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Ensuring Business Has Best Tools to Manage Risk, Boost Economy

Feb 26, 2015

The Coalition for Derivatives End-Users is wrapping up its annual summit, drawing attention to the need for measured and reasonable regulation of derivates so U.S. companies can effectively manage risk.

Highlight of the summit was a keynote address (prepared text) by Timothy Massad (pictured right), chairman of the Commodity Futures Trading Commission, one of the regulatory agencies that oversee the use of these important financial tools. Before taking questions, Massad concluded:

 

The United States has the best derivatives markets in the world – the most dynamic, innovative, competitive and transparent. They have been an engine of our economic growth and prosperity, in large part because they have attracted participants and served the needs of commercial end-users who depend on them. I look forward to working with all of you to make sure that they continue to do so in the years ahead. 

In his introduction of Massad, BRT President John Engler noted with approval the recent enactment of coalition-supported legislation (H.R. 26) that created a statutory exemption for derivatives end-users from margin requirements.

[Our] fixes reduce business risk and, despite some of the political rhetoric, only serve to bolster Dodd-Frank’s risk-reduction objectives. 

This might be a bit too optimistic for this town, but I’d sure like to think that our recent progress is a step toward – a return to – a more thoughtful and balanced discussion about financial regulation.

For more on the two-day summit, see the coalition's news release.

Massad and the CFTC draw consistent and close media coverage and his comments to the BRT-founded coalition were no exception. For example:

Reuters, "U.S. CFTC mulls tweaks to rules for uncleared margin":

Feb 26 (Reuters) - The U.S. Commodity Futures Trading Commission is considering some changes to proposed rules for margin for derivatives traded without the intermediation of clearing houses, the head of the agency said on Thursday.

Chairman Tim Massad said discussions with international regulators had brought to light some differences between the regimes in Europe and Japan.

"I am willing to consider some changes to our proposed rule in order to ensure greater consistency," Massad told a business audience in a speech.

Financial Times, "US set to raise uncleared swaps requirements":

The new head of the main US derivatives regulator has signalled a willingness to break from the agency’s recent past and harmonise swaps rules with Europe and Japan to help police the vast $700tn global derivatives market.

Timothy Massad, chairman of the US Commodity Futures Trading Commission, told an audience of derivatives users on Thursday he was looking at raising the margin requirements for rarely-traded swaps, so that US rules were consistent with overseas jurisdictions.

UPDATE (Friday, 9:20 a.m.), JDSUPRA Business Advisor, reporting on Massad's remarks, "CFTC’s Massad on End-Users."