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 released Monday.
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 said.
"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.
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
Institute.
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 long time."
"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, brian_scheid@platts.com
--Edited by Jeff Barber, jeff_barber@platts.com
© 2012 Platts, The McGraw-Hill Companies Inc. All rights reserved.
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