Remarks of Commissioner Scott D. O’Malia Before Federal Reserve Board of Chicago

CFTC Speeches

Federal Reserve Board of Chicago, 47th Annual Conference on Bank Structure and Competition, Theme Panel Implementing Dodd-Frank: Progress to Date and Recommendations for the Future

May 4, 2011

CFTC Commissioner Scott O’Malia discusses at length a number of Dodd-Frank issues. Here are two interesting passages:

“I find myself asking if we are really going to change the fundamentals of the market. If we take the flexibility out of the swaps market by trying to make those unique instruments trade as though they’re futures, and ignore the characteristics that make them useful tools to hedge risk, aren’t we sacrificing market innovation for the lazy comfort of sticking to what is more familiar?

The way the draft rules seem to be shaping up, the dealers will remain in a key market making role, albeit a more expensive responsibility. Do we want a market that leaves dealers as the prime market makers, offering less and not more competition in the swaps arena? Much of this will depend whether or not we can move to more standard products and reduce the customization of these products.

Cross References

Dodd-Frank Act, Title VII