CHAIRMAN CFTC SPEAKS TO FINANCIAL STABILITY OVERSIGHT COUNCIL

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
 
Statement of Chairman Gary Gensler Before the Financial Stability Oversight Council

April 25, 2013
I support the Financial Stability Oversight Council’s (FSOC) annual report and the recommendations. I want thank the FSOC members and their staffs for their work on this year’s important report and capturing the vulnerability to our financial system in its seven themes. I appreciate and wish to compliment their dedication to and coordination on financial reform.

Congress asked us to make recommendations once a year to enhance the integrity, efficiency, competitiveness and stability of U.S. financial markets.

In addition, we are to make recommendations to promote market discipline and maintain investor confidence. In that regard, the report recommends reforms of wholesale funding markets; housing finance; reference rates, such as LIBOR and similar interest rate benchmarks; and heightened risk management and supervisory attention.

Further, the FSOC agencies have made great progress on financial reform since the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Working with FSOC agencies, the CFTC has completed most of the Title VII swaps market reforms on transparency, clearing and oversight of swap dealers. The market is increasingly moving to implementation of these common-sense rules of the road.

There are two critical areas, however, in which the CFTC must complete reforms.

First, it is a priority to finish rules to promote pre-trade transparency, including those for swap execution facilities and the block rule for swaps.

Second, it’s a priority that the Commission, working with domestic and international regulators, complete guidance on the cross-border application of swaps market reform.

CFTC CHAIRMAN SUPPORTS EXEMPTIVE ORDER REGARDING DATES OF SOME DODD-FRANK PROVISIONS

FROM:  COMMODITY FUTURES TRADING COMMISSSION
Statement of Support
Chairman Gary Gensler
July 3, 2012
I support the exemptive order regarding the effective dates of certain Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) provisions.
Today’s exemptive order makes five changes to the exemptive order issued on December 19, 2011.

First, the proposed exemptive order extends the sunset date from July 16, 2012, to December 31, 2012.

Second, the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have now completed the rule further defining the term “swap dealer” and “securities-based swap dealer.” Thus, the exemptive order no longer provides relief as it once did until those terms were further defined.

The Commissions are also mandated by the Dodd-Frank Act to further define the term “swap” and “securities-based swap.” The staffs are making great progress, and I anticipate the Commissions will take up this final definitions rule in the near term. Until that rule is finalized, the exemptive order appropriately provides relief from the effective dates of certain Dodd-Frank provisions.

Third, in advance of the completion of the definitions rule, market participants requested clarity regarding transacting in agricultural swaps. The exemptive order allows agricultural swaps cleared through a derivatives clearing organization or traded on a designated contract market to be transacted and cleared as any other swap. This is consistent with the agricultural swaps rule the Commission already finalized, which allows farmers, ranchers, packers, processors and other end-users to manage their risk.

Fourth, unregistered trading facilities that offer swaps for trading were required under Dodd-Frank to register as swap execution facilities (SEFs) or designated contract markets (DCM) by July of this year. These facilities include exempt boards of trade, exempt commercial markets and markets excluded from regulation under section 2(d)(2). Given the Commission has yet to finalize rules on SEFs, this order gives these platforms additional time for such a transition.

Fifth, the Commission is providing guidance regarding enforcement of rules that require that certain off-exchange swap transactions only be entered into by eligible contract participants (ECPs). The guidance provides that if a person takes reasonable steps to verify that its counterparty is an ECP, but the counterparty turns out not to be an ECP based on subsequent Commission guidance, absent other material factors, the CFTC will not bring an enforcement action against the person.