CFTC RULE LETS BIG BANKS RETAIN CONTROL NEW DERIVATIVE ENTITIES
Dennis Kelleher, president and chief executive officer of Better Markets, made the following comments today on the Commodity Futures Trading Commission’s action on Dodd-Frank rulemaking:
The rule adopted today by the CFTC for swaps data repositories (SDRs) is bad for reform, bad for transparency, and bad for taxpayers. As Commissioner Dunn observed, the rule allows for conflicts of interest, which will infect the new derivatives system. SDRs control the data and whoever controls the data will have the ability to control the marketplace. This is inexcusable.
There is nothing more important than making sure the new derivatives markets are free from conflicts of interest. That is the only way the marketplace will be transparent, open and competitive. It is also the only way those markets will reduce systemic risk and prevent taxpayer bailouts.
Right now those derivatives markets are in the shadows and serve the interests of the five huge banks that control more than 95 percent of the trading. They do that directly and through other entities that they form and control, like the DTCC (see big bank dominated board of directors below). That control enables the banks to kill competition and protect their turf and profits, but it doesn’t serve the public and it can lead to crisis and bailouts as we saw in 2008.
The last thing the U.S. taxpayer needs is for the old anti-competitive and anti-transparency system controlled by a few big banks to be reproduced in the new derivatives architecture. Regrettably, that is exactly what the new SDR rule announced today authorizes. That must be changed and changed fast or the core reforms will be gutted and the letter and spirit of Dodd Frank will be defeated.
Robert Druskin Executive Chairman, DTCC
Donald F. Donahue President and Chief Executive Officer, DTCC
Mark Alexander Chief Information Officer and Head of Technology & Operations for Global Wealth and Investment Management, Bank of America Merrill Lynch
Michael C. Bodson Chief Operating Officer, DTCC; Chief Operating Officer and President of DTC, NSCC and FICC; Chairman, EuroCCP and MarkitSERV
Art Certosimo Senior Executive Vice President, Bank of New York Mellon
Christopher Concannon Partner and Executive Vice President of Virtu Financial LLC
Stephen C. Daffron Managing Director and Global Head of Operations, Technology and Data, Morgan Stanley
Jonathan W. Hitchon Co-head, Global Prime Finance, Deutsche Bank
Lori Hricik Former Chief Executive Officer and Head of JPMorgan Treasury Services
Gerard LaRocca Managing Director, Chief Administrative Officer of the Americas, Barclays Capital
Stephen Luparello Senior Executive Vice President, Regulatory Operations, FINRA
John C. Parker Executive Vice President at Wells Fargo Advisors and President of the Business Services Group
Louis G. Pastina Executive Vice President of NYSE Operations, NYSE Euronext
Derek A. Ross Former Partner at Deloitte U.K.
Neeraj Sahai Managing Director, Global Business Head – Securities and Fund Services, Citi
Gary H. Stern Former President and Chief Executive Officer of the Federal Reserve Bank of Minneapolis
Richard G. Taggart Senior Vice President and Head of Global Operations, AllianceBernstein L.P.
Robin A. Vince Managing Director and Head of Operations, Goldman Sachs
David A. Weisbrod Managing Director, JPMorgan Chase Bank, NA
