April 21, 2011

SEC Schedules an IFRS Roundtable for July

In a sign that the SEC is continuing to consider the implementation of International Financial Reporting Standards, the SEC just announced a roundtable on July 7th for the purpose of discussing topics such as investor understanding of IFRS and the impact on smaller public companies and on the regulatory environment of incorporating IFRS. The roundtable is expected to involve three panels representing investors, smaller public companies, and regulators.

While on the topic of roundtables, the SEC also announced plans to hold a two-day roundtable jointly with the CFTC on May 2nd and 3rd to discuss the schedule for implementing final rules for swaps and security-based swaps under the Dodd-Frank Act.

A Strongly-Worded Defense of Dodd-Frank Act Implementation

In a speech earlier this week, Deputy Treasury Secretary Neil Wolin defended the Dodd-Frank Act and its implementation, taking on various criticisms of the law point by point. While the speech had no title, perhaps its theme is best described as “How Quickly They Forget.” Specifically with regard to the pace of reform under Dodd-Frank, Wolin addressed the critics by stating:

After the Dodd-Frank Act was signed into law last summer, many in Washington and in the financial services industry said that the legislation lacked details, and that the uncertainty of the shape of final regulations made it difficult for businesses to plan for the future. They called for clarity, and they wanted it fast. We said that regulators would move quickly but carefully to implement the legislation. We said that we would seek public input. We said it’s critical to get the details right. Recently, some of these very same critics – those who previously demanded clarity as quickly as possible – are saying that we’re moving too quickly. They now suggest that too many details are coming too fast. They say that regulators aren’t setting aside sufficient time to study the issues and make the right decisions, and that businesses won’t have time to adjust to the new regulations. Our response to them remains the same. Regulators have been and are moving quickly but carefully to implement this legislation. We continue to seek public input. And of course, it remains critical to get the details right. Although there may be reasonable debate about the substance of Dodd-Frank implementation work, there is no question that regulators have been implementing the statute in a careful, considered, and serious manner.

SEC and CFTC’s Joint Study on Mandating Algorithmic Descriptions for Derivatives

Meanwhile, the Dodd-Frank implementation effort marches on. Recently, the SEC and CFTC delivered to Congress a joint study on the “the feasibility of requiring the derivatives industry to adopt standardized computer-readable algorithmic descriptions which may be used to describe complex and standardized financial derivatives” as required under Section 719(b) of Dodd-Frank. As noted in this press release, the joint study concludes that current technology is capable of representing derivatives using a common set of computer-readable descriptions – and that these descriptions are precise enough to use both for the calculation of net exposures and to serve as part or all of a binding legal contract.

– Dave Lynn