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As President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act on On July 21, 2010, Chairman of the Commodity Futures Trading Commission (CFTC) Gary Gensler gathered a core group of his senior staff to address the daunting task that now lay before the agency: overhauling U.S. government oversight of the 400 trillion dollar derivatives markets in just one year.
Gensler gave the 2013 Annual Robert Glauber Lecture in the John F. Kennedy Jr. Forum on Tuesday (October 29). He reported on the progress of the CFTC toward financial sector regulatory reform to support a more “transparent, competitive market” for swaps, futures, and other derivatives.
In Dodd-Frank Congress directed CFTC to complete 60 new regulatory rules to implement various provisions the law in the year that followed. This task has taken CFTC, an agency with 675 staff that completes two or three new rules in a typical year, three years, but it has now largely completed this task.
Gensler pointed out the reforms already have brought the majority of trades in what was once a famously opaque market onto online trading platforms and central clearinghouses where prices and volumes are publicly viewable. The reforms have also established a more comprehensive oversight regime for large U.S. financial institutions and the thousands of registered legal entities they maintain outside of the country.
While Gensler spoke of the pride his agency feels in completing the reforms, he acknowledged the remaining challenges to financial reform and the economic recovery. CFTC must now oversee and enforce these new rules in the rapidly expanding derivatives market in spite of budget cuts and staff furloughs at the agency—a job that Gensler likened to doubling the number of major league baseball teams without increasing the number of umpires. Meanwhile, Gensler said, the US budget crisis, turmoil in European economies, and the perception among large financial institutions that they enjoy an implicit guarantee from taxpayers continue to pose systemic risk to the global economy.
This annual lecture honors Robert Glauber and his long record of distinguished contributions to the U.S. and world financial systems, as well as his long and successful scholarship and teaching which have characterized his career at Harvard. The event occurs with the generous support of the National Association of Securities Dealers, now known as the Financial Industry Regulatory Authority (FINRA).
Gary Gensler, Chairman of the Commodity Futures Trading Commission
Gensler pointed out the reforms already have brought the majority of trades in what was once a famously opaque market onto online trading platforms and central clearinghouses where prices and volumes are publicly viewable.