Gensler addresses American Bar Association on Dodd-Frank

Market Integrity

We’ve also made progress on key reforms enhancing market integrity. These reforms will better protect market participants from fraud, manipulation and other abuses.

Last summer, we finished rules giving the Commission more authority to effectively prosecute wrongdoers who recklessly manipulate the markets and to reward whistleblowers for their help in catching market misconduct. In addition, our external business conduct rules prohibit fraud and certain other abusive practices. Together, these rules will enable the CFTC to be a better cop on the beat.

We also completed Congressionally mandated speculative position limit rules that will, for the first time, limit aggregate positions in the futures and swaps market.

Further promoting market integrity, we are working to finish guidance limiting disruptive trading practices. As we finalize reforms for the trading platforms, I look forward to including provisions regarding DCM and SEF oversight responsibilities and their role in protecting orderly markets.

I also expect the Commission will consider putting out for comment a concept release concerning the testing and supervision of market participants with direct market access. These concepts will be designed to address potential market distortions that high frequency traders and others who have direct market access can cause.

Conclusion

In conclusion, the Dodd-Frank Act is about bringing transparency and competition to the swaps market and lowering risk to the real economy, the part of the economy that supplies 94 percent of private sector jobs. It is about doing the same for the buy side as well – representing all those Americans depending upon pension funds, mutual funds, community banks and insurance companies.

Thanks to the hard work of my fellow Commissioners and the CFTC staff, we’ve been able to make a real down payment on swaps market reforms, but there’s more work to be done. I have great confidence in the Commission and the staff that we will get these reforms done this year for the benefit of the American public.

Some have raised cost considerations about these reforms. But there are far greater costs – the eight million jobs lost, millions forced out of their homes, and the uncertainty throughout the economy that came from risk, which spilled over from Wall Street.

Thank you for inviting me to speak today.

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