At the 35th Annual FIA Expo, CFTC Chair Heath P. Tarbert described five strategic goals for the CFTC and outlined action plans for each goal.

Goal: To "strengthen the resilience and integrity of . . . [the] derivatives markets while fostering their vibrancy."

Mr. Tarbert stated that the CFTC will enhance:

  • Central Counterparty supervision by (ii) improving the Division of Clearing and Risk and (ii) finalizing amendments to CFTC Rule 39 ("Derivatives Clearing Organizations");
  • international cooperation by (i) deferring to non-U.S. regulators, if deference is granted in return, (ii) facilitating an open dialogue with the European Commission and European Securities and Markets Authority (or "ESMA"), (iii) introducing a cross-border swaps proposal and (iv) applying fraud and manipulation standards as to U.S. activity (see previous coverage);
  • margin and capital regulation by (i) examining margin models to ensure that enough margin is in the system, (ii) publishing a swap dealer capital rule proposal and (iii) assessing the impact of the Basel rules on the markets; and
  • market structure by proposing, for example, a restriction on the name-give-up practice that will not harm liquidity.

Goal: To "regulate . . . [the] derivatives markets to promote the interests of all Americans."

Mr. Tarbert said, the CFTC will:

  • focus more on the agriculture sector, calling it the "cornerstone" of the Commodity Exchange Act;
  • propose a position limits rule that will provide "prophylactic, clear, and usable" limits on market participants while ensuring that "bona fide" hedging is not restricted;
  • treat Main Street institutions according to their needs, as opposed to the needs of Wall Street institutions; and
  • increase customer protection by amending CFTC Rule 160 and Rule 190 to codify bankruptcy standards.

Goal: To "encourage market innovation and enhance the regulatory experience for market participants at home and abroad."

Mr. Tarbert urged:

  • a renewal of the agency's principles-based regulation where appropriate;
  • SEC-CFTC coordination, to ensure that the agencies are not "duplicating" related regulations;
  • the elimination of rules that do not have a "current regulatory purpose"; and
  • the development of a principles-based approach that allows the United States to lead in the innovation of "21st-century" commodity products (e.g., digital assets).

Goal: To "be tough on those who break the rules."

Mr. Tarbert said the CFTC will:

  • focus on "getting people to follow the rules" rather than solely on punishing them;
  • reduce fines for those who self-report, cooperate and remediate; and
  • coordinate with other agencies (e.g., the DOJ, FBI and SEC).

Goal: To "focus on . . . [the CFTC's] unique mission and improve[] . . . operational effectiveness."

Mr. Tarbert called for:

  • cost-effectiveness concerning budget and funds allocation;
  • increasing "diverse" talent; and
  • protecting American intellectual property by enhancing data analysis and protection.

In addition, Mr. Tarbert announced that the CFTC "will restrict no-action letters to those instances where we need a temporary fix or there's something very specific that doesn't lend itself to a general rule."

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