Swaps Regulation - Hearings & Testimony

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Related CFTC Open Meetings[edit]

CFTC Open Meeting, October 1, 2010
Meeting summary

CFTC Open Meeting, October 19, 2010
Meeting summary

CFTC Open Meeting, October 26, 2010
Meeting summary

CFTC Open Meeting, November 10, 2010
Meeting summary

CFTC Open Meeting, December 1, 2010
Meeting summary

CFTC Open Meeting, December 9, 2010
Meeting summary

CFTC Open Meeting, December 16, 2010
Meeting summary

CFTC Open Meeting, January 13, 2011
Meeting summary

CFTC Open Meeting, January 20, 2011
Meeting summary

CFTC Open Meeting, January 26, 2011
Meeting summary


Gensler discusses Dodd-Frank implementation with NEC - November 9, 2010[edit]

CFTC Chairman Gary Gensler delivered a speech on the implementation of the Dodd-Frank Act to the National Economists Club in Washington, DC on November 9, 2010. In this speech, Gensler talks about the Dodd-Frank Act, noting its two central elements - transparency and lowering risk. He talks about increased transparency in the swaps market, and all swaps participants must be reported in the so-called "Swaps Date Repository." A full list of the topics discussed include:

  • A brief history of derivatives trading.
  • The need to promote transparency in the swaps markets.
  • Methods for lowering risk in the swaps markets which include:
    • Mandatory clearing of standardized swaps
    • Regulating swap dealers through business conduct and documentation standards
    • Regulating swap dealers for capital and margin
  • A brief discussion on the efforts the CFTC has underway to implement the Dodd-Frank Act.

Joint CFTC-SEC Advisory Committee Meeting - November 5, 2010[edit]

The Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) will hold a public meeting of the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues on November 5, 2010, from 9:00 am to 12:00 pm, to:

  • Receive a summary and recap from the staffs of the CFTC and SEC on the report issued September 30, 2010;
  • hear a report from the subcommittee on cross-market linkages;
  • hear a report from the subcommittee on pre-trade risk management; and
  • discuss potential recommendations and responses.

Statements by CFTC Chairman Gary Gensler:

  • The May 6 "Flash Crash" was caused by three factors:
    • very fragile and uncertain markets due in part to the unsettling news concerning the European debt crisis;
    • a liquidity crisis in the E-Mini S&P 500 futures contracts (E-Mini) and related index securities; and
    • a liquidity crisis in individual securities.

Request to discuss:
What the Committee’s views are on how we protect market integrity in light of both the events of May 6 and the rapidly changing technology in the financial markets.

  • what, if any, additional risk protections should be considered with regard to the use of algorithmic and high-frequency trading?
  • should exchanges and executing brokers be required to update risk mechanisms and rules for market pauses? If so, how? What thoughts does the Committee have on cross-market linkages either with regard to circuit breakers or any other protections?
  • what are the Committee’s views on the variety of recent initiatives taken by our two agencies, including the CFTC’s advanced notice of proposed rulemaking on disruptive trading practices and the pilot program in the securities markets with respect to market pauses?

Archived webcast:

Public Roundtable to Discuss Swap Data, Swap Data Repositories and Real Time Reporting - Part 2 - September 22, 2010[edit]

Summary: The Commodity Futures Trading Commission (Commission or CFTC) is proposing rules to implement new statutory provisions enacted by Title VII and Title VIII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The proposed regulations establish financial resources requirements for derivatives clearing organizations (DCOs) for the purpose of ensuring that they maintain sufficient financial resources to enable them to perform their functions in compliance with the Commodity Exchange Act and the Dodd-Frank Act.

Panelists:

  • Keith Anguish, Associate Director, Systems Development, CME Group Inc.
  • Jim Moran, Director, Global Market Regulation Strategy and Technology, CME Group Inc.
  • Karl Cooper, Chief Regulatory Officer, NYSE Liffe U.S.
  • Andy Booth, Chief Technology Officer, NYSE Liffe U.S.
  • Joseph Ott, Vice President, Compliance, Kansas City Board of Trade
  • Dan Umstattd, Director of Operations, Kansas City Board of Trade
  • Mark Fabian, Vice President, Market Regulation, ICE Futures U.S.
  • Barry Legros, Vice President, Application Systems, ICE Futures U.S.
  • R.J. Cummings, Vice President, Product Development, ICE Futures U.S.
  • Leslie Sutphen, Industry Consultant
  • George Crapple, Co-CEO and Co-Chairman, Millburn Ridgefield Corporation
  • Melinda Schramm, Chairman, National Introducing Brokers Association
  • Frank Franiak, President and CEO, Woodfield Fund Administration LLC
  • Ray Tubridy, Managing Director, Derivatives Sales and Marketing and Product Development, State Street Global Markets
  • Kevin Foley, Partner, Katten Muchin Rosenman LLP

Public Roundtable to Discuss Swap Data, Swap Data Repositories and Real Time Reporting - Part 1 - September 21, 2010[edit]

Summary: The Commodity Futures Trading Commission (Commission or CFTC) is proposing regulations to implement Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). These proposed amendments would establish the regulatory standards for compliance with derivatives clearing organization (DCO) Core Principles A (Compliance), H (Rule Enforcement), N (Antitrust Considerations), and R (Legal Risk), as well as DCO chief compliance officer (CCO) requirements set forth in Section 5b of the Commodity Exchange Act (CEA). The proposed amendments also would revise procedures for DCO applications, clarify procedures for the transfer of a DCO registration, add requirements for approval of DCO rules establishing a portfolio margining program for customer accounts carried by a futures commission merchant (FCM) that is also registered as a securities broker-dealer (FCM/BD), and make certain technical amendments. The Commission also is proposing amendments to update the definitions of "clearing member" and "clearing organization", and to add definitions for certain other terms.

Panelists:

  • Keith Anguish, Associate Director, Systems Development, CME Group Inc.
  • Jim Moran, Director, Global Market Regulation Strategy and Technology, CME Group Inc.
  • Karl Cooper, Chief Regulatory Officer, NYSE Liffe U.S.
  • Andy Booth, Chief Technology Officer, NYSE Liffe U.S.
  • Joseph Ott, Vice President, Compliance, Kansas City Board of Trade
  • Dan Umstattd, Director of Operations, Kansas City Board of Trade
  • Mark Fabian, Vice President, Market Regulation, ICE Futures U.S.
  • Barry Legros, Vice President, Application Systems, ICE Futures U.S.
  • R.J. Cummings, Vice President, Product Development, ICE Futures U.S.
  • Leslie Sutphen, Industry Consultant
  • George Crapple, Co-CEO and Co-Chairman, Millburn Ridgefield Corporation
  • Melinda Schramm, Chairman, National Introducing Brokers Association
  • Frank Franiak, President and CEO, Woodfield Fund Administration LLC
  • Ray Tubridy, Managing Director, Derivatives Sales and Marketing and Product Development, State Street Global Markets
  • Kevin Foley, Partner, Katten Muchin Rosenman LLP

Gary Gensler: Over the Counter Derivatives Reform - September 21, 2010[edit]

CFTC Chairman Gary Gensler spoke about derivatives trading and his perspective as one of the primary regulators in charge of implementing the derivatives title included in the Dodd-Frank Wall Street Reform and Consumer Protection Act. Following his remarks panelists spoke about the potential impact the new rules would have on the over the counter (OTC) derivatives markets, with a special focus on the implications for end-users of derivatives that access OTC derivatives to hedge commercial risks associated with their businesses.

Statements by Gary Gensler:

  • The CFTC intends to comply fully with the statute’s provisions and Congressional intent to lower risk and bring transparency to these markets.
  • The CFTC is consulting heavily with both other regulators and the broader public, and is working very closely with the Securities and Exchange Commission (SEC), the Federal Reserve and other prudential regulators.
  • The CFTC has reached out to, and is actively consulting with international regulators to harmonize swaps oversight.
  • The CFTC is soliciting broad public input into the rules being drafted.
  • The CFTC plans to actively publish proposed rules in the fall, using weekly public Commission meetings for this purpose. Public meetings will allow the proposal of rules out in the open, and promote rule-making transparency.
  • Non-financial entities that are “using swaps to hedge or mitigate commercial risk” will be able to choose whether or not to bring their swaps to clearinghouses; financial entities, however, such as swap dealers, hedge funds and insurance companies, will be required to use clearinghouses when entering into standardized transactions with other financial entities.
  • There are three tests to determine whether an entity is a major swap participant, and they all relate back to whether the entity is substantial enough to be relevant to the economy or the financial system as a whole. Further, an entity can only be a major swap participant if it is not considered a swap dealer.
  • Real time reporting will promote transparency, and must be achieved “as soon as technologically practicable” after a swap is executed to enhance price discovery.
  • The earliest that real time reporting would come into effect will be in September of 2011.

Video:

Gary Gensler: Bloomberg TV Interview - August 24, 2010[edit]

CFTC Chairman Gensler talks about financial regulatory overhaul and transparency in the swaps market. Gensler states, "Wall Street would like to keep these markets dark, and Congress has said there has to be transparency... Congress has been very specific, and we are going to follow it."

Gary Gensler: CNBC Interview - April 19, 2009[edit]

CFTC Chairman Gensler's discusses:

  • The need to use clearinghouses as a means to reduce risk to the public for all standard derivatives
  • The needed for transparency in unregulated derivatives markets
  • The cost lowering benefits of transparency
  • The need for a very narrow end-user exemption

Senate Agriculture Committee Hearing: Role of Derivatives in Current Financial Crisis - October 14, 2008[edit]

The Senate Agriculture Committee held a hearing on the role of derivatives in the current financial crisis and regulatory issues pertaining to them. Credit swaps and derivatives function in many respects like futures contracts traded on exchanges regulated by the Commodity Futures Trading Commission. The Senate Agriculture Committee hearing explored the scope of the CFTC's authority under existing law and whether this authority is adequate in the wake of the current financial crisis.

Speakers include:

  • William Black
  • Eric Dinallo
  • Terrence Duffy
  • Richard Lindsey
  • Robert Pickle
  • Ananda Radhakrishnan
  • Jonathan Short
  • Michael Crappo
  • Thomas Harkin
  • Blanche Lincoln
  • Richard Lugar

Video:

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