The Chairman of the Commodities Futures Trading Commission, Gary Gensler says the government has finally gotten around to dealing with one of the key contributors of the financial crisis, the behind the scenes machinations of certain derivatives known as swaps.
Speaking today in New York at the annual meeting of the Securities Industry and Financial Markets Association, better known as Sifma, Gensler said that by the end of this year there will be real-time reporting for the $650 trillion global derivatives market and that this transparency will ultimately be good for jobs.
Beginning on October 12, traders in certain derivatives need to report their transactions to so-called swaps-data repositories as part of the Dodd-Frank Act. "It only took four years," said Gensler, "but it's finally becoming law."
"When the financial crisis hit millions of Americans lost their jobs and the swaps market was the largest dark pool in our financial markets," said Gensler. "Think about the great reforms of the 1930s, such as public reporting of transactions and central exchange trading. We had none of this with swaps, so I believe these new rules for transparency can only be good for jobs."
On a separate matter, Gensler, who had been criticized according to Bloomberg for poor oversight of MF Global and Peregrine Financial, said new rules have been proposed by the CFTC to improve segregation and protection of customer funds.
“This proposal is about ensuring customers have confidence that the funds they post as margin or collateral are fully segregated and protected,” said Gensler. "There are always going to be bad actors such as what happened in the Peregrine situation. It's a lot about accounting and having direct access to accounts and auditing of internal controls."