Sat, Jun 25, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Inside and outside the CFTC concerns are raised over new swaps regulation

Thursday, July 07, 2011

John Damgara
Opalesque Industry Update –Futures Industry Association (FIA) President John Damgara released a statement following the CFTC approval of extensive changes in rules prohibiting fraud and manipulation in futures, swaps and cash commodity markets, and the FIA is clearly unsatisfied with the new regulation.

“"We are disappointed that the final rules do not reflect the extensive comments submitted to the CFTC by the FIA and other interested parties, and we are concerned that the CFTC did not provide more guidance on how it intends to apply the sweeping new powers that these rules will implement. We strongly support the CFTC's authority to pursue any and all deliberate attempts to manipulate prices or defraud participants in these markets, but the lack of clarity on how the broad new standards in the final rules will be applied has the potential to chill legitimate trading and reduce market liquidity."

On Thursday the CFTC voted through nearly 50 rules that would fall under Dodd Frank Regulation requirements. One of the most significant rules (according to Gary Gensler, CFTC Chairman) is the new requirement that they agency would only require one standard of proof that a trader acted recklessly, and it would allow the CFTC the ability to prosecute fraud-based manipulation. This particular rule is expected to have a great impact because prior to this the agency brought few cases against manipulators and won only a single won (after a decade long fight). Source).

Scott O’Malia, CFTC Commissioner spoke at the opening of the public hearing and requested that further transparency be adopted in adopting regulations. O’Malia noted that he has requested final regulation verbiage be posted on the CFTC website a full 7 days before proceedings, but has not heard whether or not that practice will be adopted. He also noted that while the ruling for stronger manipulation regulation would see the agency focused on pursuing such cases, O’Malia noted that without transparency through on all rules and changes, the duty (of sorting out who was confused by rules to who is flagrantly breaking them) would fall upon the shoulders of the enforcement staff.

“Briefly stated, the problem is: how can the Commission move forward on a final regulation implicating “swap dealers,” when the Commission has not determined if the term captures end-users? I recognize that the Commission will obtain the lion’s share of data from financial swap dealers. My concern is with those end-users that may be characterized as non-financial swap dealers. Even though the Commission is voting on Large Trader Reporting today, the Commission cannot determine the full benefits and costs of this regulation until the Commission defines “swap dealer” and “swap.” As I have stated previously, end-users did not cause the 2008 financial crisis. Every dollar of cost that the Commission imposes on end-users may translate into increases in energy or food costs or squeeze farmers and other industrial producers who are unable to pass on these increased costs,” said O’Malia. (Full statement available: Source)

Kirsten Bischoff

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Opalesque Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Visium hedge fund manager Sanjay Valvani found dead[more]

    Benedicte Gravrand, Opalesque London: A hedge fund manager connected with an insider trading case has apparently committed suicide. Sanjay Valvani, 44, a hedge fund manager at New York-based Visium Asset Management, was found dead in an apparent suicide on 21 June in his Brooklyn residence,