ICI Submits Comment Letter on CFTC Concept Release Re OTC Derivatives

Washington, DC, September 11, 1998 - The Institute recently filed a comment letter with the Commodity Futures Trading Commission on the CFTC's concept release related to the over-the-counter (OTC) derivatives market.

The letter notes that use of OTC derivatives has grown substantially over the past few years, in part due to strong growth in the financial markets and in part due to the benefits that OTC derivatives provide to institutional investors, including mutual funds. The letter recommends that the CFTC reconsider undertaking the initiative contemplated in the concept release because of the legal uncertainty that the concept release has created in the U.S. OTC derivatives markets, which could result in such markets moving overseas. Additionally, the letter expresses the Institute's concern that many of the proposals considered in the concept release could lead to duplicative and unnecessary regulatory burdens on dealers, intermediaries, and end-users, including mutual funds. The letter concludes that the CFTC should not take further action on the concept release until there is a consensus among Congress and the other federal financial markets regulators on how to proceed in this area.