REMARKS OF CHAIRMAN GARY GENSLER
COMMODITY FUTURES TRADING COMMISSION
BRINGING OVERSIGHT TO THE SWAPS MARKET
INTERNATIONAL FINANCE CORPORATION’S 13TH ANNUAL
GLOBAL PRIVATE EQUITY CONFERENCE
May 11, 2011
Good morning. I thank the World Bank and the International Finance Corporation for inviting me to speak today at the 13th annual Global Private Equity Conference. I also thank Roger Leeds for that introduction.
As managers of private equity funds, you are part of an industry with up to $3 trillion in assets under management. Your investors and you benefit from markets that are transparent, open and competitive. All of your funds benefit from the great advances that were put in place to regulate our markets in the 1930s when President Franklin Roosevelt, working with Congress after an earlier crisis, brought that transparency, openness and competitiveness to the securities and commodity futures markets.
But a new world of financial products developed in the 1980s that remains largely unregulated to this day, called swaps.
At the Commodity Futures Trading Commission (CFTC), we are actively at work implementing the Dodd-Frank Wall Street Reform and Consumer Protect Act to bring oversight to the swaps markets. In doing so, we have had hundreds of meetings with outside groups to hear directly from the public on how best to write new swaps rules, and we post details of the meetings to our website.
If you scroll through that list of meetings, you’d be hard pressed to find more than a handful of meetings with private equity funds. You’d find a lot more meetings with banks, hedge funds, asset managers, commercial end-users and other market participants.
So let me ask for a show of hands: how many of you use derivatives at your fund level – not at your portfolio companies, but your fund itself?
That’s what I thought. So you might be asking yourself, “Why is Gensler here talking to us? He’s a derivatives guy.”
Now let me ask for a show of hands if your fund invests in a company that uses derivatives. As I expected, many more hands went up.
I think that’s probably why the IFC invited me to be with you today.
In any event, even if your funds don’t invest in companies that use derivatives, you’ve got me for the next 20 minutes anyway. So let me tell you a little bit about what we’re doing and why it brings meaningful benefits to the economy and to the companies in which you invest.