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: Jim Hamilton's World of Securities Regulation

By Jim Hamilton

Ag Committee Reports Out Gensler Nomination for CFTC Chair to Full Senater
The Senate Agriculture Committee has favorably reported out to the full Senate the nomination of Gary Gensler to be the new CFTC Chair. Mr. Gensler is a former Treasury Under Secretary for Domestic Affairs. In an earlier dialogue with Senator Carl Levin, the nominee said that he supports the regulation of credit default swaps. Given the unique nature of credit default swaps to corporate bonds and other securities, he noted, the SEC and CFTC should work in tandem to consider regulations to protect the markets and investors.

Similarly, Mr. Gensler wants to work with Congress to consider regulations for customized bilateral OTC derivatives. Citing AIG as an example, he said that unregulated derivatives dealers, many affiliated with insurance companies, threatened and sometimes destroyed their parent or affiliate, causing global shockwaves. While at Treasury the nominee advocated for regulation of unregulated derivatives dealers affiliated with brokerage firms; and feels even more strongly today that this is the right course of action. More broadly, the nominee said that he will work with Congress and the SEC to create a transparent and accountable regulatory structure for the OTC derivatives market.

Mr. Gensler also said that the CFTC staff should review all outstanding hedge exemptions to consider their appropriateness. The CFTC will also evaluate potential practices for instituting regular review and increased reporting by holders of exemptions.

Full post as published by Jim Hamilton's World of Securities Regulation on March 20, 2009 (boomark / email).