Speaking in a video interview, Isda executive vice-chairman Robert Pickel said regulators are aware that inconsistencies could emerge between legislative requirements and Fed letter commitments Supervisors are sensitive to the friction that could emerge between voluntary commitments made by dealers and the wave of new rules currently being drawn up in the US and Europe, according to Bob Pickel, executive vice-chairman of the International Swaps and Derivatives Association. The problem was highlighted by the industry's decision in March to launch a new selection process for an interest rate repository, after the existing one, operated by TriOptima in line with voluntary standards, was deemed not to satisfy proposed new rules. Speaking in a video interview at Isda's annual general meeting in Prague on April 14, Pickel highlighted a passage in the industry's latest letter to the Federal Reserve Bank of New York on March 31, which states voluntary commitments could be revised - with the blessing of supervisors - if clashes with regulatory obligations arise. "We have been very clear in the past year or so, as we've moved up to this commitment letter that we delivered two weeks ago, that it is a different environment with mandates under existing US law and anticipated ones under European law, and potentially elsewhere. We [need to] make sure we're not going down one path on commitments and find ourselves having to go down a different path on requirements under the law," said Pickel. "The regulators are actually sensitive to that, they understand that. There is a clause in the most recent letter that says to the extent that the commitments are deviating from the requirements, we'll get back together and we'll revisit the commitments to make sure they are working in the same direction." These aren't just academic concerns. When it became clear that TriOptima could not meet new rules for swap data repositories drawn up by the Commodity Futures Trading Commission as part of the Dodd-Frank Act - in particular, a requirement for real-time reporting to regulators - dealers accepted they would need to launch a new selection process. TriOptima had been chosen in a process overseen by Isda, and driven by the New York Fed, in 2009. But regulatory expectations have since moved on. Pickel said the stance taken by the CFTC was "flowing out of what's in Dodd-Frank, which is a legislative process. We tried to point out that there was a commitment process, but there is political motivation to move forward on [the expanded repository requirements] basis. And even within the regulatory discussions, there has been some consideration of expanding some aspects of the repository," he said. "We're just going to have to make the best we can of what is a challenging situation." Pickel says the new repository requirements will "vastly increase the cost of getting that information in, and we're not even sure...what the regulator is going to do with that information"....
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