CFTC Commissioner Brian Quintenz discussed ways in which he believes a lack of transparency during the financial crisis has been addressed by post-crisis reforms requiring data reporting, central clearing, and posting margin.

In a speech delivered at the International Commodities and Derivatives 39th Annual European Summit, Mr. Quintenz argued that the major lesson of the financial crisis is that financial markets lacked sufficient transparency to ascertain the vulnerabilities of different players. Now, he observed, the CFTC can see an individual firm's swap transactions with counterparties. However, he noted that the CFTC is still in the process of ensuring that regulators are capable of analyzing swap data to identify and measure risk exposures in the market, specifically counterparty credit risk. He emphasized that for these reforms to work, regulators must share access to data.

Mr. Quintenz also lauded centralized clearing as "foundational to post-crisis reforms," asserting that initial and variation margin requirements for both cleared and uncleared swaps help to reduce the chance of losses in the event of a default.

Mr. Quintenz expressed concern as to how regulators have determined capital requirements, saying that such requirements "should not be established in a vacuum" and should consider the impact other post-crisis reforms have had on the derivatives market's ability to "better estimate risk and allocate resources." In addition, Mr. Quintenz said that regulators' current capital models do not adequately take into account the ways in which margin collection mitigates counterparty credit risk. He also noted the "penalty" that the Basel leverage ratio imposes client-posted initial margin for cleared swaps.

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