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Gensler: Regulation doesn’t go far enough

Commodity Futures Trading Commission chairman Gary Gensler believes proposed regulation by the Obama administration to govern derivative markets could contain loopholes.

Gensler tells the Washington Post that the legislation leaves significant elements of the market out of the reach of regulators and undermine efforts to combat fraud.  Of particular concern to Gensler is:

  •  certain types of derivatives used to bet on currencies could be exempt from regulators
  • minor derivative traders would not have to meet the robust trading requirements envisioned by the legislation.

He does, however, support the legislation:

A top federal regulator has urged Congress to adopt tougher rules to govern betting in exotic financial instruments known as derivatives than the Obama administration has proposed, warning that the administration’s new vision of market regulation could contain loopholes.

One of the Obama administration’s top priorities in its revamp is to regulate both derivatives and firms that trade them. READ MORE.

Increased energy market supervision; CFTC regulation

There is an interesting story by Reuters about how the Commodity Futures Trading Commission (CFTC) and the U.K’s Financial Services Authority (FSA) have announced they will closely moniter energy markets.

The story also details some of the CFTC’s plans to tighten commodity trading rules, including position limits in U.S. futures markets and sujecting more  over-the-counter derivatives subject to mandatory clearing.

Under the proposal, the  CFCT and FSA will:

  • increase information sharing and cooperation in surveillance of oil markets
  • enhance direct access rights to trade execution and audit trail data
  • share exchange regulations and disciplinary notices.

The story includes comment from CFTC chairman Gary Gensler:

WASHINGTON (Reuters) – U.S. and U.K. regulators moved on Thursday to increase supervision of energy markets while Washington also detailed new initiatives to tighten the rules in commodities trading.

The Commodity Futures Trading Commission and the U.K. Financial Services Authority announced the steps, which include closer auditing and mutual on-site visits of exchange operators, to gain a better view of trading in U.S. oil futures on the IntercontinentalExchange’s (ICE.N) London exchange. READ MORE