset Provision in there.
 71

 1 I -- again, I go back to no-action

 2 letters that sat on the books for decades that in

 3 some instances staff didn't even know they had

 4 been issued. But the individual that got that was

 5 aware of it. So I feel it is a way to maintain

 6 some discipline.

 7 CHAIRMAN GENSLER: Commissioner Sommers.

 8 COMMISSIONER SOMMERS: I have a couple

 9 of comments. I think -- I have no objection to

 10 this kind of exemptive relief having a sunset. I

 11 think the more appropriate sunset would be upon

 12 the effective date of the new rules we're putting

 13 in place.

 14 My worry, my fear, is that this is a

 15 very serious issue and the market uncertainty that

 16 we could create by not extending this relief could

 17 be worse than, you know, what I've been talking

 18 about for the last couple of months.

 19 The fact of the matter is, we have on a

 20 tentative calendar the product definition

 21 scheduled to issue for November or December, which

 22 means we already know now that we probably won't
 72

 1 have that done in time for December 31st. So

 2 unless we make some sort of commitment right now

 3 to make sure that the definitions are done first,

 4 we're going to end up in the same place.

 5 CHAIRMAN GENSLER: I don't think

 6 Commissioner Chilton is tied in by phone, is he?

 7 No, he didn't, okay.

 8 I think with that I'm supposed to just

 9 -- do I have to call a vote on the amendment, the

 10 roll call, or what do we do, Mr. Stawick?

 11 MR. STAWICK: You may --

 12 CHAIRMAN GENSLER: Fine --

 13 MR. STAWICK: I'm happy to call roll.

 14 This question, again, is on the O'Malia amendment?

 15 CHAIRMAN GENSLER: O'Malia amendment.

 16 MR. STAWICK: Commissioner O'Malia?

 17 COMMISSIONER O'MALIA: Aye.

 18 MR. STAWICK: Commissioner O'Malia, aye.

 19 Commissioner Chilton?

 20 CHAIRMAN GENSLER: I have a document

 21 somewhere. Where is it? I just want to make sure

 22 -- I think I know what it is.
 73

 1 SPEAKER: It's right here.

 2 CHAIRMAN GENSLER: Opposing the

 3 amendment to extend or eliminate the expiration

 4 date included. So I think that's no by proxy.

 5 MR. STAWICK: Commissioner Chilton, no.

 6 Commissioner Sommers?

 7 COMMISSIONER SOMMERS: Yes.

 8 MR. STAWICK: Commissioner Sommers, aye.

 9 Commissioner Dunn?

 10 COMMISSIONER DUNN: No.

 11 MR. STAWICK: Commissioner Dunn, no.

 12 Mr. Chairman?

 13 CHAIRMAN GENSLER: No.

 14 MR. STAWICK: Mr. Chairman, no. Mr.

 15 Chairman, on this question the yays are two, the

 16 nays are three.

 17 CHAIRMAN GENSLER: The motion did not

 18 pass. Then I think we'll go, Mr. Stawick, to the

 19 order as proposed by the staff.

 20 MR. STAWICK: Commissioner O'Malia?

 21 COMMISSIONER O'MALIA: Aye.

 22 MR. STAWICK: Commissioner O'Malia, aye.
 74

 1 Commissioner Chilton?

 2 CHAIRMAN GENSLER: In favor of the

 3 motion to accept the staff recommendation to issue

 4 the proposed order and request for comment. So

 5 that's an aye.

 6 MR. STAWICK: Commissioner Chilton, aye.

 7 Commissioner Sommers?

 8 COMMISSIONER SOMMERS: Aye.

 9 MR. STAWICK: Commissioner Sommers, aye.

 10 Commissioner Dunn?

 11 COMMISSIONER DUNN: Aye.

 12 MR. STAWICK: Commissioner Dunn, aye.

 13 Mr. Chairman?

 14 CHAIRMAN GENSLER: Aye.

 15 MR. STAWICK: Mr. Chairman, aye. Mr.

 16 Chairman, on this question the yays are five, the

 17 nays are zero.

 18 CHAIRMAN GENSLER: Thank you, Mr.

 19 Stawick. Thank you to my Commissioners. With it

 20 being unanimous, we will seek to send it to the

 21 Federal Register post haste. I thank our friends

 22 at the Federal Register. Hopefully it will get in
 75

 1 in the next two to three days. But there's a

 2 couple more things I have to do on dates. But

 3 General Counsel Berkovitz.

 4 MR. BERKOVITZ: Just permission to make

 5 a few technical corrections. It will not

 6 interfere with the expeditious getting this to the

 7 Federal Register. It will improve getting this to

 8 the Federal Register.

 9 CHAIRMAN GENSLER: I ask unanimous

 10 consent that General Counsel Berkovitz is able to

 11 make technical corrections? I'm not hearing

 12 oppositions, so allowed and moved.

 13 COMMISSIONER DUNN: Mr. Chairman, just a

 14 point of clarification then. I'm assuming that

 15 that final vote will be by seriatim then?

 16 CHAIRMAN GENSLER: It will either be by

 17 seriatim or we need to have a public meeting. But

 18 seriatim is all right with me, I mean, just to get

 19 it out there. But I don't know if we have

 20 something scheduled before July 16th. I'm about

 21 to turn to that.

 22 The next item for today is to vote to
 76

 1 authorize publishing a Sunshine Act notice for

 2 some meetings. I see here that we have meetings

 3 July 7th, July 19th, August 4th, September 8th,

 4 and September 22nd.

 5 So I guess Commissioner Dunn, you're

 6 correct unless people want to get -- I mean, I'm

 7 ready to get together before the 16th if you want

 8 to do that publicly. So if you want to do

 9 something on the 14th or something like that we

 10 can do that as well.

 11 COMMISSIONER SOMMERS: So will -- it

 12 won't be ready for the July 7th meeting?

 13 CHAIRMAN GENSLER: Will it be ready for

 14 the July 7th meeting, Dan?

 15 MR. BERKOVITZ: We'll have to see what

 16 the comments and if we have a 14-day comment

 17 period and we get it, that puts us to about June

 18 30th to -- so I think it will be tough to -- we'll

 19 do the best we can, but that's also the July 4th

 20 weekend, so to -- one week with the July 4th, 7th

 21 would be difficult.

 22 CHAIRMAN GENSLER: So I think it would
 77

 1 be best if we had it the July 7th. But are you

 2 saying that should we sneak a date in here, call

 3 it July, you know, 13th or 14th?

 4 MR. BERKOVITZ: We to get it right so we

 5 --

 6 CHAIRMAN GENSLER: Do you want to --

 7 MR. BERKOVITZ: -- a few days would

 8 help.

 9 CHAIRMAN GENSLER: -- with apologies, at

 10 least --

 11 COMMISSIONER SOMMERS: I would prefer to

 12 do it by seriatim if it's not ready by the 7th.

 13 COMMISSIONER DUNN: I think seriatim

 14 would be fine.

 15 CHAIRMAN GENSLER: I go with the will of

 16 the Commission. But all meetings are scheduled to

 17 begin at 9:30. It will take place in this room.

 18 Agenda's, of course, will be published seven days

 19 in advance. Sorry to do this to your staff, Dan,

 20 but I'm hopeful that we can do it the July 7th. I

 21 think that would be helpful, and it also gives the

 22 market a little bit more preparedness for the 16th
 78

 1 if possible.

 2 MR. BERKOVITZ: And it will depend on

 3 the comments. I think if we don't have

 4 substantial revisions or the comments can be

 5 incorporated, we can do it sooner.

 6 CHAIRMAN GENSLER: Okay. And then --

 7 MR. BERKOVITZ: We'll see.

 8 CHAIRMAN GENSLER: -- I guess I'm making

 9 a motion on the Sunshine Act. So do I hear a

 10 second?

 11 COMMISSIONER SOMMERS: Second.

 12 CHAIRMAN GENSLER: Do I need to do it

 13 through Mr. Stawick or do I just do it? All

 14 right, fine.

 15 MR. STAWICK: Yes. Commissioner

 16 O'Malia?

 17 COMMISSIONER O'MALIA: Aye.

 18 MR. STAWICK: Commissioner O'Malia, aye.

 19 Commissioner Chilton?

 20 CHAIRMAN GENSLER: It looks like it's in

 21 favor in the motion to schedule the meetings.

 22 MR. STAWICK: Commissioner Chilton, aye.
 79

 1 Commissioner Sommers?

 2 COMMISSIONER SOMMERS: Aye.

 3 MR. STAWICK: Commissioner Sommers, aye.

 4 Commissioner Dunn?

 5 COMMISSIONER DUNN: Aye.

 6 MR. STAWICK: Commissioner Dunn, aye.

 7 Mr. Chairman?

 8 CHAIRMAN GENSLER: Aye.

 9 MR. STAWICK: Mr. Chairman, aye. Mr.

 10 Chairman, on this question the yays are five, the

 11 nays are zero.

 12 CHAIRMAN GENSLER: It being unanimous,

 13 we'll send that on. The CFTC has substantially

 14 completed its rulemaking around these 30 topics

 15 and our next meeting will be on July 7th and the

 16 subjects of that meeting will be posted at that

 17 time.

 18 Some of the meetings that we're thinking

 19 -- some of the topics we are thinking about taking

 20 up, and I'm doing this off script, but just

 21 because we've distributed it along here, is in

 22 these July and early August meeting, without
 80

 1 trying to be specific on the dates, and staff will

 2 probably shoot me for doing this, but we're

 3 looking at anti-manipulation and trying to

 4 finalize the anti- manipulation rule. It's

 5 subject to where the Commissioners are. The large

 6 trade reporting, there's a number of process rules

 7 related to Part 40, but also with regard to

 8 clearing determinations. There's a mandatory

 9 clearing, but there's a process rule with regard

 10 to that.

 11 Agricultural commodities definition

 12 seems about ready to be teed up and there's some

 13 rules about credit ratings. Possible, but I don't

 14 know if that will be teed up. And then there's

 15 some privacy notice provisions in FCRA and GLB,

 16 Gramm-Leach-Bliley, and so forth. I'm probably

 17 missing a few things for these July meetings.

 18 We are working, and there's a

 19 significant staff dedicated to completing the

 20 summary and getting recommendations up to the

 21 Commissioners on position limits. There are many

 22 rules that were reopened through June 3rd. We are
 81

 1 now at about a little over 20,000 public comments

 2 in the comment files. About 12,000 are related to

 3 position limits, but the other 8,000 grew

 4 significantly when we reopened for 30 days.

 5 So some cases, the teams only got four

 6 or five more comments and are pretty ready to give

 7 us summaries and give us feedback. In some

 8 instances, they've got 50 or 100 comments or even

 9 more and so it will take a little bit longer. But

 10 what we're looking to do is get the comment

 11 summaries and staff recommendations, you know,

 12 percolating up a lot of these in June and July,

 13 but to the extent that they do that, I think that

 14 some of those meetings will have to be calendared

 15 for the September period to finalize clearing

 16 rules, finalize SEF rules, and business conduct

 17 rules.

 18 But it's still dependent on how the

 19 comment summaries, and most importantly, your back

 20 advise; your advise back to staff, each of you, as

 21 you start to look at the comments yourself, that

 22 we can bring these together. The entity
 82

 1 definition and the product definition, I share

 2 Commissioner Sommers' views. We've had very good

 3 dialogue with the SEC on both.

 4 We're going to have a joint roundtable

 5 on the entity definition in a couple of days. But

 6 again, depending upon some of these newer comments

 7 just to see how that -- able to take up, I would

 8 hope, shortly after Labor Day, but we're human.

 9 As I continue to say, things can slip.

 10 These are important matters and we want to get it

 11 right and balanced and so forth. So that gives --

 12 I mean, I'm just trying to give a little bit of

 13 the -- Mr. Berkovitz, anything else? Any other

 14 issues?

 15 With that can I just entertain a motion?

 16 You don't have to do anything else, right? No,

 17 entertain a motion to adjourn the meeting.

 18 COMMISSIONER DUNN: So moved.

 19 COMMISSIONER SOMMERS: Second.

 20 CHAIRMAN GENSLER: All in favor?

 21 SPEAKER: Aye.

 22 COMMISSIONER SOMMERS: Aye.
 83

 1 CHAIRMAN GENSLER: Aye. Any opposed?

 2 Thank you, the meeting is adjourned. We'll see

 3 you on July 7th, I think.

 4 (Whereupon, at 11:58 a.m., the

 5 PROCEEDINGS were adjourned.)

 6 * * * * *

 7

 8

 9

 10

 11

 12

 13

 14

 15

 16

 17

 18

 19

 20

 21

 22
 84

 1 CERTIFICATE OF NOTARY PUBLIC

 2 DISTRICT OF COLUMBIA

 3 I, Christine Allen, notary public in and

 4 for the District of Columbia, do hereby certify

 5 that the forgoing PROCEEDING was duly recorded and

 6 thereafter reduced to print under my direction;

 7 that the witnesses were sworn to tell the truth

 8 under penalty of perjury; that said transcript is a

 9 true record of the testimony given by witnesses;

 10 that I am neither counsel for, related to, nor

 11 employed by any of the parties to the action in

 12 which this proceeding was called; and, furthermore,

 13 that I am not a relative or employee of any

 14 attorney or counsel employed by the parties hereto,

 15 nor financially or otherwise interested in the

 16 outcome of this action.

 17

 18

 19 -----------------------------------

 20 Notary Public, in and for the District of Columbia

 21 My Commission Expires: January 14, 2013

 22