Good afternoon. Thank you Commissioner Sommers for chairing today’s meeting of the Global Markets Advisory Committee. I also thank my fellow Commissioners for their hard work to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. As the Commodity Futures Trading Commission (CFTC) works to implement that bill, it is essential that we work across international borders to harmonize our regulatory approach.
I thank the members of the Japanese Financial Services Authority and the European Commission who have traveled to meet with us today. Japan passed their derivatives reform proposal in May, and the E.C. has released its proposal on OTC derivatives, central counterparties and trade repositories. I look forward to continued consultation with both jurisdictions as we implement comprehensive derivatives reform. We also benefit from a strong working relationship with the Securities and Exchange Commission (SEC) on all of our Dodd-Fran implementation. In that regard, I welcome and thank SEC Commissioner Kathy Casey for participating in today’s discussions.
Last week, I traveled to Brussels to meet with members of the European Commission (E.C.) and to speak at a conference on financial regulation. As we had in the Dodd-Frank Act, the E.C.’s proposal covers the entire derivatives marketplace – both bilateral and cleared – and the entire product suite, including interest rate swaps, currency swaps, commodity swaps, equity swaps and credit default swaps. The Japanese proposal also includes a requirement that certain derivatives be centrally cleared. Though we have different political systems and different cultures, our coordination and cooperation on financial regulatory reform is leading to two largely consistent approaches.
Clearinghouses in the futures markets have been around since the late-19th century. They have functioned both in clear skies and during stormy times – through the Great Depression, numerous bank failures, two world wars and the 2008 financial crisis – to lower risk to the economy. The U.S., European and Japanese proposals recognize the need for very robust risk management standards, particularly as more swaps are moved into central clearinghouses.
The Dodd-Frank Act and the E.C.’s proposal also have strong capital and margin requirements for derivatives dealers. All three proposals have requirements that transaction data be reported to swap data repositories.
As we write rules regarding the clearing requirement, our staff is looking closely to the European and Japanese proposals to ensure consistency. We also are looking into how to best incorporate the newest draft CPSS-IOSCO standards for central counterparties into our rules.
During today’s meeting, I look forward to hearing the participants’ views on global financial regulatory reform. Specifically, I’d like to hear the Committee’s thoughts on the progress of regulatory reform both in the United States and abroad.
Specifically, I look forward to hearing the views of the panel on what data elements should be reported to swap data repositories. I am also interested in any requirements that should be placed on clearinghouses to meet rigorous risk management standards. We will be writing data reporting and clearinghouse rules in the coming months. We must work to ensure that our regulations are consistent with what is likely to come out of Europe and Japan.
We also look forward to working on international arrangements to facilitate access for regulators around the globe to position and transaction data stored in trade repositories, regardless of location.
Further, the Dodd-Frank Act empowers the CFTC to require that a foreign board of trade offering direct access to U.S. persons register with the Commission. I would like to hear the panelists’ views regarding rule-writing in this area.
Again, I’d like to thank my fellow Commissioners and Global Markets Advisory Committee members for participating in today’s meeting. I look forward to learning from the presenters and having a good dialogue on the most important issues facing global financial regulatory reform. Thank you again Commissioner Sommers for calling this meeting.
