Commodity Futures Trading Commission Chairman Gary Gensler has not endeared himself to the industry since taking the reins of the industry regulator. It has been an odd honeymoon as Gensler’s nomination was being held up by Senators concerned over his past advocacy of keeping over-the-counter trading free from direct regulation.
Gensler appears to have gotten religion though and has worried some industry insiders with an aggressive agenda. He acknowledged the error of his ways and has been the administration’s chief proponent for moving OTC trading onto exchanges or at least requiring they be cleared.
He also supported early on the view that spectulators where responsible for spikes in crude oil in 2008. He has put out a proposal for hard limits in energy futures but those limits don’t appear as stringent as many were looking for and the disaggregated data the commission began releasing at the end of 2009 did not support the view that speculators were the culprit.
There has been an unease between the CFTC Chairman and the industry, which has gotten use to a pretty friendly relationship with recent past chairman.
It may not be fair to judge the relationship to past ones because of the unique economic crisis the country is facing but he is certainly not promoting the minimalist approach to regulation several of his past predecessors has.
However, Chairman Gensler let his guard down a bit at the recently concluded Futures Industry Association conference in Boca Raton Fl., and engaged with industry leaders. His speech wasn’t the best from a CFTC Chairman at this annual event but it certainly was the best from Gensler to date and he appeared willing to engage the industry rather than simply download his agenda.
Following his speech in front of the group, Gensler stuck around and asked a question during a panel with exchange leaders.
Gensler actually turned the tables on the heads of the major futures exchanges and challenged them to back his recommendations on OTC regulation as being in their best interest. No one really bit on this piece of theatre but it was perhaps the warmest exchange we have seen between Gensler and industry leaders.
It is not vital that the exchange leaders and heads of futures brokers agree with its regulator over the regulatory policy it needs to pursue but if there is a lack of trust or communication that could do more damage, so it was nice to see the new Chairman engage the industry.