Tag Archives: CFTC

Gensler Rushes to Lock in Swap Rules as Wall Street Pushes Back

According to Bloomberg,

Gary Gensler has only weeks left as chief of the Commodity Futures Trading Commission. His message for Wall Street: I am not leaving quietly.

As the clock ticks down, Gensler has issued more than a dozen advisory opinions directed at reining in the largest financial firms and swap traders without votes by his fellow commissioners. He’s also insisting on tightening the Volcker rule ban on proprietary trading by banks, making last-minute demands that could derail a regulation that must be approved by five U.S. agencies.

Banks reeling from his final push have consulted with lawyers about whether to take the CFTC to court, according to four people briefed on the matter.

Gensler, 56, has fought a five-year battle with the industry over how to draw up a safer and more open marketplace for derivatives, the products that helped push the world economy to the precipice in 2008. Gensler is trying to cement his legacy, said Fred Hatfield, a former Democratic commissioner at the agency.

Gensler is “trying to do an awful lot in a very short amount of time,” said Hatfield, who now works at Patomak Global Partners LLC, a regulatory consulting firm in Washington. “He’s leaving as little to chance as could be possible.”

President Barack Obama has nominated Timothy Massad, 57, a Treasury Department official, to succeed Gensler, whose term has expired and must leave by the end of the year.

Chess Match

The activity in recent weeks has set up the equivalent of a high-stakes chess match between Gensler and the financial industry, which was holding off negotiating on some rules until he left, according to two people involved in the discussions. They and the others interviewed for this story spoke on condition of anonymity because their meetings were private.

The agencies that must sign off on Volcker also have been dealing with Gensler’s last-minute bargaining tactics. All five regulatory agencies don’t have to issue the rule simultaneously, and in light of Gensler’s questions some have discussed whether to press ahead and publish the rule without waiting for the CFTC to act, the Wall Street Journal reported yesterday, citing sources familiar with the process.

A former Goldman Sachs Group Inc. partner, Gensler is well-schooled in the ways of Wall Street and has emerged as one of its main adversaries in Washington. In implementing the derivatives rules mandated by the 2010 Dodd-Frank Act, he often takes an issue to the brink before striking a deal that is more amenable to the industry than what he first proposed.

 

 

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DERIVATIVES: CFTC makes “significant progress” on cross-border rules

DERIVATIVES: CFTC makes “significant progress” on cross-border rules

The CFTC is close to unveiling its approach to cross-border regulation of the over-the-counter derivatives market. Commissioner Mark Wetjen has signalled the agency may be ready to allow US firms operating in foreign jurisdictions to comply with local regulations instead of the US Dodd-Frank Act.

“We have made significant progress in recent weeks towards a workable cross-border framework,” Wetjen told the audience at the International Derivatives Expo in a keynote speech on Tuesday.

“I believe the CFTC should adopt interim guidance in the coming weeks and seek additional comment under an interim approach that provides legal certainty in the medium- and short-term.”

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Knight Is Said To Have Spurned $500 Million Citadel Loan

Knight Capital Group Inc. (KCG) rejected a last-minute, $500 million rescue-loan offer from Citadel LLC on Aug. 5 as it worked on a competing plan from a group of investors, said two people with knowledge of the matter.

The loan terms would have given Citadel a minority stake inJersey City, New Jersey-based Knight’s stock and an interest in the market maker’s HotSpot foreign-exchange subsidiary, said the people, who spoke on condition of anonymity because the talks were private. Citadel, the $12.5 billion hedge fund run by billionaire Ken Griffin, competes with Knight’s market-making and electronic-trading business.

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RBS’s CEO Blames Libor-Manipulation On ‘Handful’ Of Individuals

Royal Bank of Scotland Group Plc Chief Executive Officer Stephen Hester sought to limit the damage from the Libor-rigging scandal, blaming a “handful” of employees for attempting to manipulate the benchmark rate.

RBS dismissed four employees for trying to influence the individual responsible for Libor submissions following an internal investigation, the bank said today, without identifying the staff involved. Hester said it is too early to estimate the potential cost of fines and litigation linked to rate-rigging.

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Standard Life’s Grimstone Says Libor Scandal Is Hurting London

London’s reputation as a global financial center has been marred by the Libor-rigging scandal, said Gerry Grimstone, chairman of Standard Life Plc (SL/), Scotland’s largest insurer.

He was speaking on Bloomberg TV’s “The Pulse” show with Maryam Nemazee in London.

On London’s reputation after the Libor scandal:

“I’ve been in the financial services for 30 years and I’ve never known a time like this. It’s been terrible. Some of the language people use has been terrible. I’m concerned that the public don’t really understand it. The public talks about hanging bankers. We shouldn’t use words like cesspit to describe the City of London.”

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Fed’s Rosengren Urges ‘Open-Ended’ Easing Program

Federal Reserve Bank of Boston President Eric Rosengren said the central bank should pursue an “open-ended” quantitative easing program of “substantial magnitude” to boost growth and hiring amid a global slowdown.

The Fed should set its guidance based on the economic outcomes it seeks and focus on buying more mortgage-backed securities, Rosengren said today in a CNBC interview. Without new stimulus, the jobless rate would rise to 8.4 percent at the end of this year and economic growth wouldn’t exceed its 1.75 percent average in the first half of the year, he said.

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U.S. Stocks Rise On Policy Bet As Earnings Beat Estimates

 

U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a third straight day, amid better-than-estimated corporate earnings and speculation global central banks will take steps to boost economic growth.

JPMorgan Chase & Co. (JPM) and Bank of America Corp. added at least 2.1 percent to pace gains among financial companies. Chesapeake (CHK) Energy Corp., the second-largest U.S. natural-gas producer, increased 9.5 percent after reporting the highest quarterly profit in the company’s history. Fossil Inc. (FOSL) surged 32 percent after forecasting earnings that exceeded analysts’ estimates on increasing sales of its Skagen brand.

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