CFTC To Publish Hedge Fund Rule

Jan 19 2011 | 1:04pm ET

The Commodity Futures Trading Commission is set to offer its proposal for a new rule covering hedge fund managers, it said today.

The agency will hold a hearing on Jan. 26 about the proposed joint Securities and Exchange Commission rule. The new regulation is one of dozens of rules the two agencies must write in the wake of the Dodd-Frank financial regulation overhaul.

The CFTC and SEC are straining under the new burdens placed on them; both have been forced to delay proposals and miss internal deadlines as a result of funding shortages. Democrats last year were unable to push through funding increases for the two and Republicans, who now control the House of Representatives and who opposed the Dodd-Frank law, have proven unwilling to give the agencies the necessary funding.

The SEC has already postponed seven rules, including one that would revise the definition of "accredited investor." The CFTC has said it will miss a deadline this month to release a new rule designed to cut back on speculative commodity trading.

Meanwhile, the U.S. Financial Stability Oversight Council, which includes both the SEC and CFTC, continues to hash out other aspects of the Dodd-Frank law. The council has agreed on a "robust implementation" of the Volcker rule, which strictly limits banks' alternative investments activities and bars them from proprietary trading.

Meanwhile, two industry players and former U.S. Treasury officials met with the Federal Reserve, which leads the Stability council, about the definition of "hedge fund" and "private equity fund" under the Volcker rule. David Nason and Stephen Albrecht, now with GE Capital, "expressed concern regarding the potential breadth" of those terms, the Fed said on its Web site.

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