Chairman Massad Preps for 5-Year Anniversary of Dodd-Frank with Series of Updates on CFTC Progress
CFTC Chairman Timothy Massad has been talking anniversaries in a series of recent speeches. Using the upcoming five-year anniversary of Dodd-Frank and his own one-year tenure at the CFTC as a springboard, Massad offered progress reports on his agency’s achievements over the last few years.
Speaking last week before the Global Exchange and Brokerage Conference and this week at the FIA International Derivatives Conference, Massad highlighted the key areas where he will continue to focus in the months and years ahead.
Following were some of the key topics he addressed:
- Central clearing of standardized swaps
- Ensuring the strength and security of clearinghouses themselves through recovery and resolution planning is a top priority
- Cross-border recognition of clearinghouses with Europe has yet to be resolved but can be done without market disruption
- Oversight of the largest market participants
- The next step in the effort to de-risk swap dealers is to review swap dealer de minimis thresholds; the CFTC is seeking public comment
- Margin requirements for uncleared swaps is another major area of focus, both for transactions with other swap dealers and with financial institutions
- Regular reporting
- All transactions, cleared or uncleared, must be reported to swap data repositories (SDRs), and this will be an international effort
- Transparent trading
- Trading on Swap Execution Facilities (SEFs) is happening, but more work can be done specifically in the areas of simplifying trade confirmations, reporting obligations and the made-available-to-trade determination process
- Cross-border harmonization is also an issue in this area
- Responding to changes in the market
- Electronic and automated trading now represents the majority of trading, with “well over 50 percent of trading in U.S. financial markets,” and in futures markets, it’s over 70 percent
- Rise of this type of trading has brought benefits like more efficient execution and lower spreads, but it has changed the nature of regulatory responsibilities; CFTC is currently considering potential registration requirement for algorithmic trading
Access Massad’s full speeches here.