CFTC Chair Massad Discusses Additional End Users' Concerns and CFTC Priorities

CFTC Chair Timothy Massad discussed the CFTC's efforts to address end users' concerns at the 2015 Energy Risk Summit.

Chair Massad reiterated the CFTC's intention to "fine-tune" its rules and touched on specific areas of concern for the CFTC to address, including the following:

• making it easier for local utility companies to access the energy swaps market;
• granting relief from the real-time reporting requirements for certain less liquid and long-dated swap contracts;
• modifying the residual interest deadline;
• revisiting procedures for special calls, especially when automatically triggered by market participant trades above set levels;
• publicizing and emphasizing a CFTC interpretation that is intended to clarify when a contract with embedded volumetric optionality will be excluded from being considered a swap;
• amending real-time reporting requirements for certain less liquid and long-dated swap contracts; and
• proposing rules to reduce reporting and recordkeeping requirements for trade options.

Chair Massad reiterated the CFTC's commitment to finishing the position limits proposal and the proposed rule on margin for uncleared swaps by highlighting two recent enforcement actions that underscore certain priorities. He noted the recent LIBOR manipulation case, stating that regulators "held five of the world's largest banks accountable for their attempts to manipulate foreign exchange benchmarks." As a result of the manipulation, he said, the European Commission has since proposed legislation that is intended to regulate the administration of benchmarks. Chair Massad expressed concerns regarding the legislation, and stated that he has "encouraged them to recognize that alternatives to government regulation" of benchmarks can reduce manipulation and increase transparency.

Chair Massad also spoke about the recent enforcement action regarding automated trading, and stated that the CFTC approaches automated trading from a "policy perspective." He explained that the CFTC is taking a number of actions in response to the growth of electronic and automated trading, and that these actions address key steps in the order placement and trade execution process. Currently, it is considering comments received in response to the Concept Release on Risk Controls and System Safeguards for Automated Trading Environments issued in September 2013. He noted that the CFTC plans to determine "in the near future" what additional measures, if any, might be necessary to address automated trading.

See: CFTC Chair Massad's Remarks.
Related news: CFTC Charges Bank with Manipulation, Attempted Manipulation and False Reporting of LIBOR and Euribor (April 23, 2015); CFTC Publishes Concept Release on Risk Controls and System Safeguards for Automated Trading Environments (Fed. Reg.) (September 13, 2013).