Download PDF, Issue 26 - Swiss Futures and Options Association

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Focus “It took an act of Congress to resolve the impasse between the CFTC and the SEC.” 10 dictional reach, the tiered oversight model has increased our strength and effectiveness as a regulatory agency. In my view, the most important feature of the core principles-based orientation is a movement away from regulatory micromanagement of business decision-making. For my part, I have long been critical of actions by regulators to dictate specific terms or conditions related to contract design and market structure. In these areas, I believe that the economic incentives of those who operate exchanges and firms who enter this market are aligned such that they will make the choices that are not inconsistent with our regulatory goals. Economic incentives are a driving force not only to market operation, but also to effective market self-regulation. Regardless of their organizational structure, self regulatory organizations (SROs) dedicate substantial investment to ensuring that individual misdeeds and isolated implosions cannot and will not jeopardize the integrity of the whole market. The incentives of industry to build reputational capital to attract investors make self-regulation work. Marshalling the expertise of the industry, drawing on its self-knowledge of costs and benefits, allows the CFTC to more efficiently use our resources to police and maintain the credibility of the markets, while also allowing us to reduce costs for market participants, consumers, and the taxpayers who pay our salaries. Concerns that there may be embedded conflicts in the self-regulatory model are worthy of consideration, and the CFTC will address that potential in our forthcoming review of SROs. Certainly, there will be challenges as we seek to fulfill the congressional mandate of the Modernization Act. First, many will resist regulatory innovation for fear it may change their competitive position. Others will resist because a different approach, regardless of its potential improvement, is not the way they have always done things. But as much as we might like to remain static, the marketplace is evolving and the industry is growing, and we must strive to keep pace with that change. To do so, we must be flexible in our approach, but inflexible with regard to the principles we uphold to ensure financial and economic integrity. On this score, I would note that regulatory flexibility applies with equal force to incumbent entities and new entities, whether they are domestic or foreign. We are no more willing to throw out the rulebook for new entrants than we are to use that rulebook as a weapon to keep them out. As regulators, we will do what we believe is the right thing to protect customers and ensure market integrity regardless of who we are dealing with. We also strive to eliminate regulatory barriers to entry, whether they are in the form of outdated rules or practices, or new prescriptions that impose uncalled Sharon Brown-Hruska was designated by President Bush as Acting Chairman of the Commodity Futures Trading Commission (CFTC), the federal agency that regulates commodity futures and options trading in the United States, on July 26, 2004. Prior to her nomination to the CFTC in 2002, Dr. Brown-Hruska was an Assistant Professor of Finance. Author of numerous scholarly and applied papers based on her research in the areas of derivatives and market microstructure, Dr. Brown-Hruska is a member of the President’s Working Group on Financial Markets and she was awarded the Key Women in Energy’s Global Leadership Award. for burdens on those who would seek to compete on the open and competitive market. The tendency of regulatory agencies to financially engineer markets to perfect them through prescriptive approaches is not our model. Business decisions regarding contract design or market structure belong with those who bear the cost and enjoy the benefits of making those choices. As long as those decisions are non-discriminatory and do not violate our core principles, firms should be able to manage their accounts as they think best serves their customers and exchanges should be able to determine what kinds of trades they allow or how they organize their marketplace. As we approach Congressional reauthorization for the Commission in 2005, we are committed to upholding the goals and principles espoused in the Modernization Act and moving forward with rule modernizations that better conform to the changing technologies and more global nature of the marketplace. As the one responsible for leading the CFTC through this challenging process, I will adhere to my own principles and seek above all else to be judicious and fair. While I have a substantial knowledge of the derivatives industry and good understanding of the workings of the agency, I admit that I do not intend to go it alone. In addition to the good counsel of my colleague Walt Lukken, I will be looking to the experts, the firms, the exchanges, and international regulators and policymakers for guidance and support. Given the strong foundation I have just outlined, I believe the future is bright and I look forward to continued positive change in the global derivatives industry. SWISS DERIVATIVES REVIEW 26 – NOVEMBER 2004
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Page 1 and 2: SWISS DERIVATIVES ISSUE 26 - NOVEMB
Page 3 and 4: Contents Contents SWISS FUTURES AND
Page 5 and 6: Dear Members and Friends of SFOA Ed
Page 7 and 8: Focus Treasury. Then came Ginnie Ma
Page 9: “This approach moves us in the di
Page 13 and 14: Focus Union’s regulators in terms
Page 15 and 16: “There’s no rule saying banks c
Page 17 and 18: The rush of endless opportunity. Li
Page 19 and 20: Further your future: team up with a
Page 21 and 22: “Investor interest in gold was re
Page 23 and 24: A new standard in the derivatives i
Page 25 and 26: “The Stone Age didn’t end becau
Page 27 and 28: A blazing sponsor for Friday night
Page 29 and 30: CNBC Europe reporting live from Bü
Page 31 and 32: A fascinating presentation by ballo
Page 33 and 34: “Swiss taxation is very advantage
Page 35 and 36: “These results seriously question
Page 37 and 38: D O W J O N E S I N D E X E S THE D
Page 39 and 40: “ ‘Carry’ strategies and even
Page 41 and 42: Education Chart 2 Overbought zone (
Page 43 and 44: Bollinger Bands Let’s briefly rev
Page 46 and 47: Emerging Markets A Perspective on E
Page 48 and 49: Profile IFRI - The International Fi
Page 50 and 51: Profile 50 Official Publication of

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