Highlights: CFTC drafts new regulations to stop manipulators

WASHINGTON (BestGrowthStock) – The following are highlights from a U.S. Commodity Futures Trading Commission hearing on Tuesday on new regulations for over-the-counter derivatives markets, including tools to prevent market manipulation.

Speakers at the hearing include Chairman Gary Gensler and commissioners Michael Dunn, Jill Sommers, Bart Chilton and Scott O’Malia.

GENSLER ON INVESTMENT OF CUSTOMER FUNDS

“The rule enhances protections regarding where derivatives clearing organizations (DCOs) and futures commission merchants (FCMs) can invest customer funds.

“The market events of the last two years have underscored the importance of prudent investment standards to ensure the financial integrity of DCOs and FCMs and of maximizing protection of customer funds.”

CHILTON ON ANTI-MANIPULATION RULES

“The law has been really weak in these regards over the years, which is why many of us sought to get it changed.

“The legal definition of manipulation is really hard to prove. It’s a high bar. You not only need to have specific intent, you also need to prove as a result of that intent and market control that the activity caused an artificial price. What we’re doing today will help in that regard.”

GENSLER ON TIMELINE OF NEW RULES:

“The arithmetic shows that this will be a very busy next seven weeks. No doubt, as we’re human, that some rules may slip. It is our goal, however, to complete the proposal stage by mid-December.”

O’MALIA ON INVESTMENT OF CUSTOMER FUNDS:

“I am quite concerned that the proposed rules are overly prescriptive.

My main concern with this proposal is that the commission is proposing to significantly revise the scope and character of the types of permitted investments of customer funds in the face of numerous public comments to the contrary.”

CHILTON ON THE SILVER MARKET:

“I believe that there have been repeated attempts to influence prices in the silver markets. There have been fraudulent efforts to persuade and deviously control that price.

I am fully aware of the prohibition from divulging trader names or information about their positions. I also cannot pre-judge anything the agency may do with regard to our silver investigation, or any other matter. “

CHILTON ON NEW CFTC AUTHORITIES:

“These new authorities, along with the implementation of thoughtful position limits in metals will go a long way toward ensuring more efficient and effective metals markets devoid of fraud, abuse, and manipulation.”

DUNN ON RESOURCES

“I am very concerned about the CFTC’s budget situation and possible attempts to thwart implementation of Dodd-Frank by cutting off funding for this agency.

“I fear that a long queue will develop for new products waiting approval, and that the inability to get new products approved will prevent innovation and competition in our markets.”

Highlights: CFTC drafts new regulations to stop manipulators