CFTC Chair takes Asia

January 19, 2015 04:19 PM

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Remarks of CFTC Chairman Timothy G. Massad before the Asian Financial Forum, Hong Kong

Jan. 19, 2015

Good morning.  I want to thank the Asian Financial Forum for inviting me.  It is a pleasure to be here.  I am especially pleased to be here on a panel with Chairman Xiao, Chairman Maijoor, and Secretary Purisima.  Since I took office in June of last year, working with my international counterparts has been a priority.  I look forward to our discussion shortly with Professor Chan.

It is great to be back in Hong Kong. I spent five years living here when I was a lawyer in private practice – some of the best years in my life.  I made many good friends, and met my wife here – though she happens to be from St. Paul, Minnesota.

It was a pleasure to begin my trip in Beijing last week, where I met with Chairman Xiao and others. And I will be going on from here to Tokyo and Singapore.

You have asked us to discuss the prospects for sustainable growth in Asia in a world of change, particularly a world of changing financial sector regulations. I am very involved in changing financial sector regulations.  I chair the Commodity Futures Trading Commission, which is the United States agency responsible for overseeing the futures, options, and swaps markets.  And in that capacity, it is my responsibility to lead the U.S. effort to implement the commitments of the G-20 nations to reform the over-the-counter swaps market.

Let me first say a word about the relationship of the derivatives markets to growth.  Many people probably hadn’t heard the word derivatives until the financial crisis, and today they may associate that word with bad behavior by big banks.  But these markets, when working properly, are very beneficial to the real economy.  When designed to help commercial users, they create substantial, if largely unseen, benefits for all of us.  They enable utility companies or airlines to hedge the costs of fuel.  They help manufacturers control the costs of industrial metals like copper.  They enable farmers to lock in a price for their crops.  They enable exporters to manage fluctuations in foreign currencies.  And businesses of all types can lock in their borrowing costs.  In the simplest terms, derivatives enable businesses to manage risk.

The Asian economies have grown to the point where well-developed derivatives markets can provide great value.  To achieve that, there must be a regulatory foundation that enables markets to thrive and that attracts participants.  That is, a framework that provides transparency and sensible oversight while also promoting competition and innovation.  And because the economies of Asia, the United States, and Europe are increasingly interconnected, we must work together to build a global regulatory framework that achieves those ends.

Our lives shape our views, so let me tell you a little about how mine has.

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