FIA Chairman Testifies
In testimony on March 25 before a subcommittee of the House Agriculture Committee, FIA Chairman Gerald Corcoran warned that markets will become fragmented without coordination among global regulators.
“To date, much of the public regulatory scrutiny has focused on the cross-border regulation of trade execution parties, both the client and the swap dealers, but there are also cross-border challenges within the regulation of the infrastructure that is expected to support the clearing of derivatives,” Corcoran said.
He noted that Europe and the U.S. have developed differing requirements for margin methodologies and said that clearing members are “perplexed” by suggestions that the competing methodologies should be run simultaneously.
Corcoran also discussed concerns over Basel III capital requirements and warned that the capital rules will result in more consolidation among FCMs. “The current number of FCMs registered with the CFTC has been reduced to less than half of those registered 10 years ago,” he said, adding that the new capital requirements on bank-affiliated FCMs “will only serve to further consolidate the pool of clearing service providers.”
