CFTC Chairman Gensler Discusses Swaps Market Progress (with Lofchie Comment)

At a Washington D.C. Bar Event, CFTC Chairman Gary Gensler delivered a speech covering themes addressed in previous speeches regarding swaps market regulation. Chairman Gensler described what he views as the major components of swaps market reform, including:

• transparency to regulators, through means such as putting swap data repositories in place;
• public market transparency;
• Weekly Swaps Reports;
• pre-transaction transparency, through means such as requiring swap execution facilities to provide it as swap trading platforms;
• central clearing reform, through means such as the mandatory clearing of interest rate and credit index swaps implementation;
• reforms for swap dealers, including new business conduct standards for risk management and the documentation of swap transactions, confirmations, sales practices and recordkeeping;
• the Volcker Rule, which provides swap dealers associated with banking entities with new risk-reducing requirements prohibiting proprietary trading;
• reforming benchmark interest rates, such as LIBOR, Euribor and others;
• customer protection; and
• employing the enforcement power that Dodd-Frank allowed the CFTC.

Lofchie Comment: According to the speech, it's all good, except that the CFTC would like more money. This raises an interesting question: to what extent should the financial regulatory agencies serve as cheerleaders for themselves? This kind of cheerleading seems unhealthy for the financial regulatory system in the long run, as it ignores both the bad news and the dissent that might prove to be correctives if the CFTC's current course is not, in fact, all good.

See: Chairman Gensler's Speech.Related news: CFTC Chairman Gensler Speaks on Swaps Market Reform (with Lofchie Comment) (October 22, 2013); CFTC Chairman Gensler Delivers Speech (with Lofchie Comment) (October 29, 2013).