CFTC Chair Gensler lists progress on comprehensive new derivatives rules

CFTC Chair Gensler lists progress on comprehensive new derivatives rules

By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

Washington, Sept. 16 - Rushing to write new rules to rein in the unregulated derivatives market, Commodity Futures Trading Commission (CFTC) Chair Gary Gensler said Thursday that “We plan to actively publish proposed rules in the fall, using weekly public Commission meetings for this purpose.”

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Gensler pointed out that the CFTC has already made substantial progress toward implementing the complex provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. He said “We already have published one final rulemaking regarding retail foreign exchange transactions.” As well, “We have organized our effort around 30 teams who have been actively at work. We had our first meeting with the 30 team leads the day before the President signed the law.”

As proof of the CFTC's commitment to full transparency, Gensler noted that the commission has held three roundtable meetings to gather stakeholder input and is “posting on our website a list of all of our meetings, as well as the participants, issues discussed and all materials given to us.” (Go to for details on the web posting. See the Aug. 25 Agri-Pulse newsletter for coverage of CFTC roundtable discussions.)

Addressing the International Swaps and Derivatives Association (ISDA) Thursday, Gensler said that for the first time the CFTC has been “tasked with bringing its regulatory expertise to the swaps marketplace.” He said that as the new legislation required, the CFTC will implement three critical reforms of the derivatives markets: “First, the bill requires swap dealers to come under comprehensive regulation. Second, the bill moves the bulk of the swaps marketplace onto transparent trading facilities - either exchanges or swap execution facilities. Third, the bill requires clearing of standardized swaps by regulated clearinghouses to lower risk in the marketplace.”

Gensler said that in addition to working with the Securities and Exchange Commission (SEC) and the Federal Reserve, the CFTC has been “actively consulting with international regulators to harmonize our approach to swaps oversight.”

Based on the work done so far by CFTC's 30 rule-writing teams, Gensler explained that:

  • Initial estimates are that there could be in excess of 200 entities that will seek to register as swap dealers.”
  • We estimate that approximately 20 to 30 new entities will register as swap execution facilities or designated contract markets. That is in addition to the 16 futures exchanges that we already regulate.”
  • It is anticipated that the number of registered derivatives clearing organizations will increase from 14 to around 20.”

As part of lowering overall risk and providing trading transparency to benefit end-users, Gensler said the new rules will create “swap data repositories” to track the activities of “swap dealers, major swap participants, swap execution facilities and designated contract markets.” He said the new rules will require “robust recordkeeping and reporting, including an audit trail, for swaps” because “It will be important that swaps data be collected not only when the transaction occurs, but also for each lifecycle event and valuation over its duration.”

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