Opening Remarks of Reuben Jeffery III
Chairman, Commodity Futures Trading Commission
Hearing on Self-Regulation in the U.S. Futures Industry
Washington, D.C.

February 15, 2006

Good morning. It is a great pleasure for me, and my fellow Commissioners to welcome you to today’s Hearing on Self-Regulation in the futures industry. I would like to first thank all of the distinguished panelists for being here to share their views and experience with the Commission and the public on the key issues involving self-regulation.

Few issues are more vital and fundamental to the U.S. futures industry than the structure of our self-regulatory system. Ours is a model of regulation that is premised on the notion that the industry is uniquely situated to define, monitor, and enforce rules of conduct governing its members. With proper checks and balances, self-regulation can fulfill its ultimate role of promoting market integrity and customer protection.

Self-regulation, however, is not a static concept. To continue to work properly, the self-regulatory model must adapt, as appropriate, to reflect the realities of the marketplace. In this, it is incumbent upon all of us - the SROs, the Commission, and the industry - to remain open to changes necessary to ensure that self-regulation continues to play a vital role in the futures industry, but at the same time, preserve those elements that give strength and vitality to the self-regulatory system.

The changes unfolding in the industry have brought to the fore questions about the current state of self-regulation and in particular, the adequacy of the SRO governance structure to manage heightened potential for conflicts of interest arising from those changes. As reflected in the comment letters, there are strongly held and differing views as to whether, and how, the existing self-regulatory model can effectively respond to the changing marketplace.

That said, the dynamism and vigorous competition that are the hallmarks of today’s futures markets are an affirmation that self-regulation has been a success in this industry. But if our markets are to continue to flourish, we cannot give short shrift to this most fundamental component of our regulatory framework. Ultimately, self-regulation becomes irrelevant unless it fosters public confidence that SROs are fair and impartial, notwithstanding pressures that could potentially compromise the execution of their regulatory duties.

We look forward to hearing from our distinguished panelists today and now turn to Commissioner Lukken for his opening remarks. Thank you.

Last Updated: April 2, 2007