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Friday, key provisions of Dodd-Frank governing over-the-counter derivatives (e.g., swaps, etc.) take effect. Specifically, the rules aim to increase transparency into transactions to reduce overall risk... For starters, many businesses aren't even aware if they're subject to the rules or not. As of last week, hundreds of firms utilizing swaps and potentially subject to regulation submitted requests for clarification, regulatory relief or exemption from the CFTC [Commodities Futures Trading Commission]. Further, the CFTC's regulation fails to clearly specify what enforcement actions they might take for noncompliance.

Regulatory uncertainty can have a chilling effect on markets. Participants may step back for fear of violating (still nebulous) regulations and unclear punitive consequences from regulators. And in this case, that can mean firms wanting to better protect themselves from risks associated with their business won’t be able to do so if swap dealers won’t participate in the market. That could result in higher costs for some businesses, which get passed along to their customers.

Dodd-Frank also tasks various federal and international regulators—the SEC, CFTC, Treasury, Fed, etc. with rule-making in many of the same areas—resulting in vast overlap and further confusion.

If you thought that was good, wait'll ya see ObamaCare.

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