CME Group CEO Craig Donohue talked about some of the biggest regulatory challenges facing the industry at the Profit & Loss Forex Network in Chicago today. Two of the main concerns are the CFTC‘s recent calls for more OTC derivatives trading to be done on exchanges and discussions about imposing position limits in the energy markets.“In the futures and options markets, the listed exchange markets, the central counterparty clearing systems functioned flawlessly during the economic and financial markets crisis,” Dohohue said. “There’s a lot of people that think the OTC markets didn’t function very well. Some of that is quite exaggerated.” He added that CME Group is opposed to government regulatory proposals to mandate the exchange trading of OTC derivatives instruments. ”We don’t think that government is in the best position to dictate that. The services that we provide are compelling enough and our commitment to partnering with market participants to find a right way to offer those solutions is the better course.”
Donohue also mentioned the ongoing attacks from Washington blaming speculators for higher prices in the energy markets. He noted that CME Group is opposed to restricting market participation of swap dealers and index funds, changing the tax treatment for professional traders and higher margin requirements. “Not a single reliable [economic] study has indicated that speculators, index funds and swap dealers have contributed to price spikes in those markets. We’re working hard to not tolerate discriminatory access to free markets by legitimate market participants,” he said.
Donohue said CME Group is prepared to implement hard position limits in energy “so long as the CFTC regulates similarly the exempt commercial markets, the foreign boards of trade over which it may have some authority and so long as it actually seeks and obtains from Congress the authority which it presently lacks to impose these requirements on the OTC market participants. If you don’t have all that, you’re discriminating against access to the futures market and you’re pushing people to the over the counter markets and foreign markets.”
