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CFTC Commissioner Critical of CFTC’s Swaps Trading Rules

In a recent speech, CFTC Commissioner J. Christopher Giancarlo criticized the CFTC’s swaps trading rules, describing them as “fundamentally flawed.”  While the Republican Commissioner supports Title VII of Dodd-Frank, he took issue with the CFTC’s regulatory framework implementing the swaps trading requirements.  According to the Commissioner, the CFTC’s swaps trading rules have increased fragmentation in the global swaps markets, are driving away global capital, will threaten the survival of swaps execution facilities, and are not consistent with Dodd-Frank’s intent. 

Commissioner Giancarlo outlined an alternative framework that would:

  • Subject a comprehensive range of US swaps trading to clear and definitive rules
  • Require that all swaps trading fall within the same, cohesive and undivided regulatory framework
  • Allow participants the flexibility to choose from among the broadest possible array of methods of execution within the statutory definition of “swaps execution facility”
  • Require standards of conduct for swaps market personnel and
  • Promote swaps trading and market liquidity as a prerequisite to increased transparency.

In addition to his speech, Commissioner Giancarlo published a white paper “analyzing the mismatch between the CFTC’s swaps regulatory framework and the inherent dynamics of global swaps markets and the adverse consequences that have resulted.”