CFTC to Restructure
A day after the White House nominated him as a Chairman of the Commodity Futures Trading Commission, acting Chair Christopher Giancarlo laid out his plan to restructure and right-size the derivatives market regulator in a speech before the Futures Industry Association’s annual conference in Boca Raton.
As part of the restructuring, the CFTC will establish a New Market Intelligence branch that will consist of elements within the Division of Market Oversight and will be led by a newly minted Chief Market Intelligence Officer, who will report to the CFTC Chair directly.
The CMIO’s mandate includes helping the public understand the risk-transfer markets, engaging with industry participants and other regulators, and provide better insight into the needs of derivative and swaps market participants, according to Giancarlo.
Giancarlo also plans to move portions of the market surveillance branch to the Division of Enforcement from the Division of Market Oversight.
“By separating the two units – surveillance within DOE and market intelligence within DMO – we will sharpen our surveillance capability while increasing our knowledge of evolving market structures and practices to inform sound policymaking at the Commission and promote efficient and sound markets,” he said. “The overall goal is to make the CFTC more adept each of the two disciplines.”
At the same time, Giancarlo announced that the CFTC would launch an agency-wide review of CFTC regulations with the intention of making the enforcement of existing regulations simpler, less burdensome and less costly.
Mike Gill will lead the effort the new project, dubbed Project KISS for “keep it simple, stupid,” as the CFTC’s Regulatory Reform Officer.
The CFTC also plans to issue a call for recommendations from the public on which CFTC regulations the task force should be reviewed.
“Let me be very clear, this exercise is not about identifying existing rules for repeal or even rewrite,” said Giancarlo. “It is about taking our existing rules as they are and applying them in ways that are simpler, less burdensome and less of a drag on the American economy.”
Giancarlo also looks for the CFTC to “resume normalized operations and practices,” after the swift rulemaking and adoption environment that the implementation of the Dodd-Frank Act brought on.
“That means a return to greater care and precision in rule drafting, more thorough econometric analysis, less contracted time frames for public comment and a reduced docket of new rules and regulations to be absorbed by market participants,” he said. “It also means that the CFTC will embrace President Trump’s directive that each federal agency minimizes the costs borne by its regulation.”
Giancarlo ended his speech acknowledging that the regulator needs to live within its budget established by Congress.
The CFTC launched a comprehensive budget and spending review of the agency a few week weeks ago in preparation for upcoming budget negotiations with the White House and Congress.
“Our budget review has already identified several areas in which the agency can run more efficiently,” said Giancarlo. “We are looking for more.”
Clearing mandate for European index CDS is being introduced this year.
New margin rules led to a shift to central clearing from a bilateral only market.
The LSE said MiFID II will boost organic growth opportunities.
Tradition and LMRKTS will expand into the compression of interest rate products.
NEX unit will electronically manage confirmations and payments for equity swaps.