Opening remarks: Walt Lukken CEO FIA
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30th expo. In 1985 18 million contracts traded. That is now monthly average.
There are 4000 delegates attending from 30 countries
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Keynote Speaker: CFTC Chairman Tim Massad
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The need for derivative reform is ongoing and the goals of the CFTC are the following:
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1) Increase oversight
2) Standardize clearing
3) Make the market more transparent. Do this by requiring that SWAPs, etc be exchange cleared. In 2007 only 16% of SWAPs were cleared. That number is now 74% with 100% as the goal
4) Stiffen timely reporting of all transactions. Not T + 1, but day of trade by 6PM at the latest
5) Dramatically raise margin requirement for uncleared SWAPs
6) Impose stricter position limits
7) Tighten record keeping requirements across all media, texts, cell, email even social media (Facebook, LInkedIn, etc)
8) Harmonize regulations among all G 20 countries
9) Strengthen cyber security across all exchanges and financial institutions
9a This means independent audited testing
9b Any system that crashes must have sufficient redundancy to resume operations in 2 hours
10) Robust enforcement of rules against “spoofing” (putting in ghost bids and/or offers with the intent to manipulate the market and not to trade)
11) Get Congress to increase CFTC budget
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Exchange Leader Panel (Moderator Ron Insana CNBC)
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Present were CEO’s of CME, EUREX, ICE, CBOE
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Points raised:
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Cross border regulations must be harmonized with mutual recognition of all registered clearing members
Even with yesterday’s GOP victory there is fear that clear and well defined rules regarding Dodd Frank will not be coming anytime soon. Even a worry that the GOP will scrap or roll back existing regulations which will increase uncertainty.
There is too much fragmentation in the US (13 exchanges are too many)
There is evidence that “the tail is wagging the dog”, ie that the underlying value exists to serve the derivative exchanges and not vice-versa, which is either good or bad depending on your perspective.
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Finish writing Dodd Frank rules. Congress, in his view is dragging its feet
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