Who Will Be Exempt From the New Derivative Rules?

When Congress passed its massive financial regulation bill this summer, quite a few of the details were left up to regulators. As they struggle to make sense of how to best finalize rules to create a healthier market, the fine print is being written little-by-little. Last week, the Commodity Futures Trading Commission decided who would be exempt from the strict new derivatives rules when hedging risk. Christopher Doering and Ayesha Rascoe of Reuters report:

The rules -- eagerly awaited by companies like Exelon and Ford that do not want to be forced to clear their swaps trades, causing them to post billions of dollars in margin -- grant an exemption if one side of the trade is a non-financial entity, and can prove the deal is not speculative.

But, in yet another sign that regulators are conflicted on how best to limit systemic risk in the swaps market, the two Republican commissioners on the five-member Commodity Futures Trading Commission voted against releasing the rules for public comment, saying more clarity was needed.

"I am flummoxed as to why we are failing to fully address the issue of excluding small banks, farm credit institutions and credit unions from the definition of financial entity," CFTC Commissioner Scott O'Malia said at the public meeting.

Read the full story at Reuters.