CFTC Chair Massad Sets Out Future Priorities (with Lofchie Comment)

CFTC Chair Timothy G. Massad offered a brief history of the reforms implemented in the derivatives markets and set out future priorities for the CFTC. He delivered his remarks in a keynote address before the District of Columbia Bar Association. Chair Massad recommended additional steps to be taken in the Dodd-Frank implementation process, including: (i) increasing clearinghouse resiliency; (ii) enhancing swap dealer oversight; (iii) reviewing possibilities for the swap dealer de minimis threshold (i.e., should it stay at $8 billion notional, as it is set currently, or decline to $3 billion, as it is scheduled to do?); (iv) enhancing the trading of swaps on swap execution facilities; and (v) harmonizing and standardizing swap data reporting. Additionally, Chair Massad expressed concerns about (i) liquidity, (ii) the impact of new regulations on costs and (iii) the decline in the number of clearing firms.

Lofchie Comment: Financial regulators tend to be cheerleaders for their own actions. This is to be expected. They are not disinterested observers or reporters. If they were more objective, the regulators might admit that it is not at all obvious that the use of clearinghouses as mandated by Dodd-Frank has reduced risk. On the other hand, the regulators say, it is an objectively verifiable fact that costs have risen while the number of clearing firms has decreased and that this cannot be traced to Dodd-Frank but rather reflect part of a "long-term historical trend." To paraphrase Mr. Garrison Keillor, all of our rules are above average.

See: Chair Massad's Remarks before the District of Columbia Bar.