Public Statements & Remarks

Opening Statement of Chairman Timothy Massad before the Commission Open Meeting

December 16, 2015

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 have gathered to consider three important measures. The first two are proposed rules on system safeguards, which will address concerns in our markets that relate to cybersecurity and technological or operational risk. In addition, we will consider a final rule regarding margin for uncleared swaps.

But before I discuss these rules specifically, I want to take this opportunity to thank the CFTC staff for all of their hard work and dedication. I’d also like to thank my fellow commissioners and their staffs for their collaboration and their constructive input. I am very pleased that we have avoided the obstruction and division that we see too often in this town in favor of working together constructively on behalf of the American people.

I would also like to take a moment to look back at some of the things we have accomplished this year.

Our enforcement division has continued to do an excellent job holding entities accountable for misbehavior. We brought or resolved actions related to integrity of benchmarks, improper behavior such as spoofing, traditional scams such as Ponzi schemes, and failure to comply with reporting obligations. Over the past fiscal year, the CFTC’s total monetary sanctions topped more than $3.2 billion dollars. This included an $800 million dollar sanction, the largest in Commission history, and 69 new enforcement actions.

Over the past year, the Commission also has been very focused on the resiliency of clearinghouses. With the increased significance they have taken on in the financial system, it is important we make sure they are strong and stable. In addition to our domestic efforts, we are leading substantial work taking place internationally in this area.

We have also focused on automated trading, issuing a proposed rule just a few weeks ago.

We’ve continued to implement the Dodd-Frank Act reforms, and in particular Commission staff has taken a number of actions to fine-tune our rules, including in the area of SEF trading. SEF trading is still new, and we still have significant work ahead of us. Our objective is to not only achieve the statutory goals of transparent and competitive trading of swaps on SEFs. It’s also about making SEF trading attractive, to build participation and create a strong foundation upon which our markets can thrive.

We have also taken steps to improve and enhance the reforms requiring the reporting of swap data, as with our proposal on cleared swaps reporting.

Finally, we have continued to focus on making sure commercial end-users can use these markets efficiently and effectively.

For example, we amended our rules so that publicly-owned utility companies can continue to effectively hedge their risks in the energy swaps market, which helps them provide reliable, cost-effective service to their customers. We approved a modification to the “residual interest” rule, which can affect when customers must post collateral with clearing members. We clarified the treatment of contracts with embedded volumetric optionality. We have also issued some proposals that I hope we can finalize soon—these pertain to the treatment of trade options and exempting end-users from certain recordkeeping requirements.

And in that same vein, the final rule on margin for uncleared swaps that we will consider exempts end-users. We included this exemption in our initial proposal and, and in the course of working together to harmonize our rules, the bank regulators agreed to change their rule to do so as well.

I won’t attempt to preview all that we will be doing next year, but I know we will get off to a busy start. I hope that we can finalize a number of SEF registrations early in the new year, and take up certain changes to SEF trading rules – including the “made available to trade” determination process – later in the year. We are continuing to work toward harmonization and mutual recognition with European and other international regulators. We’re also looking at ways to ensure the data we collect is more standardized and complete.

These are just a few highlights; there is work going on in many other areas. But regardless of the area, we will continue working to ensure these markets are working well for the commercial end-users who depend on them.

Thank you.

Last Updated: December 16, 2015