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CFTC SEF Proposal Risks Return to Market that Caused 2008 Crash

FOR IMMEDIATE RELEASE
Monday, November 5, 2018
Contact: Nick Jacobs, 202-618-6430 or njacobs@bettermarkets.com

 

 

THE CFTC’S SWAP EXECUTION FACILITIES (SEF) PROPOSAL RISKS RETURNING TO THE UNREGULATED SWAPS MARKET THAT CAUSED THE 2008 CRASH

 

Washington, D.C. – Better Markets President and CEO, Dennis Kelleher, issued the following statement on the Commodity Futures Trading Commission (CFTC) proposed changes to the CFTC’s regulations governing swap execution facilities:

 

“The CFTC’s proposal today on swap execution facilities (SEFs) is a dangerous step backwards to dark, unregulated derivatives trading and markets like those that existed before the 2008 crash.  That is where, why and how that crash was spawned unseen and exploded without notice, catching regulators, elected officials, policymakers and even market participants themselves unprepared.  That’s what transformed a financial crash into a global catastrophe.

“The creation of SEFs and the regulation of the derivatives markets, with much greater transparency, delivers information and knowledge, which enables risk-reduction, oversight and preparation to prevent future crashes.  It would be a tragedy if the CFTC deregulated those markets again and put that progress at risk.

“While the proposal is lengthy and will take some time to review, the CFTC is apparently proposing a fundamental shift away from the current SEF framework, which has increased pre-trade transparency, supported impartial access to the markets, diversified liquidity, and facilitated risk management within regulated marketplaces.  Unfortunately, the CFTC is doing this before it has even fully implemented and enforced the existing law, which would have facilitated competition and reduced the oligopoly of the five dominant, taxpayer-backed Wall Street derivatives dealer banks which continue to have a stranglehold on the markets.”

 

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies – including many in finance – to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.com.

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