Opening Statement Chairman Timothy G. Massad before the Global Markets Advisory Committee Open Meeting

October 9, 2014

Thank you, Mark. Commissioner Wetjen and his office, as well as the professional staff have done a tremendous amount of work to support the GMAC and I thank them for that. I also want to thank today’s participants. Your presence and input is very much valued.

Our advisory committees provide a valuable forum for discussion of complex and evolving market issues relevant to our work here at the CFTC. And, it is important for us to listen to a broad variety of viewpoints as we consider these.

The topics of discussion today are both timely and important.

The first session on non-deliverable forwards should be very helpful to us as we consider whether to propose mandatory clearing for NDFs.

As you know, under the law pertaining to swaps clearing, the Commission must consider several factors to determine whether a swap is required to be cleared, which include: whether there is sufficient liquidity to support clearing; whether the necessary rules and infrastructure are in place to support clearing; and what are the effects on the mitigation of systemic risk and on competition.

Now, today’s meeting is not a formal process to consider those factors; but today is an opportunity for us to learn more about the NDF market so that we can consider whether to go forward with a proposed rule. If we decide to propose a rule, there will be an opportunity later for all the public to give their views.

Considering whether to propose a rule for further clearing mandates underscores the importance of working out the cross border issues on clearinghouse regulation and supervision. Europe has not yet recognized our clearinghouses as equivalent. I believe they should because our clearinghouses meet international standards. They believe we should change our regulatory approach to clearinghouses that are located in Europe but are also registered with the U.S. But the existing dual registration regime has worked well for many years. And so I believe this is a situation of, if it ain’t broke, don’t fix it. But we have agreed to look at whether we can further harmonize our rules and regulatory approach. And I am pleased that they have decided to postpone the imposition of higher capital charges on European banks participating in our markets. It was this threat of higher capital charges that was going to fragment the market, not the existence of dual registration, which has existed for years and has actually been the foundation for the growth of the global markets.

Our second topic pertains to bitcoin.  While the development of digital payment systems raises many issues outside our jurisdiction, one area within our responsibility is derivative contracts traded on SEFs or DCMs that are based on bitcoin. Today, we have the opportunity to hear about that.

I think about this area in the following way: Innovation is a vital part of our markets that our regulatory framework is designed to encourage. At the same time, our regulatory framework is intended to prevent manipulation and fraud, and to make sure our markets operate with transparency and integrity. Our responsibilities at the CFTC in this regard are ongoing. Of course, the fact that a contract exists doesn’t mean the CFTC endorses it, as the staff will explain more fully later today. As with all new developments, we must remain vigilant and will continue to evaluate these new contracts over time. And of course, we will coordinate with our colleagues at other regulatory authorities as appropriate. I think it is helpful to keep these points in mind whenever we consider a new innovation in our markets.

Thank you again for being here and contributing your ideas. I look forward to a productive discussion.

Last Updated: October 9, 2014