Commodity Futures Trading Commission Chairman Gary Gensler described the job of regulators since the onset of the financial crisis one year ago as "Getting a sinking ship back to port," while speaking at the Futures Industry Association’s Futures and Options Expo in Chicago on Wednesday.
Gensler said that the legislation that has worked its way through the Agriculture Committee and the Financial Services Committee entail three essential elements: "They require swap dealers and major swap participants to register and come under comprehensive regulation. This includes capital standards, margin requirements, business conduct standards and recordkeeping and reporting requirements. Second, the bills require that dealers and major swap participants bring their clearable swaps into central clearinghouses. Third, they require dealers and major swap participants to use transparent trading venues for their clearable swaps."
Gensler called the debate between strong regulation and free markets as a false choice. "Markets work best when there are clear rules to the road."
While addressing concerns that certain reforms could push business overeas, he stated that he was encouraged that European regulators were moving in a similar direction.
Commenting on OTC clearing, he said, "We endorse an open governance model," reiterating previous comments that there should be fungibility in cleared OTC products. "We want to promote competition in the market place," he added.
Later he stated that the most important task is to bring regulation to the OTC marketplace, which he estimated to be 15-20 times the size of our economy. "We will do it [by] regulating dealers and bringing products to clearing facilities and transparent trading venues."
