CFTC Chairman Gary Gensler Delivers Speech before the Senate Banking Committee (with Lofchie Comment)

CFTC Chairman Gary Gensler spoke before the U.S. Senate Banking, Housing and Urban Affairs Committee addressing swaps market reforms through the implementation of the Dodd-Frank Act. Chairman Gensler testified as to what he believes are the benefits which end-users will see as a result of recent swaps rulemaking reforms. Gensler stated that the putative benefits include:

• Increased transparency as a result of swap dealers being required to report in real time their interest rate and credit index swap transactions to the public and regulators, and a requirement (as of February 28, 2013) to report on swap transactions in equity, foreign exchange and other asset classes. Increased clearing requirements implemented recently and in the near future, which will lower risk and foster increased competition by allowing increased access by people who traditionally did not have access to the market.
• Swap dealer oversight, which will promote market consistency and lower risks to the economy as a whole.
• Increased international coordination on swaps market reform in an effort to decrease global economic downturns that occur as a result of crises in an area of the financial market.
• Increased protection to swaps customer funds through the prevention of certain types of activities that put these funds at risk.

Lofchie Comment: According to the speech, it is all going kugat. It does not feel that way to those of us trying to implement the statute. What harm would there have been in at least acknowledging the problems? When the CFTC had to issue 25 or so no-action letters (many of which were completely confusing) before the end of year deadline, when no one has any idea of the ultimate reach of the CFTC's geographic jurisdiction, and when the swaps business is moving outside the United States to avoid Dodd-Frank, it must be clear to the regulators that at least some of the statute or the implementation (or both) is not working.

Click hereto view testimony in full (links externally to Senate Banking Committee website).Related News Items: Senate Banking Committee Hearing: "Wall Street Reform - Oversight of Financial Stability and Consumer and Investor Protections" (with Video and Highlights); SEC Chairman Walter Delivers Speech before the Senate Banking Committee; and FRB, OCC, FDIC, CFPB and Treasury Testify before the Senate Banking Committee.