CFTC boss calls for more derivatives information flow

Gary Gensler, the chairman of the Commodity Futures Trading Commission, told conference attendees that the industry is not doing enough to provide regulators information about trades.

The comments come as members of the U.S. Senate and House of Representatives prepare to take up debate that will ultimately reconcile the massive financial reform bills passed by each legislative body. A major element of the anticipated final legislation will re-write the rules of OTC derivatives.

Remarks of Chairman Gary Gensler, Sandler O’Neill Global Exchange and Brokerage Conference, New York, NY
June 3, 2010

Good morning. I thank Sandler O’Neill for inviting me to speak at this conference and Rich Repetto for that very kind introduction.

Today’s conference falls at a critical moment in the nation’s financial history. In the next weeks, House and Senate conferees will meet in an effort to produce final legislation that will bring great reform to our financial regulatory system. Only once before in our history has Congress considered such comprehensive financial reform – in the midst of the Great Depression.

At that time, President Franklin Roosevelt signed legislation to bring regulation to the futures and securities markets. Futures and securities were regulated to protect the investing public against fraud and manipulation. Exchanges were regulated to ensure they were transparent, fair and orderly. Roosevelt and Congress at that time recognized that transparency, a key to market-based reform, was critical to ensuring that a market functions well.

Companies that need to raise or borrow capital, for example, can see and rely upon where other companies have priced their securities. The public can see the last transactions in futures or securities as they consider their investment decisions. Hedgers and speculators can see where futures trade in a marketplace to get the best pricing. All market participants and the public benefited from the great reforms of the 1930s that regulated securities and futures.

The legislation before Congress today would bring similar reforms to the over-the-counter derivatives marketplace. As we saw in 2008, an opaque derivatives market, concentrated with a small number of financial institutions, contributed to a financial system brought to the brink of collapse.

Download the rest of Gensler's comments in PDF format.

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