SPEECHES & TESTIMONY

Opening Statement of Chairman Timothy Massad before the Commission Open Meeting

    September 8, 2016

Good morning. This meeting will come to order.

This is a public meeting of the Commodity Futures Trading Commission (CFTC). I’d like to welcome members of the public, market participants, and members of the media, as well as those taking part on the phone or via webcast.

Today, we gather to consider three important measures. The first two are final rules that will enhance cybersecurity and operational safeguards in our markets. In addition, we will consider a determination of comparability with respect to Japan’s margin requirements for uncleared swaps.

The risk of cyberattack probably represents the single greatest threat to the stability and integrity of our markets today. Instances of cyberattacks are all too familiar both inside and outside the financial sector. Today, they often are motivated not just by those with a desire to profit, but by those with a desire deliberately to disrupt or destabilize orderly operations.

That is why these system safeguard rules are so important. They will apply to the core infrastructure in our markets—the exchanges, clearinghouses, trading platforms and trade repositories. And they will ensure that those private companies are adequately evaluating cyber risks and testing their cybersecurity and operational risk defenses. While our rules already require this generally, the measures we will consider today add greater definition—not by being overly prescriptive, but by setting some principles-based standards rooted in industry best practices.

I’ve said many times that as regulators, we must not just look backwards to address the causes of past failures or crises. We also must look ahead; ahead to the new opportunities and challenges facing our markets. Financial markets constantly evolve – and we must ensure our regulatory framework is adapting to these changes.

These rules are one good example of how we are looking ahead and addressing these new challenges.

I want to thank all those who provided feedback on the proposed rules the Commission approved last December. We received a number of thoughtful comments from market participants, most of which expressed broad support for the proposals. Commenters also highlighted some areas of concern, and we made adjustments based on that feedback. For example, we have reduced the frequency of controls testing and narrowed the instances where independent contractor testing is required. We have also clarified definitions of key terms and made clear that the scope of required testing will be based on appropriate risk and threat analysis.

If approved, these new rules will serve as a strong and important complement to the many other steps being taken by regulators and market participants to address cybersecurity. For example, government agencies and market participants are already working together to share information about potential threats and risks – and learn from one another.

Today the Commission will also consider a measure that will further our commitment to international cooperation and harmonization—a comparability determination with respect to Japan’s rules on margin for uncleared swaps. This will provide that a Japanese swap dealer registered with the CFTC can comply with many aspects of our margin rules by meeting Japan’s corresponding requirements. Comparability determinations like this are critical to building a strong and sensible international regulatory framework.

As always, let me thank the hardworking CFTC staff for their work on today’s rules – and for what I’m sure will be instructive presentations. And I thank my fellow Commissioners, Bowen and Giancarlo, for their commitment to these issues.

Last Updated: September 8, 2016