CFTC Acting Chair Sees "Heightened Market Liquidity Risk"; Urges Review of Bank Capital Requirements

In remarks before the International Swaps and Derivatives Association 32nd Annual Meeting, CFTC Acting Chairman J. Christopher Giancarlo spoke about the changing nature of the global swaps market. Giancarlo said that after reviewing the impact of existing regulation on the financial system, he has concluded that market liquidity must be enhanced, global trading markets must be preserved, and regulatory comity must be deepened. Giancarlo stated that since the financial crisis of 2008 and the Dodd-Frank Act, “markets have signaled warnings that liquidity has been significantly curtailed.” He added that rising incidences of flash events in the markets are “alarm bells warning about heightened market liquidity risk in the global financial system.” Giancarlo called on global regulators to “recalibrate bank capital requirements to better balance systemic risk concerns with healthy economic growth and prosperity.”

Meanwhile, the CFTC recently voted to seek public input on simplifying and modernizing its rules partly in response to President Trump’s February executive order. Acting Chair Giancarlo announced an initiative in March, Project KISS, as an agency-wide review of CFTC rules, regulations and practices to identify those areas that can be simplified to make them less burdensome and less costly. The CFTC is soliciting ideas from industry, other stakeholders and interested parties, and the broader public on where the CFTC rules can be simplified and made less costly to comply. Members of the public can submit their ideas and suggestions by emailing projectkiss@cftc.gov or visiting cftc.gov/projectkiss.