FSGG Hearing: FY15 SEC and CFTC Budget Requests

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In his opening statementAderholt began by laying out the goals of the Agriculture Subcommittee which included: Moreover, Aderholt encouraged the CFTC to use budgeted funds to invest in technology to allow for innovation in the marketplace, and to evaluate the current method for sizing swaps markets. In his opening statement, Bishop began by commenting on the relevance of the CFTC for both farmers and financial institutions in using products to hedge risk. Further, Bishop emphasized the damaging effect of the great recession and warned against unraveling Dodd-Frank and the protections it has provided for the financial system, and thanked Chairman Giancarlo for reaching across the aisle to work with him and other legislators budget hearing commodity futures trading commission prevent the unraveling of the bill.

Christopher Giancarlo, Chairman, U. Commodity Futures Trading Commission. Giancarlo said that the budget reflects the need to oversee new technological advances that are transforming the way market participants deal and interact in a complex derivatives market, noting that with innovation comes new security concerns, new products that need oversight, and new financial technology that has prompted the Commission to rethink outdated regulations. Aderholt asked if Giancarlo could speak on the role the CFTC plays in regulating the Bitcoin and crypto asset market that has dominated the press over the last year.

He added that asserting legal authority is budget hearing commodity futures trading commission part of a six-fold approach to crypto assets that also includes: Further, DeLauro suggested that those funds and time should be spent preventing the unwinding of Dodd-Frank, a bill that effects most Americans.

Giancarlo responded that funds and attention should be spend on this area of the market because Americans, particularly young Americans, are being targeted by scammers in this market and Bitcoin is a commodity within the authority of the CFTC which cannot be ignored.

Aderholt asked if Giancarlo could explain the difference between notional value and the new metrics currently being developed by the CFTC to size risk in the swaps market. Giancarlo responded by drawing a distinction between user fees and transaction fees, stating that he has long opposed transaction fees because they provide a tax on the use of risk hedging markets, and that will effect both financial institutions and farmers.

Giancarlo responded that the reason for the delay is that any budget hearing commodity futures trading commission will need a Commission vote, and because the amount of data that needs to be analyzed before making any change is vast.

However, Giancarlo remarked that because of the addition of two new Commissioners, he expects this to be done within the next couple of months. Giancarlo said the budget is necessary because of the new issues facing the CFTC that were not addressed in Dodd-Frank. He explained that currently, the Commission is focused on using funds to address widespread digitization of markets and funding the Lab CFTC program to grow internal knowledge.

Moreover, he explained that the CFTC intends to use this budget to upgrade those key systems to handle the enormous amount of data collected and increase automation of those systems. Yoder asked whether the plan at the Federal Budget hearing commodity futures trading commission to replace the current exposure method CEM with the Standardized Approach to Counterparty Credit Risk SA-CCR through rulemaking would be too lengthy of a process to make those changes given increased volatility in the markets this year.

Giancarlo responded by stating that during the recent volatility in February, there was some evidence to suggest the current form of the Supplemental Leverage Ratio SLR budget hearing commodity futures trading commission the ability of larger market markets to take on positions, which in turn exacerbated market movement.

Budget hearing commodity futures trading commission Chairman also commented that the SLR approach deters moving products to clearing, which undermines the ultimate policy goal of Dodd-Frank.

Furthermore, Giancarlo understood that despite the need for change, the process takes time. Pingree asked whether the CFTC is in communication with European and Asian counterparts, to which Giancarlo said that relationships with international counterparts are extremely important and the Commission fully supports the G20 efforts.

He continued that his concern is that post-Brexit, the EU Parliament will undertake legislation and it is unclear whether that legislation will undermine the Equivalency Determination on central counterparty CCP supervision. Further, the Chairman emphasized that he has testified in Europe and was clear to the EU Commission that he expects the Equivalency Determinations to be upheld. Aderholt asked why the initial margin requirements put in place by the prudential regulators were not first required by the CFTC.

Giancarlo responded that the prudential regulators are outliers in global markets, and the CFTC believes the enhancement of systemic stability resulting from the requirements is far outweighed by the competitive disadvantage American firms face while operating in global markets.

Bishop asked whether the CFTC should consider changes to its self-certification process. Giancarlo said that he believes the process is effective and supported that assertion by citing the self-certification of 12, new products budget hearing commodity futures trading commission two decades without an issue.

Giancarlo emphasized that to achieve that balance the CFTC needs to first understand the changes in the market, then policy change can be made. He remarked that diversity of market participants is not necessarily the cause of recent market volatility and is vital for a growing and diverse market. For more information on this hearing, click here. Giancarlo responded that Bitcoin is a commodity, and therefore the CFTC has a statutory mandate to bring enforcement actions against fraudsters, especially since many younger Budget hearing commodity futures trading commission are involved in the Bitcoin market.

Swap Dealer De Minimis Levels: Giancarlo responded that the reason for the delay is that any change will need a Commission vote, and because of the vast amount of data that needs to be analyzed prior to making any change. However, Giancarlo noted that he expects this to be done within the next couple of months due to the addition of two new Commissioners. He continued that the Commission is focused on using funds to address widespread digitization of markets, fund the Lab CFTC program aimed at growing internal knowledge, and to upgrade swap data repositories SDRs to budget hearing commodity futures trading commission the enormous amount of data they collect.

Witness The Honorable J. Testimony The Honorable J. Budget hearing commodity futures trading commission of the Swaps Markets Aderholt asked if Giancarlo could explain the difference between notional value and the new metrics currently being developed by the CFTC to size risk in the swaps market.

Risk Assessment Yoder asked whether the plan at the Federal Reserve to replace the current exposure method CEM with the Standardized Approach to Counterparty Credit Risk SA-CCR through rulemaking would be too lengthy of a process to make those changes given increased volatility in the markets this year. Cross-border Engagement Pingree asked whether the CFTC is in communication with European and Asian counterparts, to which Giancarlo said that relationships with international counterparts are extremely important and the Commission fully supports the G20 efforts.

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