Yesterday, the CFTC delayed a vote that would establish trading venues for complex derivatives that contributed to the 2008 financial crisis. The Wall Street Journal reports that the agency’s swing vote brought up concerns about the plan’s market repercussions.
Swaps Regulation & Mark Wetjen
The CFTC set a meeting, tentatively, for March 1, which pushed back a meeting scheduled for Tuesday – when the initial vote was expected. A spokesman said that the next meeting hasn’t been officially announced, and is subject to change.
Mark Wetjen, a Democrat on the CFTC, told The Wall Street Journal that he has not decided how he will vote on the draft, and stated that he is concerned that the commission doesn’t “push the markets precipitously in a way that ends up being counterproductive.” Mr. Wetjen also indicated in an interview with The Wall Street Journal, that he is less concerned about pushing the swaps market toward more centralized electronic trading because “we already see the evidence of that happening.”
These new trading platforms are part of the market overhaul that regulators are working to refine for the swaps market. Many issues have already risen Many issues have already risen about how regulators should transform the current model, one where brokers connect buyers and sellers over the phone.
CFTC members are still debating over the mechanics of trading platforms. Details specifying how many quotes brokers will have to seek when they are executing a trade, and how they can use the phone when executing trades – are still being finalized.
Recently, firms who are creating new trading platforms have increased pressure on the CFTC to complete the rules, so that they’re able to rival exchanges who have created new products that mimic swaps. In the Dodd-Frank financial overhaul, Congress called for a new swaps platform as a way to bring transparency and competition into the formerly privately negotiated swap market.