Friday, June 19, 2009

Obama regulatory reform plan "very bold": Gensler

By Christopher Doering
WASHINGTON (Reuters) - Gary Gensler, the recently confirmed chairman of the U.S. Commodity Futures Trading Commission, said the Obama administration's plan to overhaul the financial regulatory system would lower risk and increase transparency, but he called on Congress for help.
"The president laid out a very bold agenda to regulate the markets," Gensler told CNBC television in an interview.
Gensler, who has pushed for overseeing both markets and dealers, said large financial institutions that deal in derivatives should be regulated for capital and margin requirements and be subjected to greater transparency.
"The way we do that is with Congress' help hopefully," he said, echoing his requests earlier this month for Congress to give CFTC more regulatory authority.
The CFTC was given a lot of attention in the 88-page white paper released on Wednesday. The package called for CFTC to coordinate with the Securities and Exchange Commission in overseeing dealers and trading of over-the-counter derivatives.
Derivatives such as credit default swaps were blamed for amplifying last fall's economic crisis.
"We'll be working along with the Securities and Exchange Commission to make sure that we police these and have clear authorities to do so," he said.
The White House's plan said the CFTC and the SEC should iron out their opposing philosophies in favor of common rules that will make it easier to find violators and introduce new financial instruments. It did not propose merging the two agencies.
The paper said the CFTC should have the authority to set position limits on OTC derivatives that perform or affect a significant price discovery function on futures markets.
Absent from the report were proposals to curb excessive speculation. Traders, farm groups and some farm state members of Congress blame a wave of hot money from hedge funds for driving commodities ranging from oil to wheat to record highs in 2008.
Gensler said there are "legitimate reasons why hedgers want speculators on the other side of the market place but we also have to make sure there is not some undue manipulation in these markets and there is not pressure beyond what is helpful to the markets to get a fair price discovery function."
(Reporting by Christopher Doering; Editing by Marguerita Choy)

Source: Reuters

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