Two weeks ago it was Commissioner J. Christopher Giancarlo, and last week it was Commissioner Mark Wetjen who suggested that the CFTC swaps trade execution regime “might be due for fine tuning.” In a speech before the Cumberland Lodge Financial Services Policy Summit in the United Kingdom, Mr. Wetjen recommended that the CFTC should not seek to impose its trading conditions on non-US multilateral trading facilities seeking exemption from registration as a swap execution facility solely to the extent transactions involve non-US persons. This should be the case, he argued, even if the platform also permits access by US persons. Such trading conditions should only be applied to transactions involving a US person, said Mr. Wetjen. Mr. Wetjen also recommended, among other things, that the CFTC should consider only requiring registration as a SEF trading platforms that facilitate trading in swaps subject to the Commission’s mandatory trading requirement and whether the currently available so-called "made available to trade" process should be replaced by an exclusive CFTC determination. According to Mr. Wetjen, “The existing policy is based on the assumption that SEFs and [designated contract market]s are best positioned to evaluate whether a swap is liquid enough to support a trading mandate. But independent regulatory agencies should not leave policymaking of this sort to the very commercial entities that stand to benefit most from the trading policies in question.” (Click here to see a discussion of Mr. Giancarlo’s related comments in the article “Speech Not Given by CFTC Commissioner J. Christopher Giancarlo Roundly Criticizes Swaps Trading Rules” in the November 10 to 14 and 17 edition of Bridging the Week.)
My View: It appears timely for the CFTC to call for a meeting of its technology advisory committee or another public session to formally discuss possible amendments or other fixes to its trade execution rules.