Opening Statement of CFTC Commissioner Dan M. Berkovitz before the Commission Meeting

March 25, 2019

Good morning Mr. Chairman and my fellow Commissioners.

I’d like to begin by thanking Commission staff.  The CFTC has been particularly busy lately on issues of global importance.  Your hard work and dedication to our mission allows us, despite our size, to be one of the world’s preeminent financial regulatory agencies.  In particular, I appreciate your work on the issues we’ll be discussing today, your consideration and incorporation of many of my office’s comments, and the time you’ve spent with my staff in preparation for this meeting. 

When the Chairman announced this meeting just over a week ago, we had seven items on the agenda.  Fortunately, we were able to approve five of these items ahead of today’s meeting, including amendments to Commission Regulation 1.52, concerning requirements for self-regulatory organizations; Regulation 23.700, concerning requirements for segregated margin for swaps; margin comparability determinations for Australia and Japan; and updates to memorandums of understanding with the U.K’s Financial Conduct Authority in preparation for Brexit.  So I’m pleased to report that we won’t be keeping you here all day!  I thank the Chairman and my fellow Commissioners and their staffs for their work towards our unanimous approval of these matters.  

In addition, in the past couple of weeks, the Commission has also exempted certain derivatives trading venues in Singapore from registration as swap execution facilities because they met our comparability standards; has been taking steps with the European Commission to ensure the continuity of derivatives trading and clearing after the U.K.’s withdrawal from the EU; and today, will be voting to maintain the “legacy” status of certain uncleared swaps if those swaps need to be legally transferred due to a no-deal Brexit. 

These recent actions show that the CFTC’s cross-border regulatory approach that has now been in place for nearly six years, and implemented by several successive Commissions, provides an appropriately flexible framework for addressing the varied cross border issues that the Commission faces in international derivatives markets, while simultaneously minimizing the financial risks that could come back to the U.S. 

Finally, the other issue being voted on today is an amendment to the de minimis exception to the swap dealer definition, which excludes from counting toward the de minimis threshold certain swaps entered into by insured depository institutions, or “IDIs.”  I will now say briefly that I plan to vote against this amendment, for both substantive and procedural reasons.  In my view, this amendment drives a truck through the de minimis exception to the swap dealer registration rule by permitting an unlimited quantity of swap dealing by an IDI in connection with loans, and any expansion of the IDI exclusion can be adopted only through joint rulemaking with the SEC.  I will address these concerns in greater detail when we consider that rule for a vote.