Sharon Bowen stopped by Georgetown’s IIEL today to deliver her farewell speech to faculty, students, regulators and the press.  Certainly, derivatives regulators had an extraordinary agenda during her term, which coincided with the overall implementation of not only the Dodd Frank agenda, but also the G20 Pittsburg agenda for global derivatives reform.  That said, what I found especially interesting was her to-do list for the next Commission as she “passed the baton.”  She highlighted five issues:

  • Achieve international harmonization of data reported to swap data repositories.
  • Improve cybersecurity for clearinghouses, exchanges, trade repositories and swap execution facilities and other critical market infrastructures
  • Introduce oversight of algorithmic firms to meet standards set by Mifid II:  Specifically, she notes:  “since MiFID II, the European regulation, which will be triggered next year includes robust oversight of algorithmic firms, including authorization of HFT firms, we should establish similarly robust rules in the interests of harmonization and avoiding regulatory arbitrage.”
  • Implement governance reforms of clearinghouses. Specifically, she urged consideration of reforms to: 

1) establish a Board committee that would report to the Board, called a Regulatory Oversight Committee to monitor and oversee the regulatory program of the entity, and supervise its Chief Compliance Officer;

2) submit an annual report for the Commission and the Board, assessing the entity’s self-regulatory program; 

3) report to the Commission if the Board rejects any recommendation by the Regulatory Oversight Committee; and

4) ensure that the Board is composed of qualified, diverse, and independent directors that represent a diversity of viewpoints.19

  • Finally, increase the CFTC’s budget. “Two-hundred and fifty million dollars for an agency that oversees a $400 trillion swaps markets does not add up.”

For more, Commissioner Bowen’s speech is available here.

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