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AFR Statement: Throwing Out Derivatives Reform Strengthens Too-Big-To-Fail Oligopoly

Submitted by on November 6, 2018 – 1:24 pm

FOR IMMEDIATE RELEASE

Nov. 6, 2018

CONTACT:

Carter Dougherty, carter@ourfinancialsecurity.org, (202) 251-6700

Throwing Out Derivatives Reform Strengthens Too-Big-To-Fail Oligopoly

Statement from AFR Policy Director Marcus Stanley regarding today’s CFTC meeting:

“We strongly disapprove of the new proposal to change rules for derivatives trading announced in today’s meeting of the Commodity Futures Trading Commission (CFTC). The requirement that complex derivatives be traded whenever possible in open, competitive markets was a crucial element of Dodd-Frank derivatives market reforms. It was intended to break up the oligopoly of giant dealer banks that dominated the market before the 2008 financial crisis. Current implementation of this requirement has been inadequate to fully achieve the goals Congress laid out, but the changes proposed today appear to jettison the reform effort entirely.  They would roll back the gains the CFTC has made and further empower the too-big-to-fail banks at the expense of everyone else.

The CFTC today also announced that the de minimis threshold for designating swap dealers will be set permanently at $8 billion. The agency also announced, however, that it would not make the many other changes to the threshold discussed in the proposal.  We remain concerned that the eight billion dollar threshold may be too high for some commodity markets. But we are pleased by the CFTC’s decision not to move forward on other proposed changes that would have permitted even very large swap dealers to avoid registration and regulation as dealers.  As laid out in AFR’s comment on the threshold proposal, they would have dramatically undermined dealer regulation, and the CFTC was correct not to adopt them.”

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