CFTC Chairman Gensler's Message for the CFTC's 2012 Financial Report (with Lofchie Comment)

CFTC Chairman Gary Gensler delivered a speech on the CFTC's Financial Report for Fiscal Year 2012 and the current progress of the swaps market regulation. Gensler stated that, as the CFTC has shifted to the implementation of rules and direct oversight of the swaps market, the CFTC is in need of more resources. Gensler asserted that swap regulation is bringing, or will soon bring, substantial benefits to the public. Chairman Gensler said he believes that swaps into central clearing will lower the risk of a highly interconnected financial system.

Chairman Gensler stated that the CFTC is moving to finalize guidance on the cross-border application of swaps market reform and an accompanying release on phased compliance for foreign swap dealers. Gensler anticipates that the Commission will take up the final rules on margin in 2013 and, once these margin rules on capital are complete, the compliance for market participants will be phased in throughout the next year.

Furthermore, Gensler argued that customer protection proposals (finalized in 2013) will strengthen the controls around customer funds at FCMs, set new regulatory accounting requirements providing stronger protections for customer money held by FCMs, and raise the minimum standards for independent public accountants who audit FCMs. Finally, in order to ensure that benchmark rates (such as LIBOR) are honest and reliable, Gensler said he believes that rates should be derived from real and observable transactions.

Lofchie Comment. Chairman Gensler's speech emphasized the positive. He took an optimistic view of the anticipated regulatory benefits of the CFTC's rule making and an upbeat, cheery and peppy view of the CFTC's progress in adopting rules.

View speech in full here (links externally to CFTC website). See also: Agency Financial Report for 2012.