CFTC Commissioner Dawn D. Stump advocated for the frequent re-visitation and refinement of swaps rule sets by regulators to ensure that regulations are current with the market environment.
Ms. Stump highlighted the following subject areas:
- Access to Clearing. Ms. Stump called central clearing a "critical tenet" of post-crisis reforms, one which provides greater ability for market participants to access clearinghouses around the world. Ms. Stump urged the CFTC to permit U.S. persons to access non-U.S. clearinghouses with comparable regulatory structure without requiring such clearinghouses to register with the CFTC.
- Swap Dealer Capital Requirements. In light of the October 2021 compliance date of the adopted swap dealer capital requirements, Ms. Stump said she was satisfied with the CFTC Market Participants Division's assessment of the comparability of relevant requirements in other jurisdictions.
- Data Refinement. Ms. Stump stated that the CFTC must coordinate with international counterparts on data fields and swap data reporting rules.
Ms. Stump called for a renewed commitment to customer education, given the growing retail participation in derivatives markets. That participation is reflected in the increased listings of "micro" and "micro e-mini" futures and options contracts, as well as the new futures exchanges with business models focused on retail traders.
With regard to long-term regulatory changes that the COVID-19 pandemic might prompt, Ms. Stump noted that the expiration of the CFTC's targeted no-action relief will coincide with the prospect of new hybrid work models, which will require heightened attention to cybersecurity due to greater teleworking.
Ms. Stump warned that regulatory adaptation includes the "end" of certain businesses, citing the LIBOR transition and the uncleared margin implementation. For the latter, while Ms. Stump urged consideration of other recommendations by the CTFC Global Markets Advisory Committee, she said that no further extensions should be expected to the compliance dates for phases 5 and 6, and firms "need to treat compliance with those requirements with a sense of urgency."
Commentary Nihal Patel
Ms. Stump's speech covers a lot of ground and provides a good picture of a number of key issues at the CFTC. Many of her priorities seem achievable (or at least reasonable) even with Ms. Stump's party in the minority.
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