Gensler calls for a regulatory regime to cover the entire over-the-counter derivatives marketplace, this will require two complementary regimes - one for dealers and another for regulation of the market functions.
“We must establish a regulatory regime to cover the entire over-the-counter derivatives marketplace”, CFTC Chairman Gary Gensler said. “This new regime should govern 100% of OTC derivatives no matter who is trading them or what type of derivative is traded, standardized or customized”, he underlined.
The regime should include interest rate swaps, currency swaps, commodity swaps, equity swaps, credit default swaps or those which cannot yet be foreseen.
“I envision this will require two complementary regimes --- one for regulation of the dealers and one for regulation of the market functions”, Gensler said.
Regulation of the dealers should set capital standards and margin requirements to lower risk, he noted and called to set business conduct standards. Also, regulated exchanges and regulated transparent trading systems will bring much needed transparency to OTC markets, he said.
With regard to hedge fund regulation, Gensler recalled that advisers should be required to report sufficient information on the funds they manage to assess whether any fund poses a threat to financial stability
“We will identify existing differences in statutes and regulations with respect to similar types of financial instruments, explain if differences are still appropriate, and make recommendations for changes”, he said.
Full speech
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