For Release: September 19, 2008
CFTC Update on Efforts Underway to Oversee Markets
Washington, DC – Today, on behalf of the Commission, CFTC Acting Chairman Walt Lukken made the following statement:
“These are extraordinary times in the financial markets. The CFTC continues to coordinate closely with our sister regulators in the U.S. and overseas to ensure that futures customers are protected under the commodity futures laws and to facilitate the continued functioning of the commodity futures and options markets during this challenging time. The agency applauds the steps being taken by the Department of the Treasury, Federal Reserve Board of Governors and Securities and Exchange Commission (SEC) in coordination with Congress to increase confidence in the broader financial system and to formulate a comprehensive approach to restore market stability.
“The Commission has worked throughout this week to address current and evolving market developments and continues its efforts in the following ways:
• Staff is on-site in New York participating in the Lehman Brothers proceedings to promote the orderly transfer of positions and the safeguarding of customer assets to the fullest extent of the law. A Lehman subsidiary, Lehman Brothers Inc. (LBI), is a regulated futures commission merchant and securities broker-dealer.
• The agency is actively monitoring and working with exchange self-regulatory organizations to ensure that futures firms continue to meet their customer segregation and capital requirements while allowing for the orderly functioning and stability of the markets.
• The Commission is prepared to provide temporary and conditioned hedge exemption relief for firms taking on swap positions from distressed companies. This will allow for continued risk management and orderly functioning of the markets. The hedge exemption would be limited to existing positions only, would require weekly reporting by firms utilizing the hedge exemption and would expire after 90 days.
• The agency is coordinating with the relevant futures exchanges to facilitate block trading, which allows for the orderly transfer and clearing of large positions.
• CFTC staff is engaged in heightened monitoring and surveillance of financial company single-stock futures traded on futures exchanges – in coordination with the SEC’s emergency action on short selling and in our collective effort to prevent manipulation of financial stocks.
“The Commission continues to work with all relevant parties to respond to market developments and in close coordination with the comprehensive steps being taken by the Treasury, Federal Reserve, SEC and Congress. The Commission and its dedicated staff are using all available tools to help facilitate the continued and orderly functioning of the commodity futures and options markets and may consider additional steps as necessary to protect market integrity.”
R. David Gary
Last Updated: September 19, 2008