By Alexandra Alper
WASHINGTON, Oct 5 (Reuters) - Lawmakers and a regulator on Friday took steps to help assauage swap players' concerns about complying with confusing rules that are set to take effect on Oct. 12.
Democratic Commissioner Bart Chilton of the Commodity Futures Trading Commission told reporters that swaps players, are unlikely to face enforcement actions before they get answers to their questions about the swaps rules.
"If we don't respond to them, there is no way I can envision the agency taking an action against them," he said, adding he expected the agency to address some of the inquiries over the next few days.
The rules are mandated by the 2010 Dodd Frank financial reform that seeks to boost oversight of the $648 trillion over-the-counter swaps market, which was implicated in the 2007-2009 financial crisis.
The October deadline was triggered when the CFTC published a final version of its definition of "swap," setting the clock on the reforms, even though other related rules have yet to be finalized.
Confusion over rules has prompted a flurry of petitions from lawmakers and the industry to the CFTC, which was given the task of drafting most of the rules.
Others have sent letters elsewhere.
In a letter dated Oct. 5, Republican Reps. Frank Lucas, Spencer Bachus, Michael Conaway and Scott Garrett urged Treasury Secretary Timothy Geithner to delay implementation or provide relief from the rules, which they say could harm the competitiveness of U.S. firms or damage the economy.
They highlighted new powers that Geithner has as chairman of the Financial Stability Oversight Council, a group of regulators that is authorized to monitor the stability of financial markets.
"We are hopeful that the FSOC will not allow an inflexible implementation of new rules to needlessly disrupt the U.S. derivatives marketplace," they wrote.
Bachus and Lucas head up committees that oversee the CFTC. TOUGH RULES
Among the toughest rules that are scheduled to kick in next week is one that requires traders to begin counting their swaps transactions to see if they reach an $8 billion threshold, which tags them as a "swap dealer." Such firms face the toughest rules, like capital requirements to back trades.
But firms that have only $25 million in total swaps trading with public utilities also get tagged. The aim of this lower threshold was to protect public utilities, by toughening up oversight of banks that deal with them.
But the lawmakers raised concerns voiced by utilities that the threshold will deter banks from trading with them at all, limiting their ability hedge risk and forcing them to pass higher costs on to consumers.
"These new rules will harm America's economic engine by impairing many of the companies that provide vital financing to consumers and American businesses," they wrote.
Sources familiar with the matter say the CFTC is reviewing this and other issues posed by the Oct. 12 deadline.
(Reporting by Alexandra Alper; Editing by Leslie Gevirtz)
Keywords: CFTC CHILTON/