Public Statements & Remarks

Opening Statement of CFTC Commissioner Dawn D. Stump before the Global Markets Advisory Committee Meeting


April 15, 2019


Good morning and welcome to the first Global Markets Advisory Committee meeting of 2019.


I am excited to sponsor the GMAC, and believe that the importance of the Committee in today’s increasingly interconnected marketplace cannot be overstated.  The objectives of the GMAC are many, and include helping the Commission determine how it can avoid unnecessary regulatory or operational impediments to global business while still preserving core protections for customers and other market participants.  Another objective of the GMAC is to assist the Commission in assessing the impact on U.S. markets and firms of the Commission's international efforts and the initiatives of foreign regulators and market authorities.  Given today’s global marketplace and the multinational nature of business, I believe that the reconstitution of the GMAC has come at a critical time.


I am delighted to host the first GMAC meeting in several years.  Getting the GMAC up and running has been a goal of mine since I first joined the Commission, and I am hopeful that today’s meeting will be the first of many under my sponsorship.


Before I move to the substance of today’s program, I want to thank the new members of the Committee.  You all have been enthusiastic to be appointed as members of the GMAC, and I have no doubt that this enthusiasm will translate into robust participation and spirited discussion on the complex issues that we will cover, both today and in future meetings.  Your time and service on the GMAC is greatly appreciated.


I would also like to thank the Chairman and my fellow Commissioners for being here today and for their contributions to the discussion.  I would especially like to thank Commissioner Quintenz for his efforts to manage the Committee’s updated charter and organization while serving as the GMAC’s temporary sponsor prior to my arrival at the Commission, and I would like to recognize Andrea Musalem who served as the temporary Designated Federal Officer to ensure a seamless transition.


In addition, I would like to thank our panelists.   We have gathered a distinguished group of speakers, and their eagerness to participate is greatly appreciated.  The presentations are critical to today’s discussion, and will provide a jumping off point for what I can only assume will be engaging discussions among GMAC members around crucial global issues.


Lastly but certainly not least, I would like to thank Andrée Goldsmith, the Committee’s current Designated Federal Officer, for her efforts in making today’s meeting a success.  I am grateful for her tireless work in organizing the group and also for the benefit of her tremendous experience which is reflected by today’s meaningful agenda designed to set the stage for the Committee’s work ahead.


Turning to today’s agenda, we have a full day ahead.  We are focusing this meeting of the GMAC on an examination of the status of the key pillars of the Group of 20 (G-20) directive regarding the OTC derivatives market.  Specifically, today’s agenda revolves around the sometimes-overlooked component of the G-20’s agreement in 2009 in Pittsburgh, which stipulated that regulators should “assess regularly implementation and whether it is sufficient to improve transparency in the derivatives markets, mitigate systemic risk, and protect against market abuse.”  It is noteworthy that in 2009, in the midst of responding to the crisis, the G-20 leadership admitted that as individual jurisdictions implemented the G-20’s principles, a look-back was needed to ensure the G-20’s objectives were being met.


In that spirit, this morning, we will start with a presentation by Shunsuke Shirakawa, Vice Commissioner for International Affairs at the Financial Services Agency in Japan, on Japan’s priorities for its G-20 presidency in 2019.  The Vice Commissioner will focus on the three goals of Japan’s G-20 presidency:  first, addressing market fragmentation; second, addressing the challenges that come with regulating in this era of technological innovation; and third, addressing the issue of financial inclusion in an aging society.  We are pleased to have the Vice Commissioner here with us today, and we look forward to his presentation.


Second, Steve Kennedy from ISDA will pick up on one of the themes in Vice Commissioner Shirakawa’s presentation, and present on ISDA’s work on regulatory-driven market fragmentation.  Steve’s presentation will include a discussion of the sources of market fragmentation, some real-life examples of fragmentation, and potential solutions.


In the afternoon, we will turn to an examination of the status of the key pillars of the G-20 directive regarding the reforms of the OTC derivatives markets.  The third panel will explore cross-border issues with respect to trading venues and central counterparties.  Nicolette Cone of ISDA will walk us through some of the cross-border issues that have arisen with new trade execution requirements and the effect of the October 2017 announcement of a common approach between the CFTC and the European Union regarding certain derivatives trading venues.  Then, Colin Lloyd of Cleary Gottlieb Steen & Hamilton will present on the current framework for U.S. access to non-U.S. swaps central counterparties, some of the issues created by the current framework, and a proposal for a new framework for allowing U.S. customer and proprietary access to non-U.S. CCPs for swaps.  Both presentations raise a number of interesting points for discussion, and I have no doubt that the GMAC members will have plenty of thoughtful comments following these presentations.


Next, we will hear from the CFTC’s own Rafael Martinez and Richard Haynes on initial margin for non-centrally cleared derivatives.  Rafael will provide a general background on the margin rules and then delve into the work of the Working Group on Margin Requirements, an international group under BCBS and IOSCO tasked with developing margin standards for uncleared swaps.  Richard will then present findings from the CFTC’s Office of the Chief Economist (OCE) study on the implementation of Phase 5 of the uncleared margin rules, including the number and characteristics of the entities that will be pulled into scope with the implementation of Phase 5 in September 2020.  I look forward to hearing from GMAC members following these presentations on their experiences with the uncleared margin rules, and their concerns with respect to the fast-approaching implementation of Phase 5.


The last panel will focus on swap data reporting.  I have long believed this to be one of the most critical components of the reform agenda.  With the post-crisis implementation of comprehensive trade reporting requirements and the creation of trade repositories around the world, new issues have arisen with respect to swap data harmonization and data sharing.  David Aron will first present on the CFTC’s work regarding the implementation of a public swap data roadmap and the CFTC’s leadership in global data harmonization efforts.  Next, Kate Delp from DTCC will provide DTCC’s perspective on progress made to date and what the future holds with respect to swap data reporting.


As you can see, our agenda for today is packed and will cover a wide variety of topics.  I am very excited to delve into these issues with the GMAC and I again want to recognize the tremendous amount of work that has gone into planning this meeting and thank everyone for being here.