Addressing Regulatory Uncertainty
Risk-informed options for energy companies subject to the Dodd-Frank Act
Many energy companies have struggled for almost three years to avoid the so-called “collateral damage” to energy markets that has come with the Dodd-Frank Act and associated rulemaking from the Commodity Futures Trading Commission (CFTC). With recent developments in the publication of key final Dodd-Frank rules, it appears the regulatory foundation is largely in place for companies to move forward with regulatory compliance. Corporate compliance professionals responsible for Dodd-Frank compliance should assess the impact of three likely policy scenarios and have a plan to execute a strategic path forward based on their company’s risk strategy.
Postures toward regulatory risk that a management team might consider include:
- Cost-effective compliance
- Await completion until rulemaking is “complete”
- No regrets spending
A company’s assessment of the impact of these scenarios should take into account the company’s approach to regulatory risk and anticipated compliance resources. Federal regulators expect companies to comply fully with all applicable regulations. During the uncertain start-up phase of Dodd-Frank regulations, such compliance is challenging given the uncertainty regarding how regulations will be interpreted, interpretation of technical standards and reliance upon other market participants.
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