Tradeweb supports the passing of today's historic financial reform legislation. We believe that this new regulatory framework will drive the majority of over-the-counter derivatives trading to electronic platforms. However, history teaches us that the inevitable compromises made in the legislative process can lead to ambiguities as reforms are implemented.
Tradeweb is broadly supportive of the objectives of the draft OTC derivatives legislation proposed by the Treasury. These initiatives include the desire to create: greater transparency; a more harmonized regulatory framework; central clearing and electronic trading of standardized derivatives contracts.
Tradeweb is supportive of both the European Commission's Communication on OTC Derivatives Market Regulation, and the US Treasury Department's recent proposals on the same issue
Tradeweb is supportive of the European Commission's Communication today on "strengthening the safety of derivatives markets". The Communication stresses the need for transparency and the management of systemic risk, and emphasises the need to clear OTC derivatives through regulated Central Counterparties (CCPs).
Since October 2008 the Commission has been working actively on an in-depth review of derivatives markets. As announced in the Communication "Driving European Recovery", this Communication presents the findings of that review and prepares the ground for forthcoming measures to address the problems identified.
The new regulations will drive increased market efficiency and transparency by requiring the clearing of standardized contracts through regulated central counterparties, and moving trading in the OTC derivatives markets to regulated trade execution systems. These electronic platforms, such as Tradeweb, offer the most flexible, proven trading model for the OTC markets.
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In addition to working toward this much needed reform, I also will work to ensure that the Commodity Futures Trading Commission (CFTC) continues to fulfill its basic mission under the Commodity Exchange Act (CEA) to protect the integrity of the futures markets. I look forward to working with you to improve the capabilities and authorities of the CFTC to ensure that both our futures markets and the OTC derivatives markets are transparent and free from fraud, manipulation and other abuses.
Tradeweb is supportive of the U.S. Treasury Department's proposals in relation to regulation of over-the-counter (OTC) derivatives. In particular: The drive for greater transparency and competition through electronic trading systems and exchanges, and the requirement that standardized OTC contracts be cleared through regulated central counterparties (CCPs).
Today I am writing to follow up with further details on the amendments to the Commodity Exchange Act (CEA), the securities laws, and other relevant laws that I believe are needed to enable the government to regulate the OTC derivatives markets effectively for the first time.
Officials around the world are turning to regulatory reform to address systemic risk in the global financial markets. While this is a healthy and necessary step towards rebuilding confidence in the banking system, we must take care that the very steps regulators elect to take to restore and protect, do not pose a serious threat to competition in financial markets.