CFTC's Gensler talks to OTC traders

The United States, Europe, Japan and Canada together make up about 90 percent of the worldwide swaps marketplace.

Japan passed reform legislation in 2010, and has made real progress on the clearing mandate.  Further, they have a proposal before their Diet on the use of trading platforms, as well as post-trade transparency.  The European Parliament last month adopted the European Market Infrastructure Regulation (EMIR) that includes mandatory clearing, reporting, and risk mitigation for derivatives.  And the European Commission has published proposals providing for both pre-trade and post-trade transparency. 

Other major jurisdictions, including the largest provinces in Canada, have the legislative authority and have made progress on swaps reform.

Yesterday, regulators from nine major market jurisdictions met in Toronto for what was a very constructive dialogue in our continuing efforts to achieve consistent global swaps market reforms.  Next week, at the invitation of Financial Stability Board (FSB) Chairman Mark Carney, I’ll join other U.S. regulators in Basel to meet with the FSB regarding swaps market oversight.  

Before Steve gets to ask me questions, I’d like to turn to six important areas where we have made good progress but there is more work to be done.


First, is promoting greater transparency to the public in the swaps market.  At more than $700 trillion, the global swaps market remains today the largest dark pool in our financial markets.

As the G-20 heads of state understood three years ago, promoting transparency to the public in the swaps market is critical to both lowering the risk of the financial system, as well as reducing costs to end-users around the globe.

The more transparent a marketplace is to the public, the more efficient it is, the more liquid it is, and the more competitive it is. 

The U.S. has taken the important step forward and included such transparency in the Dodd-Frank Act.  The Japanese and European transparency proposals, as well as initiatives well underway in other jurisdictions, will further align international reform efforts and benefit the public.

The CFTC has completed key rules on transparency.  Starting this summer, real-time reporting to the public and to regulators will be a reality.  We are working to complete final rules for both designated contract markets and swap execution facilities by this summer.

Building on newly available data to the Commission, the CFTC also plans to begin publishing aggregated swaps market data.  The public has benefited for years from the Commitment of Traders futures data we publish.  Our goal is to provide similar public transparency for the swaps market.

Some of your members may be concerned with global transparency initiatives.  You've raised some questions about liquidity.  But economists have noted that when information shifts to the broader market, end-users benefit from the greater competition this transparency unleashes.

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